Financial institutions in Costa Rica are preparing to comply with FATCA law

Costa Rican financial organizations are prepared to meet the demands of the United States on the foreign account tax compliance Act (FATCA), which came into force this year.

The law of United States oblige financial institutions of Costa Rica to provide financial information to the United States internal revenue about their national clients service, the law obliges foreign financial institutions to supply information to the service of internal revenue of United States (IRS) about its customers, with the objective of combating tax evasion through the use of accounts abroad.

Over the next year local agencies will have to modernize their systems so, 01 January 2014, they are able to locate United States taxpayers who have accounts with them and perform the compilation information.

According to Manrique Blen, specialist at the accounting firm of Deloitte tax, institutions will be seeking to identify what customers might be American taxpayers. In January 2014, they will start to contact customers requesting more information to confirm their status as taxpayers. Then the companies will decide that customers should be reported to the IRS.

In 2010 the United States adopted the law of rent, which encourages employers who hire people who have been unemployed for a certain period of time. To cover the cost of these incentives, the Government created FATCA, which has instituted a series of controls on international financial transactions.

The Act does not require, but invites financial organizations around the world to provide this information to the IRS. However, according to close, there are penalties for those who violate.

"As a law of the United States, should not be able to oblige the Costa Rican financial institutions," said. "However, those who do not comply with these processes will be punished by the financial institutions in the United States with deductions of up to 30 percent in any payment made to a foreign financial agency that does not have an agreement with the IRS."

Starting from March 31, 2015, local financial institutions will have to start reporting to the IRS information on clients of United States taxpayers that they carried out operations in 2013 and 2014. From 2016, containing more than $50,000 of personal and corporate accounts containing more than $250,000 shall be informed.

According to Blen, Deloitte advises a large number of banks and has spoken with 90 per cent of the financial organizations of Costa Rica. "Everyone knows FATCA and many already they are applying," he said. "During the rest of this year, all to make changes which to date."

"FATCA is an important development in the United States efforts to combat offshore breach. At the same time, the IRS recognizes that the FATCA application is an important commitment for financial institutions," said the IRS Commissioner Doug Shulman in a statement released in July 2011.

Close also recognizes that one of the advantages of the law is that it allows greater transparency in the destination of the funds and the tax obligations of persons holding financial transactions outside the United.

Blen added that the IRS also offers countries the possibility of signing intergovernmental agreements, in which foreign Governments sent the United States information about financial operations of American taxpayers in their countries. Mexico was the first Latin American country to sign an agreement of this type.

"There is a list of about 50 countries that are negotiating with the United States signing these agreements," said.

Posted by Costa Developers

Living Abroad Solutions to Scary Retirement Facts

Even in the best of times saving for retirement is often a monumental and difficult task, now with middle class opportunity shrinking, economic “cliffs” and austerity measures, it can be not just daunting but scary.

Many Americans are starting to look at options to make their finances for retirement more assured.

Here are five hard facts on retirement and how living abroad can provide viable solutions.

1. Americans live for approximately 19 more years after retirement

This represents 20-25% of your entire life and further, approximately half the population will live longer than average life expectancy.

Many American (especially baby boomers) have realized that apart from declining middle class opportunities, a potential bankrupt social security system and other economic disasters and woes, their savings are simple not going to last. Many have discovered that living aboard can significantly increase their odds of having sufficient money in their Golden Years.

2. Real estate values

Many retirees are expecting to cash in on their number one asset, their home/property.

The survey conducted by the Professional Risk Managers’ International Association for FICO found that home prices in the united Sates are unlikely to recover before 2020 and mortgage defaults will persist for years, says a survey of bank risk managers.

The report, Emerging Trends in Real Estate from the Urban Land Institute, predict above-average growth for Latin America, well ahead of that for the United States and Europe, and other survey’s from across the global predict Latina America and specifically Central America, will see significant growth in real estate value, as more and more investors jump into the largest emerging market on the planet.

If you are looking at improving your asset value, living abroad on your own real estate is increasing attractive.

3. Medical cost will continue to rise, as well as your need for medical attention

It is a well known fact that US medical costs will continue to rise as will insurance costs. The aging population in US will also require more medical treatments as they age.

It is also a fact that medical and dental treatments and procedures in places like Costa Rica will save you from 30% to 85% compared to the USA. (See TCRNs Health section for numerous article medical tourism)

4. Currently, the average Social Security retirement payment is just $1,220 a month

How far does $1220 go? Not far in North America. There are several areas in Central America, like Costa Rica where $1200 covers your monthly cost of living expenses, rent utilities, food and even leaves a little extra.

For example in Costa Rica, outside of the densely populate urban centers or tourist traps, a nice 2 or 3 bedroom house is around $400/month, utilities including cable and internet will run you around $150/month, food is$450/month approximately.

5. The average cost of an assisted living facility is approximately $40,000 a year in the U.S.

Projections estimate that about 3 million US expats will join the million+ already in Mexico and Central America within the next 10 years. Other estimates place the number closer to 10 million by 2025.

That, added to the shortage of affordable assisted living facilities in the US, creates a huge opportunity for investors and developers. When you search the news online you can find numerous investors, developers and existing assisted living facility businesses already moving south of the border, to take advantage of cheaper development costs, lower cost of living, less expensive but still highly skilled labor, and the growing number of baby boomer expats moving to Central America.

Living abroad for retirement has become a reality for many Americas and is projected to become a major consideration for the baby boomers population which are now hitting retirement age at a rate of 10,000 per day in the US.

For more information visit www.costadevelopers.com and retirement in Costa Rica, contact us on the form below and one of our Customer Service Experts will be glad to help you.

Posted by Costa Developers