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1. What is FATCA?

FATCA is an acronym for the Foreign Account Tax Compliance Act. It is a piece of US legislation that accompanied and supported the Hiring Incentives to Restore Employment Act of 2010. The fundamental objective of FATCA is identifying those US persons who may be evading tax through the use of accounts or entities held outside of the US. It required countries across the globe to enter into Inter-Governmental Agreements (IGA) with the US to automatically exchange account information where those accounts were held for the benefit of US citizens on an annual basis. This process will continue with the US as they are not adopting the Common Reporting Standard (CRS) which is an international initiative aimed at collecting account information on behalf of over 100 countries.

2. When does US FATCA start?

US FATCA came into effect on 1st July 2014, with the first year of reporting (data as at 31st December 2014), having been completed by 30th June 2015. The second exchange will involve greater detail in respect of those persons and accounts reported, including not only balances of account, but also information surrounding relevant payments, and is set to be completed by 30th June 2016.

3. How does US FATCA affect entities managed by JTC?

Any entity or trust that is resident in a Country with whom the United States Government has signed an Agreement to exchange data is now legally obliged to undertake a classification under the US FATCA regime. Once this classification outcome is known, this will determine what additional actions, if any, might be necessary by that entity.

4. What do you mean by ‘classification’ of an entity?

Every entity (including Trusts) needs to determine whether it is a Financial Institution (FI) or a NonFinancial Entity (NFE) and there are sub-categories of each status. There are rules that guide the assessment and categorisation of any given entity and it is these rules that JTC will follow to determine the status of all relevant client entities.

5. What difference does that classification have on reporting?

Broadly speaking, an entity that is a Financial Institution will have some reporting obligations itself. It may also be obliged to register online with the United States Internal Revenue Service (IRS) to identify itself to the US Authorities and confirm that it will be making reports of data. An entity that is a Non-Financial Entity has no direct reporting requirements but where that entity holds accounts (e.g.: a bank account) with another Financial Institutions they may have to make a report depending on the circumstances.

6. What reporting will be made to the US?

Where an entity that is classified as a Financial Institution has ‘account holders’ (which definition includes beneficial owners of companies and beneficiaries of trusts) resident or otherwise a Citizen of the United States it will be obliged to transmit data in respect of that person to the tax authorities within its home jurisdiction who will then share that information on an annual basis with the US Internal Revenue Service.

7. What reporting will the US make?

The arrangements are often (but not always) reciprocal, so a US entity that is classified as a Financial Institution that has ‘account holders’ resident in a Country with whom the United States Government has signed such an Agreement to exchange tax account information will be obliged to transmit data in respect of that person to the US Internal Revenue Service, which will then be shared on an annual basis with the tax authorities of the account holder in their jurisdiction of tax residence.

8. What do you mean by a US Person (Resident or Citizen)?

The following are all treated as US persons for tax purposes:

  • US citizens.
  • Individuals resident in the US based on number of days spent there.
  • US green card holders (even if the green card has expired).
  • US created corporations.
  • US created partnerships.
  • US estates and trusts.
  • Virtually everyone born in the US.
  • Those with dual nationality, even if such persons are registered taxpayers in the other, non-US country.
  • Some individuals who were born outside the US but who have at least one US parent.

In practice, this means that banks and trust companies, including JTC Group, will have to carry out a review of the due diligence and information they hold on all their clients in order to identify whether any US indicia exist.

9. I am not a US citizen or resident, so why are you telling me about US FATCA?

Even where it is known that there are no US account holders, an entity that is resident in a Country with whom the United States has signed an agreement to exchange information will have certain obligations depending on its classification. In some cases, this will include a legal obligation to undertake an enhanced file review. There is not an ‘Opt Out’ for this part of the process even if an entity anticipates that it will have nothing to report. During this process we may require additional information and your cooperation is vital even if you are content that you are not a US Person. (See FAQ 16 below for further details).

10. I am not US resident but I am a Citizen or US Green Card Holder so is US FATCA relevant to me?

Yes. US FATCA seeks to capture information about all US Persons, even if they do not ordinarily reside in the United States. You may have certain tax reporting obligations that exist within the United States even where you do not live and work there. You may wish to seek advice surrounding your obligations under US tax reporting, but it would be expected that if you are an account holder of a Financial Institution that you would be reportable under the US FATCA arrangements.

