Intergovernmental Agreements (FATCA)
Mon 16 February 2015
The Bailiwick of Guernsey is signed up to a number of international agreements and conventions.
The Foreign Account Tax Compliance Act (“FATCA”) is a US law aimed at foreign financial institutions (“FFIs”) i.e. Richmond Fiduciary Group Limited and joint licensees (“Richmond”) and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts, which was signed into US law on 18 March 2010.
FATCA will have a far-reaching impact on US-based companies as well as foreign companies with US assets or clients. Under the new provisions, a FFI may enter into an agreement with the US Internal Revenue Service (“IRS”) requiring it, among other things, to report information on the FFIs US accounts. A FFI that enters into such an agreement becomes a “participating FFI.”
If a FFI does not enter into an agreement with the IRS, all relevant US-sourced payments, such as dividends and interest paid by US corporations, will be subject to a 30% withholding tax. The same 30% withholding tax will also apply to gross sale proceeds from the sale of relevant US property.
Prior to 1 January 2015, Richmond registered with the IRS as a compliant FFI.
In June 2015 we have a duty to begin reporting to our relevant competent authority namely the States of Guernsey Income Tax Authority.
Download Richmond’s FATCA US Specified Persons Guidance Note here
Further updates will be provided.