Further to our previous blog on FATCA wherein we observed the postponement of the implementation dates for FATCA, the regime has now been implemented since July 2014.
Jurisdictions across the world are producing local legislation and guidance in order to implement FATCA on their home soil.On 27 June 2014, Ireland implemented the Financial Accounts Reporting (United States of America) Regulations 2014 which sets out the reporting and due diligence obligations on reporting Financial Institutions (“reporting FIs”). The current draft Revenue “Guidance Notes on the Implementation of FATCA in Ireland” is dated January 2014 and it is anticipated that a new draft will issue very shortly. The Regulations and the Guidance Notes incorporate additional aspects of FATCA which had not been yet introduced by the US back when Ireland signed its Inter-Governmental Agreement (“IGA”) on 21 December 2012.
On 1 September 2013 the UK implemented the International Tax Compliance (United States of America) Regulations 2013 which were subsequently replaced by the International Tax Compliance (United States of America) Regulations 2014, implemented on 30 June 2014. These regulations prescribe the reporting and due diligence requirements. HMRC’s most recent update to their Guidance Notes was on 28 February 2014.
First Steps In Complying With FATCA
Entities across the jurisdictions are busy working on their FATCA implementation policies and deciding on the FATCA classification status of their entities.
The first step in complying with FATCA is to register with the IRS and obtain a Global Intermediary Identification Number (“GIIN”) which must be obtained before 1 January 2015. After this date, all reporting FIs will need to provide their GIIN in its dealings with other FIs.
In order to have obtained a GIIN and be in compliance by 31 December 2014, the last practical date for registration is 25 October 2014 and accordingly it is recommended that all UK and Irish FIs make their application to the IRS for a GIIN before this date.
Due Diligence & Reporting
Since 1 July 2014 all FIs need to assess their accounts in accordance with FATCA and the local regulations. The local regulations together with Annex 1 of the IGAs set out detailed due diligence requirements which detail the checks required depending on the nature and size of an account.
Once reportable accounts are identified, FIs need to prepare to report on them to the local revenue. The local regulations and the IGAs set out the reporting requirements.
Dealing With Other Financial Institutions
One significant impact of FATCA is that the majority of banks, being FIs themselves, will now seek each account holder to classify its status for FATCA. This means that not only do potential FIs need to be aware of their obligations under FATCA but all entities and individuals need to understand where they fit in under FATCA and must be in a position to self certify their status. Many banks are submitting classification guidelines which are helpful.
The practical impact of FATCA is yet to be understood however it is clear that its affect will be widespread.