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USAREUR Credit Union Liaison Update Defense Credit Union Council Overseas Sub‐Council Brief CPT Juan C. Pratts USAREUR Banking and Credit Union Liaison Officer 1 May 2014 Rome, Italy POC Name Enter DSN As of: YYYY MM DD
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Purpose
Purpose & Agenda Provide an update of ongoing developments in the U.S. Army Europe (USAREUR) Area of Operations (AO) and Area of Responsibility (AOR).
Agenda
266th Financial Management Support Center Update ‐Mission ‐USAREUR & USARAF Support USAREUR Transformation ‐Installation Closure ‐Manpower Reduction Topics of Interest/Concern ‐Advertisement of Off‐Base Financial Institutions ‐Art. X NATO SOFA Issue for Art. 72 SA Employees POC Name Enter DSN As of: YYYY MM DD
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266th Financial Management Support Center Update 266th FMSC deployed to Camp Arifjan, Kuwait
COL. Thomas J. Seelig ‐ Director SGM Tommy A. Byrd – Senior FM Advisor
In Support of Operation Enduring Freedom (OEF); 1st Theater Support Command (TSC) Contingency Banking team deployed to Kabul, Afghanistan 1LT Aaron Dermon ‐ OIC SFC Steven J. Brooks ‐ NCOIC Civilian Deputy Director Mr. Mark W. Jackson
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266th Financial Management Support Center Update Benelux Finance Office
Italy Finance Office
USARAF Area of Responsibility ‐Mauritania
‐Uganda ‐Senegal
‐Sudan ‐Mali ‐Burkina
‐South Sudan
‐Djibouti ‐Faso
‐Egypt ‐Niger ‐Lesotho ‐Chad ‐Kenya ‐Central African Republic
Germany
Africa
USAREUR Area of Responsibility ‐Romania ‐Slovakia ‐Poland ‐Hungary ‐Norway ‐Ukraine ‐Croatia
‐ Lithuania
‐Latvia ‐Estonia ‐Kosovo POC Name Enter DSN As of: YYYY MM DD
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US Army Europe Transformation FY06‐13 = 7 Garrisons / 112 Sites Closed 28,912 Acres, $11.21B Plant Replacement Value (PRV) FY14‐15 Returns = 2 Garrisons / 21 Sites 16,045 Acres, $6.854B Plant Replacement Value (PRV) USAG Bamberg & USAG Schweinfurt Closure (September 2014)
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US Army Europe Transformation 2006 Returns - 7 Sites -211 Acres / PRV: $0.36B
2007 Returns - 29 Sites -2,986 Acres / PRV: $2.48B
2008 Returns - 26 Sites -11,305 Acres / PRV: $2.53B
2009 Returns - 20 Sites -7,816 Acres PRV: $2.72B
2010 Returns - 8 Sites -Acres: 608 PRV: $0.510
Oberdachstetten Fam Hsg Daley Village Fam Hsg Wuerzburg Trng Area Breitsol Comms Station Eygelshoven Reserve Stor Area (NL) RAF Hythe (UK) Bettembourg Site (LUX)
Schwanberg DCS Site Aschaffenburg Fam Hsg Giebelstadt Army Airfield Giebelstadt DYA Camp Giebelstadt Tactical Defense Fac Kitzingen Fam Hsg Amberg Fam Hsg Pond Barracks Brandhof Radio Relay HoheWarte LTA Larson Barracks Harvey Barracks Birkenfeld Housing Facilities Friolzheim Comms Fac Gruenstadt Comms Fac Bonstetten Radio Relay Station Babenhausen Kaserne Babenhausen Fam Hsg Hohenstadt Radio Relay Station Melibokus Radio Relay Station General Patton Hotel Koenigstuhl Radio Relay Station Heidenheim Radio Relay Site Reinwarzhofen Radio Relay Site Stocksberg Comm Station Alvin York Vil Fam Hsg McArthur Place Fam Hsg Faulenberg Kaserne Turley Barracks Giessen
