FATCA stands for Foreign Account Tax Compliance Act and it is an agreement between the US and Ireland. It obliges Financial Institutions in Ireland to identify and potentially report US persons, with whom the Financial Institution has a relationship, to the US Internal Revenue Service (IRS) as these US Persons may be obliged to pay tax in the US. The Irish Government has signed an Inter-Governmental Agreement (IGA) with the US Government to participate in the initiative. The US Government has a similar agreement with many other countries including the UK to participate in FATCA.
Since 1st July, Financial institutions in Ireland are required as a matter of Irish law to seek answers to certain questions the for purpose of identifying those accounts which must be reported to Irish Revenue for onward transmission to the US IRS in connection with the FATCA.
Customers must answer specific questions in order for them to comply with FATCA Regulations and ensure the accurate reporting of accounts. These questions vary depending on whether the customer is an individual, a limited company or a trust. FATCA applies to any US Person who is a customer of a Financial Institution in Ireland who has US indicators on their profile or account such as being a U.S. citizen or resident.
A US Person is:
- Any individual admitted for permanent residence in the United States
- Any Corporation, Partnership or other Organisation organised under the laws of the United States.
The legislation issued by the IRS and Irish Revenue determines that every customer should answer two self-certification questions when opening a bank, investment, savings or investment account with any financial institution.
Any customer who has been identified as a US Citizen or US Tax Resident with an aggregated balance of $50,000 (Euro equivalent) across all their accounts on 31st of December each year will be reportable under FATCA. Once the Financial Institution has submitted the report their responsibility is fulfilled and no further action is required.