Do you know FATCA?
Foreign Account Tax Compliance Act (hereafter "FATCA") was enacted in 2010 by USA Congress as part of the HIRE Act. The scope of FATCA is to reassure the cross-border compliance of United States persons with their tax duties. The meaning of "United States person" can be found under section 1473, subsection 3 of FATCA and it includes-among other- citizens or residents of USA, partnerships and corporations, incorporated under USA legal framework etc.
It is an act according to which foreign financial institutions (hereafter "FFI") (i.e. banks, custodians, investment funds) and some non-foreign financial entities (hereafter "NFFE")(meaning non-USA entities that are not FFI) have to report on the foreign assets held by their USA account holders. Individuals have also to report on their foreign accounts. Under this scope, the Act provides that if a foreign financial institution does not report on its US account holders, then it will face 30% tax on all its USA income.
Like the majority of OECD countries Belgium and the United States signed an Intergovernmental Agreement (hereafter "IGA") in which the Belgian Federal Financial Authority ("Service Public Federal Finances") has to communicate the information referred in FATCA to the relevant USA authorities, the Internal Revenue Service (hereafter "IRS").
More information about FATCA on the Belgian Authority's website
Is your company concerned about FATCA?
FATCA has an impact on the financial sector, making the work of compliance officers more complicated. Financial institutions have to review their policies and spot the clients which fall under FATCA. They have to change their procedures where is needed in order to be compliant with FATCA requirements and accelerate the reporting process. The entities may have to register with the IRS and be prepared to answer questions coming from their FATCA related clients.
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