Standard system provides cost benefits
Since the agreement needs to be negotiated, we do not currently know about or how it differs from the agreements that have already been signed with Great Britain, Germany, French, Italy, Spain, Norway and Denmark or when the agreement can be completed. The Swedish market differs from the other Nordic countries with large volumes of endowment insurances linked to deposits and the premium-defined share of occupational pensions with unit-linked insurance as forms of management. This may mean that certain types of insurance will be reported. In all likelihood, it will also require legislative measures to get the flow of information to comply with the agreement. Once this is in place, the Swedish Tax Agency can specify what data they need from the players who are obliged to report. In the last ten years Itello has reported data for control data to the Swedish Tax Agency for our life insurance customers.
Reuse saves time on development, testing and implementation
The experiences of reporting control data to the Swedish Tax Agency means that we will be able to reuse previous knowledge to solve this type of problem. Because all of our customers have the same version and data model in Inca it makes it easier to create a generic solution for reporting. Obviously our customers’ products are different, but they are configured with the same component-based approach. We have our responsibility but in a long-term partnership with our customers they must take their responsibility too. We do not know the detail of what is involved, but understanding the implications of FATCA and the definitions of “US persons” and the interpretation of the rules and laws they operate within are we think the responsibility of the customer. For those players who for various reasons choose not to adhere to the industry standard, but instead choose to report directly, discussions are in progress at an international level where coordination with the TRACE system is seen as a possible way. Just the task of entering the people and what holdings they have in which insurance and savings products covered by FATCA is an extensive, time and cost consuming one for the players. To then create processes, procedures and adaptions of the many different systems to administer agreements and savings means considerable additional costs. It is probably right for the players who have operations in many countries and therefore need to report to many tax authorities. We at Itello have chosen to link our solution to the industry standard – reporting under FATCA through each country’s tax authority.
