The Foreign Account Tax Compliance Act (“FATCA”) enacted in the United States of America (“US”) and similar tax information sharing arrangements put in place by the United Kingdom (“UK”) became effective 1 July 2014. Various intergovernmental agreements (“IGAs”) have been put in place to implement these laws locally, eg., between the US and Hong Kong, the UK and Cayman Islands. These new US and UK tax regulations, and IGAs require financial institutions to identify and report US persons or UK tax residents to the relevant tax authorities. Click here to view the complete list of all IGAs in effect.
FATCA requires foreign financial institutions (FFIs) to report to the US Internal Revenue Service (IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. It aims to prevent wealthy US citizens from dodging their tax liabilities.
The US authorities will impose a 30 per cent withholding tax on US-related income going through financial institutions that do not comply with FATCA.
While FATCA is US law, it has global reach, because it requires all firms worldwide to disclose information to the IRS as long as they do business with US clients. The US$780 million penalty paid by UBS and the disclosure of American account holders to IRS, in 2009, was just the beginning. For those who don’t step forward, the IRS and Department of Justice (DOJ) are making clear that they have even more resources at their disposal.
Who is impacted by FATCA?
US Specified Person(s) or Controlling Person(s) and UK specified Person(s) or Controlling Person(s).
A US Specified Person(s) or Controlling Person(s) would generally be a US Citizen or Resident.page1image16320
A UK specified Person(s) or Controlling Person(s) is someone who has a UK residential/or correspondence address.
If you have any questions with respect to your US person or UK tax resident status or the new tax information sharing arrangements between UK and US, we would suggest that you consult your Gladstone Morgan Advisor.
The following US and UK governmental websites provide general information in regard to FATCA:
Watch out for our next blog on what US services we can assist with.
Talk to a member of Dino Zavagno’s team at Gladstone Morgan to arrange a meeting to learn more on this subject.
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It should be noted the services available from Gladstone Morgan Limited would vary from country to country. Nothing in the comments above should be taken as offering investment advice or making an offer of any kind with regard to financial products or services. It is therefore important to reinforce that all comments above are designed to be general in nature and should not be relied upon for considering investment decisions without talking to licensed advisers in the country you reside or where your assets may located.