FATCA Compliance
FATCA compliance and the country list for automatic exchange with the U.S.
The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law to enforce the requirement for U.S. persons including those living outside of the United States to file yearly reports on their non-U.S. financial accounts to the Financial Crimes Enforcement Network (FinCEN).
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA.
Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets and Form 114, Report of Foreign Bank and Financial Accounts. There are serious penalties for not reporting these financial assets.
FATCA will also require certain foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The reporting institutions will include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies. Some non-financial foreign entities will also have to report certain of their U.S. owners.
Therefore, if you set up a new account with a foreign financial institution, it may ask you for information about your citizenship. FATCA provides special (and lessened) reporting requirements about the U.S. account holders of certain financial institutions that do not solicit business outside their country of organization and that mainly service account holders resident within it.
The Treasury has announced completed FATCA agreements to automatically swap tax data with 110 countries and below please find a snap shot of the few countries that we have helped clients with reporting their undisclosed accounts.
- Belgium
- Brazil
- British Virgin Islands
- Canada
- Cayman Islands
- China (agreement in substance)
- Chile
- France
- Germany
- Gibraltar
- Greece
- Hong Kong
- India
- Iraq
- Isle of Man
- Italy
- Jersey
- Liechtenstein
- Luxembourg
- Malta
- Mexico
- Moldova
- Netherlands
- New Zealand
- Norway
- Panama
- Saudi Arabia
- Singapore
- Switzerland
- Spain
- St. Kitts and Nevis
- Sweden
- Taiwan
- United Arab Emirates
- United Kingdom
Please see here for a complete list of countries which signed agreements with the IRS to exchange tax data.
We have experience helping local Swiss banks to bring their American clients into compliant due to FATCA application. Please contact us for a free initial review of your case if you have any questions.
Refer here to the IRS’ FATCA FAQs.
The categories of U.S. persons potentially liable for filing Form 5471 include:
- U.S. citizen and resident alien individuals,
- U.S. domestic corporations,
- U.S. domestic partnerships, and
- U.S. domestic trusts.
The filing requirements for Form 5471 varies depending on the persons who have a certain level of control in certain foreign corporations. Form 5471 should be filed as an attachment to the taxpayer’s federal income tax, partnership or exempt organization return, and filed by the due date (including extensions) for that return.
Depending on the ownership in foreign entity, Form 5471 and Form 8865 can be applicable and the potential penalty for not filing the form is significant (from $10,000 to $50,000 per form per year).
Please contact us if you have any questions.
