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Trustee obligations under FATCA
The Foreign Account Tax Compliance Act (FATCA) imposes mandatory reporting obligations on foreign financial institutions and certain non-financial foreign entities. Taxand Ireland takes a look at the wider implications for trustees of private trusts in Ireland.
The main aim of the regulatory regime is to combat tax evasion by US citizens through the use of foreign accounts but it also has wide implications for trustees of private trusts in Ireland. Trustees resident in Ireland may have obligations under FATCA even where there is no US settlor, no US assets, no US trustees and no US beneficiaries. However, Trustees resident in Ireland will have the benefit of coming within the Ireland / US Intergovernmental Agreement which provides for the automatic reporting and exchange of information in relation to accounts held in Irish financial institutions by US persons.
Failure to comply with FATCA will result in a 30% withholding tax penalty being applied on certain sources of investment income beginning on a specified date now extended to 1 January 2015 where foreign financial institutions can demonstrate they are making reasonable efforts to comply.
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