W.O. Darby Kaserne Ernst Ludwig Kaserne Cardwell Village Fam Hsg Buedingen Ammo Area Buedingen Army Heliport Coleman Village Fam Hsg Tiergarten Training Area Fliegerhorst Airfield Kaserne Wuerzburg Hospital Ray Barracks Roman Way Village Fam Hsg Giessen Community Facilities Edingen Radio Receiver Fac John F Dulles Village Fam Hsg George Marshall Vill AFH Armstrong Village Fam Hsg Armstrong Barracks Pendleton Barracks Messel Small Arms Range Campo Pond Training Area Langen Terrace Fam Hsg Area St. Barbara Village Fam Hsg Argonner Kaserne Yorkhof Kaserne Butzbach Trng Area & Range Friedberg Trng & Stor Area
Bensheim Maint & Supply Fac Hutier Kaserne New Argonner Fam Hsg Grossauheim Kaserne Wolfgang Kaserne Pioneer Village Fam Hsg AG Pub & Trng Aids Ctr Pioneer Kaserne Kitzingen Trng Areas Aschaffenburg Trng Areas Camp Oppenheim Trng Area Idar Oberstein Fam Hsg Griesheim Airfield Strassburg Kaserne Lincoln Village Fam Hsg Leighton Barracks Jefferson Village Fam Hsg Kelley Barracks Dautphe Boy Scout Camp Hommertshausen Girl Scout Camp
Sanem Site (LUX) Anderson Barracks Dexheim Family Housing Coltano Comms Site (IT) Germersheim RTO site Neubruecke Hospital Friedrichsfeld Storage Area Stem Kaserne
2012 Returns - 6 Sites -612 Acres // PRV - $.158B
2013 Returns - 10 Sites -5,076 Acres // PRV - $1.94B
Dannenfels Comms Station (Nov 11) Dexheim Missile facility (Jan 12) Kilbourne Kaserne (May 12) Bamberg Airfield (Jun 12) Rottershausen Stor Area (Sep 12) Sulzheim TA (Sep 12) (+ Acquired Brunssum NIC Site Jun 12)
Lampertheim Tng Area (15 Jan 13) Rottrdm Adm Lease (31 Jan 13) (NL) Schwetzingen TA (27 Feb 13) Tompkins Barracks (28 Feb 13) Ben Franklin Fam Hsg (30 Apr 13) Sullivan Barracks (29 May 13) Edigheim Beacon Site (14 Jun 13) Heidelberg Hospital (17 Sep 13) Heidelberg Golf Course (30 Sep 13) Oftersheim Range (30 Sep 13)
Pre-IMCOM Returns by USAREUR 2003-2005 (12) 12 Sites, 412 Acres, PRV$.819B (Not included in above totals) • Regensburg Fam Housing • Rheinau Coal Point D1 • Massbach QRS Site • Brunssum Pomms (NL) • Vriezenveen Pomms (Almelo) (NL) • Bad Aibling Kaserne • Community Fac Kaiserslautern • George Gershwin Fam Hsg • Verona Riverside School (Italy) • General Von Steuben Hotel • Frankfurt AFN Station • Schloss Kaserne AFRC Site not included above • Chiemgau Recreation Area
Franconia 2011 Returns - 6 Sites Total -298 Acres // PRV - $0.512B Mannheim Class III site Friedrichsfeld QM Service Center Cambrai Fritsch Kaserne Hammonds Barracks Taylor Barracks Nathan Hale QM Area
Mannheim
Hanau
Baden-Wurttemberg
(Note: Return Data updated as of 30 SEP 2013)
FY06-13 = 7 Garrisons / 112 Sites Closed, (28,912 Acres, $11.21B PRV) POC Name Enter DSN As of: YYYY MM DD
Heidelberg
Darmstadt
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FY14-15 Returns = 2 Garrisons / 21 Sites* (16,045 Acres, $6.854B PRV) 2014 Future Returns - 10 Sites -759 Acres // PRV - $2.87B Campbell Barracks Heidelberg Army Air Field Heidelberg Community Spt Ctr Mark Twain Village Fam Hsg Patrick Henry Village Patton Barracks Spinelli Barracks American Arms Hotel Giessen Army Depot (Complete) San Gottardo Signal Site (Italy)
