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August 20, 2021
Report on recent US international tax developments – 20 August 2021
The United States (US) House of Representatives, in recess since the beginning of August, will return the week of 23 August to vote on the Senate-passed budget resolution that will lay the groundwork for passage of Democratic priorities in a proposed US$3.5 trillion budget reconciliation bill this fall. House Speaker Nancy Pelosi has continued to insist that the House will not take up the infrastructure bill passed by the Senate until the Senate passes the reconciliation bill after Labor Day. Putting the Speaker in a difficult position is a group of moderate House Democrats who are demanding a vote on the infrastructure bill soon and threatening to withhold their vote on the budget resolution. Democratic progressives, meanwhile, are insisting that the House first pass the reconciliation bill before taking up infrastructure.
Tucked in the Infrastructure Investment and Jobs Act recently passed by the Senate is a cryptocurrency measure that may have escaped notice. It would apply information reporting requirements to digital assets (including cryptocurrency), and update the definition of broker with the intention of reflecting the realities of how digital assets are acquired and traded. More specifically, cryptocurrency and other "digital assets" sold by customers of "brokers" would be subject to Form 1099-B reporting and cost-basis reporting if the infrastructure bill becomes law. The bill would add to the definition of the term broker “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” The amendments would be effective for information returns filed in 2024 for the 2023 calendar year. See EY Global Tax Alert, US: Senate-passed infrastructure bill would impose information-reporting requirements on sales of cryptocurrency and other digital assets, dated 20 August 2021.
Given the considerable discussion in the Senate in regard to this provision, there may be further efforts by Congress in the future to address a difficult-to-understand issue that is attracting increasing political heft.
The US and Germany reportedly agreed in July 2021 on implementation of spontaneous exchange of multinationals’ country-by-country reports for the period 1 January 2020 through 1 January 2021. The agreement is based on Article 26 of the 1989 US-Germany tax treaty, as amended in 2006. The information that is exchanged reportedly will be subject to confidentiality and other safeguards found in the tax treaty, including the provisions that restrict the use of the exchanged information. According to the press, the parties are negotiating a competent authority arrangement to address the issue and the recent agreement is an interim measure.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC