What is FATCA?

FATCA (Foreign Account Tax Compliance Act) refers to rules, regulations and provisions included in U.S. laws aimed at addressing perceived tax abuse by U.S. persons through the use of offshore accounts. The new rules and regulations require Foreign Financial Institutions (FFIs) such as USB Bank PLC to provide the U.S. Internal Revenue Service (IRS) with information on U.S. Tax Residents (both individuals and legal entities) who maintain accounts outside of the U.S.

Cyprus and US Intergovernmental Agreement (IGA)

Cyprus and the US have signed an Intergovernmental Agreement (IGA) on December 2nd 2014. This agreement requires USB BANK PLC and other Financial Institutions in Cyprus to determine accounts maintained by U.S. Tax Residents, comply with verification and due diligence procedures and provide annual reporting on these accounts to the Cyprus Tax Authorities who subsequently will provide them to the IRS.

Generally, the IGA Agreement requires each Financial Institution to:

  • Obtain a self certification from customers regarding their U.S. Tax Status;
  • Comply with verification and due diligence procedures with respect to the identification of accounts maintained by U.S. Tax Residents;
  • Report annually information related to these accounts;
  • Report on any account holder that fails or refuses to provide the information required to determine whether an account is maintained by a U.S. Tax Resident.

The IGA also requires each Financial Institution to register with the IRS and USB BANK PLC has registered as a Reporting Financial Institution under a Model 1 IGA, and has been allocated the GIIN:. I8FJ14.00004.ME.196.

Reporting requirements under the Cyprus – US IGA

USB BANK PLC must obtain all the required customer documentation associated with the indicia of U.S. Tax residency status as well as all related account information in order to be able to report accordingly.

Under the IGA, it is required to report starting in 2015, information for U.S. accounts, which includes, amongst others, the following:

  • The name, address and U.S. TIN (Tax Identification Number) or date of birth of each specified U.S. Tax Resident that is an account holder;
  • The account number;
  • The account balance or value as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure.

 

More information can be found on:

Cyprus Tax Department - Automatic Exchange of Information

IRS

IRS Form Title
W-9 Request for Taxpayer Identification Number and Certification
W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding
W-8BEN-E Certificate of Entities Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)