2015 Future Returns - 11 Sites -15,286 Acres // PRV - $3.984B Coleman Barracks Funari Barracks Darmstadt Training Center (Dagger) Bamberg Stor & Range Flynn AFH & TNG Area Warner Bks Warner AFH Askren Manor AFH Conn Bks Ledward Bks Bamberg Schweinfurt TA
Schweinfurt 6
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US Army Europe Transformation
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Manpower Reduction USAREUR HQ – 40 % Reduction FY14 21st TSC HQ – 25 % Reduction FY15
“Right now the Army and USAREUR are in a time of transformation as we seek to reach our authorized end strength to meet the needs of the nation. As we transform, we must ensure that our actions enable us to build readiness and continue modernization for the future.” ‐ LTG Donald M. Campbell, USAREUR CDR
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US Army Europe Transformation Germany
Belgium
Gain ‐ 53 U.S. CIV
Gain – 5 U.S. CIV and 3 MIL
Loss – 554 LN and 93 MIL
Loss ‐ 25 LN
Netherlands
Overall
Gain ‐ 1 MIL
Net Increase ‐ 44 U.S. CIV
Loss ‐ 14 U.S. CIV
Net Reduction – 579 LN and 89 MIL
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US Army Europe Transformation (21st TSC) Kaiserslautern, Germany
Vilseck, Germany
6966th Truck Transportation Terminal: Loss – 3 U.S. CIV and 63 LN. Maintenance Activity Kaiserslautern: Gain – 1 U.S. CIV. Loss – 330 LN. Supply Activity Europe: Loss – 1 U.S. CIV and 42 LN.
Maintenance Activity Vilseck: Loss – 1 U.S. CIV and 42 LN.
Grafenwoehr, Germany Joint Multinational Training Command (JMTC): Loss – 9 U.S. CIV, 114 LN and 83 MIL.
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“The expected decrease in future workload requirements in conjunction with the posture changes announced by DoD in 2012 make these changes necessary”.
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US Army Europe Transformation (IMCOM‐E) Garrison Support Sembach: Gain – 3 U.S. CIV and 4 LN. USAG Ansbach: Gain ‐ 6 U.S. CIV. Loss – 1 MIL and 20 LN. USAG Baumholder: Loss – 11 U.S. CIV, 154 LN and 8 MIL. Small Site Garmisch: Gain – 14 LN and 1 MIL. Loss – 4 U.S. CIV.
USAG Bavaria: Gain – 19 U.S. CIV. Loss – 72 LN and 2 MIL. USAG Hohenfels: Loss – 8 U.S. CIV, 59 LN and 3 MIL. USAG Rheinland‐Pfalz: Gain – 21 U.S. CIV, 179 LN and 3 MIL. USAG Stuttgart: Gain – 2 U.S. CIV, 91 LN and 2 MIL. USAG Wiesbaden: Gain – 38 U.S. CIV and 32 LN. Loss – 2 MIL.
Belgium
Netherlands
USAG Benelux: Loss – 30 LN and 2 MIL.
Small Site Schinnen: Gain ‐ 1 MIL. Loss ‐ 14 U.S. CIV.
Germany
Small Site Brussels: Gain – 5 U.S. CIV, 5 LN and 5 MIL.
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Advertisement of Off‐Base Financial Institutions Issue: Allegations of improper advertisement from the Exchange New Car Sales (ENCS) on behalf of off‐base financial institutions (FI). DoDFMR Vol. 5 Ch. 34: “Off‐base financial institutions are not permitted to distribute competitive literature or forms on the installation” “Installation activities, including Military Exchange Services and concessionaire outlets, shall not permit the distribution of literature from off‐base financial institutions if there is an on‐base financial institution” Status: DoD Banking Office has established a dialogue with AAFES at senior levels.
