After several delays, the US Foreign Account Tax Compliance Act (FATCA) is now becoming a reality.

FATCA is a US law aimed at foreign financial institutions (FFIs) and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts.

The majority of countries have started to negotiate intergovernmental agreements (“IGAs”) with the IRS in order to facilitate information flows between entities, local tax authorities and the IRS and also to try to integrate local specificities into these agreements.

Most countries which entered into an agreement with the IRS have opted for an IGA model 1.

In order to be FATCA compliant and avoid being subject to a withholding tax of 30% on US payments, each legal entity around the world will have to go through the following steps*

800x635 FATCA1

* if their FATCA status requires this

The IRS registration portal was finally opened in January allowing entities to register and obtain their Global Intermediary Identification Number (GIIN). While some FATCA status does not require any registration (and consequently no GIIN), having this GIIN is the guarantee to having efficient relations with third parties and to avoid any withholding amount. If the selected FATCA status does not imply the issuance of a GIIN, justification of the FATCA status might be requested by third parties at the entry in relation. Consequently determining its FATCA status and registering with the IRS if required should be put at the top of the list of each entity.

Each entity will have to identify US tax payers among new coming investors from July 2014. This implies that KYC procedures must be updated for this deadline. Entities using a domiciliation agent or a transfer agent (for funds) will be allowed to rely on them for this identification. This means that all service providers will have to be ready for this deadline. Identification of US tax payers among existing investors must be performed before July 2015.

Entities will have to publish their first reporting for September 2015. There are still some uncertainties regarding the way the reporting will have to be submitted but it’s pretty clear that identity and value of account of US tax payers will have to be reported. 2014 is definitely a FATCA year with many challenges ahead.

Alter Domus has a dedicated FATCA team that is ready to make these new requirements an efficient and smooth process for all our clients.



Alter Domus Improves Client On-boarding with Adoption of Thomson Reuters FATCA Solution

NEW YORK/LUXEMBOURG, July 21, 2014 - Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced that Alter Domus, one of its long-term clients and a leading provider of fund administration and fund services, has adopted Thomson Reuters FATCA solution across its services platform to improve client identification and on-boarding in order to comply with the FATCA legislation.

Please click here to read the Press Release.

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