What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) was passed by the government of the United States government on March 18, 2010. FATCA invites Foreign Financial Institutions (FFIs) to identify, report (in some cases) withhold funds from U.S. persons. FATCA comes into effect from July 1, 2014.

Which is the aim of FATCA?

The goal is to detect and prevent tax evasions investments by residents and U.S. citizens. Financial institutions outside the United States have an important incentive to comply with this law, since it’s the only way to avoid a 30% tax on any payment received from an American source to subject to withholding.

Who hits FATCA?

FATCA is a broad regime and can impact any natural or legal, American or foreign, to the extent that the person is involved in making and receiving of payments that fit within the scope of FATCA.

FFIs must comply with FATCA in the following ways:

  1. In countries with Intergovernmental Agreements (IGA) Model 1, the FFIs must meet under the local regulations and report its tax authority, who will exchange information with the Internal Revenue Service (IRS).
  2. In countries with IGA Model 2, the FFIs must comply with local regulations to get into a FATCA agreement with the IRS and report directly to the IRS. The requirements for compliance with this law are set out in the IGA signed by the country.
  3. In countries that have not signed an IGA, the FFIs must enter into agreements with the IRS FATCA and report directly to the agency.

What is the position of BiscayneCapital?

As a leading financial advisory and wealth management firm for individuals and Latin American families with high purchasing power, and a presence in several countries, BiscayneCapital has agreed to participate in FATCA and comply with the requirements and obligations of this law in order to continue providing financial solutions their clients level of excellence.

How FATCA hits Biscayne Capital?

BiscayneCapital has signed an agreement with the IRS under which it should obtain and verify certain information about their customers, and eventually report to the IRS and/or the local authorities. FATCA requires financial institutions to review their existing processes and client acceptance and retention processes that adjust for this law to the extent applicable.

When does FATCA withholding being?

FATCA withholding from American sourced income such as interests, dividends, premiums and annuities begins on July 1, 2014. Withholding on gross income from the sale or redemption of assets that generate dividends or interest starts as of January 1, 2017. Additionally, deductions on payments over foreigners do not being before January 1, 2017. It should be noted that the deductions will be made only from American customers whom do not supply the required fiscal documentation and who do not participate.

What does this mean for customers?

According to the provisions of the IRS, FATCA will take effect on July 1, 2014. This requires Biscayne Capital to determine the status of new clients as of the date before accepting them as clients. BiscayneCapital will ask existing customers to supply information to document their FATCA status in the coming months.

Account reporting of U.S. Persons to the IRS is scheduled to begin in March of 2015. Please contact your tax advisor if you have specific questions in regards to American taxes or visit www.irs.gov for more information.