FATCA (Foreign Account Tax Compliance Act) is a US regulation aiming to fight tax avoidance by US taxpayers who hold financial assets outside of the United States.
Since July 1, 2014 FATCA has been requiring financial institutions to:
- identify their customers who are US taxpayers and all legal entities whose capital or voting rights are more than ten per cent (10%) held directly or indirectly by persons who are US taxpayers, and
- inform the US Internal Revenue Service (IRS) of their assets held (2014), their income received (2015), and their transactions (2017).
Otherwise, they will be subject to a 30% withholding tax for all financial flows from a US source or from the US that they receive on their behalf or on behalf of their customers. These deductions will take place starting 1 July 2014 for income and starting 1 January 2017 for asset disposals.
The FATCA regulation was originally a unilateral scheme of the United States.
The signing of intergovernmental agreements between the United States and various countries that impose reciprocity of exchanges changes the regulation to a multilateral initiative of automatic exchange of tax information. These agreements (IGA) provide a legal framework to financial institutions for applying FATCA in their country. The United Kingdom, Germany, Japan, and Switzerland have already signed an agreement with the United States.
You can check the list of signatory countries of a governmental agreement on the Treasury website.
The position of Natixis
Natixis has decided to comply with the FATCA regulation in all countries where it is established and for all activities concerned, provided that such an application complies with the applicable local legislation. Natixis’ entities affected by the regulation registered with the IRS in order to appear on the lists of compliant institutions disclosed by the IRS.
Natixis has the Model Reporting FI status and the following GIIN: XGE71W.00107.ME.250.
What is the consequence for our customers?
Since July 1, 2014 Natixis has been establishing procedures to identify its US customers. During tax year 2015, it will directly or indirectly send the identity of its US customers as well as the balance of their accounts as at 31/12/2014 to the Internal Revenue Service. Additional information about income then the overall amount of disposals of securities will be gradually added to the declarations in subsequent years.
If there are indications that customers are US taxpayers (address, phone number, birth place, nationality, permanent transfer of funds to the US, power of attorney to a person with indications of being a US taxpayer), they will be contacted in order to complete their record and validate their FATCA status (US taxpayer or not).
Similarly, businesses or companies that fall within the scope of the regulation will be contacted in order to send all documents necessary for the proper application of the regulation. These will primarily be companies that are not listed and do not have an industrial or commercial activity. They must indicate whether they have a significant shareholder who is a US taxpayer.
Financial institutions or financial counterparties to our transactions - located in a country that has not signed an intergovernmental agreement - will be asked to confirm their compliance with the FATCA regulation. If they fail to respond, the financial institutions will be subject to a FATCA withholding tax of 30% on flows from a US source.
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