Foreign Account Tax Compliance Act (Fatca)
Active since: 2010
Target: all non-U.S. foreign financial institutions
Goal: Identify (potentially) US citizens that live abroad or have an account abroad and report their details and assets to the US department of Treasury.
FATCA is a United States Law, used to demand the aid of foreign financial institutions to locate U.S. citizens (residing in the U.S. or not) and "U.S. persons for tax purposes" and their financial assets.
Financial institutions will have to report the gathered information to the U.S. Internal Revenue Service (IRS). In most countries this information is therfore first gathered by the national government and they share the information with the IRS.
The information of indicated U.S. taxable persons and their assets is used to perform cross-checks with self-reported information by individuals to the IRS or to the Financial Crimes Enforcement Network (FinCEN).
U.S. persons, regardless of residence location and regardless of dual citizenship, are required to self-report their non-U.S. assets to FinCEN on an annual basis.
According to qualification criteria, individuals are also required to report this information on IRS information-reporting form 8938.
Non reported assets will lead to collection of the missed tax as additional fees.
Banks that fail to comply will face a 30% witholding tax on all payments of income sourced directly or indirectly from the United States.
Customers that fail to provide Fatca related information will face a 30% withholding tax on specific payments.