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FATCA 

The U.S. government intends to combat tax evasion from the United States more intensively. FATCA, which stands for Foreign Account Compliance Tax Act, is aimed at flushing out US tax evaders worldwide. The new provision, enacted into law on March 18, 2010 by President Obama, introduces a 30% withholding tax on any withholdable payment made to a foreign financial institution (FFI), unless such entity complies with specified reporting or certification requirements or qualifies for an exemption.

FATCA withholding is effective for US payments (any payment of U.S. source income: e.g. dividends, interest and any gross proceeds from the sale or disposition of a security) made after 2014/2015. The 30% withholding is not imposed for purposes of collecting withholding taxes but rather, to ensure that FFIs and other foreign entities disclose information about their U.S. account holders and owners. Therefore, beginning on 1 July 2013, foreign entities (and their common control affiliates) must either:

 

  • identify and report to the IRS information about direct and indirect US account holders; or
  • pay a 30% withholding tax on all US investment income and gross sale proceeds from U.S. stocks and securities.

 

The term FFI may include banks, brokers, insurance and reinsurance companies and investment funds, including private equity funds, hedge funds and real estate funds, as well as certain professionals of the financial sector (PFS).

 

How FATCA affects your business

This new reporting and withholding regime presents significant challenges for FFIs in identifying US accounts and subsequently identifying and evaluating relevant payments for compliance.

How we can help

Complying with the FATCA rules will not only be a major compliance task to fulfill due to extended information reporting but will also influence your business strategy and the markets you serve.

     

    The impact on the FFI is not negligible and requires assistance of specialists.

     

  • Development of Implementation Plans : assistance in developing realistic, pragmatic, plans by utilizing our experience gained in other projects of similar scope and our deep understanding of the technical requirements.
  • Payment Mapping Analysis : assistance with conducting a mapping exercise to determine where your business is impacted and the nature of accounts to which payments are made.
  • Anti-Money Laundering (AML)/Know Your Client (KYC) Reviews : performing a review of the procedures in place for AML/KYC purposes to ascertain whether these will also be sufficient to ensure compliance with FATCA requirements.  We can also assist by developing new account opening procedures to facilitate FATCA compliance and provide training for staff responsible for these processes.
  • Systems Analysis : identify the extent of current capabilities and where new functionality or data records will be needed.  We can also assist in developing or reviewing specification documents and, to the extent we are permitted from a regulatory perspective, to implement and test new functionality.
  • FATCA Help Desk : help desk services that enable staff specified by clients to call with any technical questions related to FATCA.

     

     Consult our FATCA Workshop brochure.pdf (250 KB)

     

      

    Get in touch with KPMG

    Contact

    Tax

    Georges Bock

    Managing Partner

    Tel. +352 22 51 51 - 5522

    georges.bock@kpmg.lu

     

    Gérard Laures

    Partner

    Tel. +352 22 51 51 - 5549

    gerard.laures@kpmg.lu

     

    Claude Poncelet

    Partner

    Tel. +352 22 51 51 - 5567

    claude.poncelet@kpmg.lu

     

    Frank Stoltz

    Partner

    Tel. +352 22 51 51 - 5520

    frank.stoltz@kpmg.lu

     

    Advisory

    Vincent Koller

    Partner

    Tel. +352 22 51 51 - 7922

    vincent.koller@kpmg.lu

     

    Jean-Pascal Nepper

    Partner

    Tel. +352 22 51 51 - 7973

    jean-pascal.nepper@kpmg.lu

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