What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is legislation enacted in March 2010 by the US Government, implemented on 1st January 2013.
The Foreign Account Tax Compliance Act, commonly abbreviated as FATCA, requires US residents living in foreign shores to file yearly reports on their assets from their non-US financial accounts.
The purpose of FATCA is to stop American citizens from evading US tax by using foreign subsidiaries to invest in the US through foreign accounts. FATCA imposes a 30% withholding tax on foreign entities that refuse to disclose the identities of their US clients.
Payments subject to a 30% withholding tax include payments sources from the US such as interest, dividends, rents, salaries, premiums, annuities and any other gross proceeds which could produce interest or dividends from sources within the US.
Foreign banks and other financial institutions, including foreign insurance companies, must therefore provide the evidence to verify US status within a time limit. Failure to provide evidence within the agreed timescale, or if the individual fails to disclose assets in full in their annual tax returns to the IRS, the foreign financial institution must treat their account as a recalcitrant account and must withhold all US source income and payments from them and will also be subject to 30% withholding tax.
What can you do?
As part of deVere Group, one of the world’s leading independent financial advisory organisations, deVere Switzerland offers a range of services that can help alleviate the effects of FATCA, allowing you to get on with your new life.
We offer Americans living in Switzerland alternative ways to invest their money that could potentially give them attractive tax advantages, whilst remaining in-line with US laws and regulations.
For more information, contact one of our experts today at deVere Switzerland!