11. I am US resident so what does US FATCA mean to me?

If you are a resident of the United States, and have interests held outside of the United States, if the Country in which those interests are held has signed an agreement to exchange information with the United States, you are defined as an account holder. It is likely that information will be transmitted as to those interests under the US FATCA regime. This will include your personal details and identifying information in order that the US Internal Revenue Service can correctly identify you.

12. Am I an ‘Account Holder’?

In the situation of a bank, the account holders are simply the owners of the bank accounts held with that bank. In the case of entities that are administered the situation is a little more complex, for example:

Type of Entity Account Holders might include
Company The Shareholders (including those for whom shares are held on a nominee arrangement); or holders of certain types of debt interest in the company
Trust The Settlor, some Trustees, Protectors, and certain types of beneficiaries (where there are benefits being provided or the class of beneficiary has a defined right to any part of the capital or income of the Trust)
Partnership The Partners
Fund vehicles Most ‘investors’ in a fund will potentially be seen as an account holder.

 13. What if I am uncertain as to where I am resident for tax purposes?

The rules on Tax Residence are a complex subject, and as US FATCA looks at US Citizenship as well as US tax residence it is quite possible for an individual to be a US Person as well as a tax resident of another jurisdiction. If you are in any doubt as to whether you might be caught by US FATCA, we would advise you to seek personal tax advice as a priority.

14. What information will be reported?

  • The name, address, date of birth and Social Security Number of each individual account holder.
  • In the case of a US owned foreign entity the same details for each substantial US owner.
  • The account number.
  • The account balance or value at each year end.
  • Gross dividends, interest and other income paid or credited to the account in the year.

15. What information do you need from me?

Much of the information that is required to be reported upon should already be held on our records. In certain circumstances, we may require your assistance with accessing information to value certain interests within underlying structures, or simply require you to confirm your tax residencies, Social Security numbers or Tax Identification numbers. Where this is the case, we will write to you directly under separate cover.

16. What if I do not give you this information?

Depending on what information we already hold on you, we may already be in possession of sufficient data to exchange information under the normal reporting format. If there is currently insufficient information for the enhanced file review and you do not respond, or refuse to provide such information upon request, we may thereafter be required to report information on your interests as a ‘non-responder’ to the tax authorities.

17. What if my circumstances change?

As any changes to your personal details might have an impact on what information would be disclosed to the tax authorities, we ask that you notify us in a timely fashion should any of your personal details change.

18. Will you be deducting any amounts from payments that you receive or that you send to me in respect of the entity under US FATCA?

Provided that we are able to fully meet the obligations of the entity under US FATCA, it will not be necessary for us to deduct any withholding from the amounts you receive. If we are unable to comply however, there is the risk that a 30% deduction would be required to be made on payments made under the US FATCA regime. [What about any annual ‘US FATCA admin’ fees?]

19. Will I see what you will report in advance?

JTC will use its best endeavours to provide you with a copy of what is to be reported in advance of its filing so that you are aware of what information we have given and can provide this to your tax advisor. The reporting is a legal obligation based on the records we hold and is not optional.

20. If I move the entity to another jurisdiction is the reporting avoided?

No. We still have to undertake an enhanced file review and if applicable report on the account holders of an entity that we have administered since 1st January 2014. In addition, the United States has entered into Agreements with many jurisdictions across the globe and all such Countries would be making similar exchanges. In instances where a Country has not entered into an Agreement with the Government of the United States, it is likely that they would suffer deductions of 30% of any US source payments.

21. What about the Common Reporting Standard? Does this replace US FATCA?

No. The United States has confirmed that they will continue to exchange data only under the existing US FATCA arrangements, and they have made no commitment thus far to replace or enter into any additional arrangements under the Common Reporting Standard. If you are resident in a jurisdiction other than the United States however, it is possible that you might be subject to reporting under both the US FATCA and the Common Reporting Standard regimes. We have produced a similar guide for the Common Reporting Standard that you may find useful, but we do recommend that you seek advice surrounding your unique personal circumstances and how the various automatic exchange of information regimes might affect you.

22. What if I want further information?

We are always on hand and willing to discuss how we can assist clients in respect of those entities we administer and your usual relationship team will be able to direct any queries internally. JTC Group do not provide tax advice so if your query relates to your personal tax and residency circumstances we recommend you seek third party tax or legal advice and we will be happy to make introductions to potential suppliers of these services if required.


This publication is intended to provide an overview of the subject matter (errors and omissions excepted) and is not comprehensive in nature or to be construed as legal, tax or investment advice. We recommend that clients seek professional advice on any particular matter.

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