FATCA stands for the Foreign Account Tax Compliance Act.
Introduced by the United States Department of Treasury and the US Internal Revenue Service (IRS), the purpose of FATCA is to encourage US taxpayers to comply more effectively with tax rules. In this regard, FATCA requires non-US financial institutions to identify and report US taxpayers annually.
On 28 March 2014, Luxembourg agreed to enter into an Inter-governmental Agreement (IGA) with the US, published on 24 July 2015 (in Mémorial A - No 145 of 29 July 2015 and in Mémorial A – No 158 of 12 August 2015) and which entered into force on 29 July 2015 (Mémorial A – No 156 of 10 August 2015).
In accordance with the requirements of the abovementioned agreement, KBL epb documents all its customers in order to identify its so-called 'US' customers. To do this, KBL epb collects from each direct or indirect customer the appropriate US form (US form W-8BEN / W-8BEN-E / W-8BEN-E / W-8IMY / W-8EXP / W-9) and any other additional documents required.
Based on this identification process, each year KBL epb communicates reportable customers and reportable accounts to the US tax authorities (IRS) via the local tax authorities (Administration des Contributions Directes). This communication includes, for each person reported, information relating to the assets and financial accounts held directly or indirectly.
In addition, KBL epb may be required to report information about customers who are not US persons but who do not provide the required documentation.
Where clients fail to provide the appropriate documentation and/or when doing business with non-compliant entities, KBL epb may be required to apply a 30% US withholding tax on certain types of US income paid to such clients.
KBL epb contacts all its customers in order to collect the appropriate US form.
For the purposes of FATCA, the forms are only to be updated if there is a change in circumstances (change of country of tax residence, change of business, name, beneficial owner, etc.). This update must be made within a period of a maximum of 30 days under the risk of being classed as reportable and subject to higher taxation on income from US sources.
The information reported to the tax authorities will be of a non-financial nature (name, first name, address, date of birth, taxpayer identification number) and of a financial nature (account number, account balance, income paid into the account).
ALL NATURAL PERSONS WHO ARE ACCOUNT OR JOINT ACCOUNT HOLDERS
ALL LEGAL PERSONS WHO ARE ACCOUNT HOLDERS
Please refer to the instructions on the IRS website for more information.
For legal reasons, KBL epb is not authorised to advise you on your tax situation or your FATCA status. In order to avoid the most common errors, we invite you to consult the IRS website or contact a professional tax advisor.