FATCA technical aspects

Please find hereafter some details about the technical aspects of this regulation, like due diligence procedure, reporting requirements, withholding requirements, affiliated group requirement, and the “FATCA five”.


The U.S. Treasury Department and the Internal Revenue Service (IRS) have released proposed regulations on FATCA.

FATCA, which became law in 2010, requires foreign financial institutions to provide detailed information about U.S. account holders to the IRS. The law is effective on January 1, 2013.

On February 8, 2012, the U.S. Treasury Department and the IRS released proposed regulations and the top financial services executives should likely consider the takeaways from these regulations. 

FATCA due diligence procedure

The proposed rules regarding classification and action on pre-existing accounts are a significant departure from the guidance contained in the prior notices and include changes that should reduce the affected customer population and streamline the remediation process.

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FATCA reporting requirements

The proposed rules give FFIs additional time to make adjustments to their systems for reporting US income. These reporting requirements will be phased in gradually between 2014 and 2017.

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FATCA affiliated group requirement

These rules would add a transition period (until 1 January 2016) to the expanded affiliated group requirement to comply with FATCA if certain branches or entities within the group are unable to fully comply with FATCA (e.g., limited branches and limited FFIs).

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The “FATCA five”

The US has signed an agreement with five European governments to help combat tax evasion. France, Germany, Italy, Spain, and the United Kingdom said they would jointly develop a framework to collect and send information about offshore accounts held by Americans from their FFIs to the IRS.

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