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees Joerg C. Moddelmog, LL.M. (USA) Senior German Attorney‐Advisor
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees Non‐German Commercial Enterprises (Art. 72 SA) Are not part of the U.S. Forces, but if the enterprise EXCLUSIVELY serves the Forces, the civilian component, & their dependents, both the enterprise and its U.S. employees get certain SOFA based benefits/privileges. Employees who EXCLUSIVELY serve the enterprise are treated as members of civilian component with SOFA status, except: Art. 72 para. 5 (b) SA Germans or person who were ordinary resident in Germany PRIOR to being hired don’t qualify for SOFA status
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees The Tax Benefit: Art. X para. 1 NATO SOFA Among the SOFA benefits available is exemption for certain German (host nation) taxes (Art. 72 para. 5 (a) SA Art. X para. 1, NATO SOFA (taxation privilege) Article X paragraph 1 NATO SOFA reads: “Where the legal incidence of any form of taxation in the receiving State depends upon residence or domicile, periods during which a member of a force or civilian component is in the territory of that state BY REASON SOLELY of his being a member of such force or civilian component shall not be considered as periods of residence therein, or as creating a change of residence or domicile, for the purposes of such taxation. Members of a force or civilian component shall be exempt from taxation in the receiving State on the salary and emoluments paid to them as such members….”
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees Art. X para. 1 NATO SOFA The German tax courts currently interpret the wording “by reason solely of” in Art. X to mean, to have the “intent to return” (to the US).
The “Intent to Return” (or “Rückkehrwille”) test applies to uniformed members of the force and to members of the civilian component, and thus to Art. 72 employees.
“Intent to Return” must exist during EVERY tax year, not just at the end of the contract.
FULL burden of proof is on the “taxpayer” merely presenting an alternative view of the facts is insufficient. (“Is the glass half full or half empty?”) Problem: It’s a subjective standard and when in doubt, the Finance Office wins (99% of the time).
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees “Intent to Return” Some of the Criteria The Courts Consider: overall duration of stay in Germany (“5‐year rule”) real estate in the USA as opposed to real estate in Germany (valid) American driver’s license driving a car with US specifications if you paid U.S. State income tax. frequently traveling back to the USA participation in U.S. elections (remaining ties to the USA) German spouse (and the amount of German spouse’s income) Kindergeld, attendance of German school; homeowner grants. Witness testimony of neighbors and friends on your German (dis)likes Case‐by‐case analysis, there is no one decisive factor ‐‐ Even an actual later return to the U.S. has been held to be inconclusive. POC Name Enter DSN As of: YYYY MM DD
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees New / Latest Trick Foreign Earned Income (FEI) and German Taxation Germans see taking the FEI exemption as an indication to opt for a German residence, triggering a lack of “intent to return” Germans “interpret” US tax law – incorrectly(?) ‐ When using the FEI exemption, select the Physical Presence election. Art. 72 para. 5 (a) SA misses a clause like Art. 71 para. 5 (a) (i) SA Foreign Earned Income (FEI) and US Taxation Rev. Rul. 72‐497, 1972‐2 C.B. 448, 1972 WL 29556 (IRS RRU) “Indirect” government employee: “SOFA‐Land” means that Germany is not your residence for FEI or else taxation should be in Germany USAREUR US tax attorneys still work this issue POC Name Enter DSN As of: YYYY MM DD
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees What Happens if German Tax Authorities Determine “No Intent to Return” Generally, SOFA status remains unaffected, except Art. X tax exemption shield is gone. World‐wide income subject to unlimited German taxation. Risk of in kind income (e.g., VAT‐free shopping, gas‐coupons,…) being added to gross income. US/German Tax Treaty (TT) applies but provides no relief: Art. 19 TT: Government Services does not apply to SCU employees. Art. 15 TT: Personal Services: Right of taxation rests with residency state (Germany) Work is performed in Germany
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Art. X NATO SOFA Taxation Issues for Art.72 SA Employees What to do? If eligible, see a JAG local national legal assistance attorney for initial advice. Attack settled case law on the interpretation of Art X. para. 1, sentences one and two. Try new case law – Supplementary Agreement Re: Art. 68 para. 2 (a) – similar language to Art X. Keep and document extensive ties with the U.S. to show your “intent to return;” do not mark Bona Fide Resident on the IRS Form 2555 (FEI); do not accept German social benefits, especially if tied to residence. Last resort: inter‐governmental talks
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Questions?
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