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FATCA: Due diligence and reporting 2016

Deloitte Malta Tax Alert

Due diligence

An agreement, between the Government of the Republic of Malta and the Government of the United States of America, to Improve International Tax Compliance and to Implement the Foreign Account Tax Compliance Act (the ‘IGA’), was signed on 17 December 2013 and requires that all accounts held by Malta financial institutions are to be reviewed, in accordance with the due diligence procedures listed in Annex 1 (of the agreement).

The review of pre-existing accounts (that are maintained as of 30 June 2014, in case of an individual account holder; or that were in existence before 1 January 2015, in case of an entity account holder), must be completed by no later than 30 June 2016 for:

  • Individual accounts with a balance or value that exceeded USD 50,000, but that did not exceed USD 1,000,000 as of 30 June 2014;
  • Individual accounts with a balance or value that did not exceed USD 1,000,000 by 30 June 2014, but that exceeded USD 1,000,000 by 31 December 2015;
  • Entity accounts with a balance or value that exceeded USD 250,000 by 31 December 2014; and
  • Entity accounts with a balance or value that did not exceed USD 1,000,000 by 31 December 2014, but that exceeded USD 1,000,000 by 31 December 2015

Information to be reported

The IGA also contemplates transitional provisions, which gradually extend the scope of the reporting obligations of Malta financial institutions. In respect of information from 2015, which is to be reported to the Malta Inland Revenue Department (the ‘IRD’) by no later than 30 April 2016, and in addition to information obtained and exchanged in respect of 2014, this shall include:

  • In relation to Custodial Accounts – the total gross amount of interest, dividends and other income, paid or credited to the account;
  • In relation to Depository Accounts – the total amount of gross interest paid or credited to the account, in the calendar year or other reporting period;
  • In relation to Other Accounts – the total gross amount paid or credited to the account, including the aggregate amount of any redemption payments made to the account holder, during the calendar year or other appropriate reporting period.

Please note that pre-existing accounts, which are identified as reportable, are only reportable from the year in which they are identified as such.
 

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