The Foreign Account Tax Compliance Act (FATCA) is a legislation that requires U.S. citizens to file annual reports on any foreign account holdings they have. The FATCA was signed into U.S. Law on 18 March 2010, as part of the U.S. Hiring Incentives to Restore Employment (HIRE) Act, which is developed to promote transparency in the global financial services sector.
The main purpose of FATCA is to stop tax evasion and to ensure that the Internal Revenue Service (IRS) can identify and collect the proper amount of tax from all U.S. citizens.
FATCA created new information reporting and withholding for payments made to specific foreign financial institutions (FFIs) and foreign entities. This program is developed to make it easier for the US government, particularly the IRS, to keep track of US citizens and businesses who are earning income from investments or deposits in foreign bank accounts.
FATCA requires all FFIs to register with the IRS, perform due diligence to identify U.S. accounts and report client data to the IRS or their local government through an Intergovernmental Agreement (IGA).
In addition to individual reporting requirements, FFIs are required to report on the assets of their American clients to avoid a 30% withholding on payments from U.S. paying agents or other FFIs.
Like other hundred countries, Luxembourg implemented FATCA into force on 7-29-2015.
FATCA reporting doesn’t have to be difficult, so if you know you need to file FATCA, please communicate this information to us : firstname.lastname@example.org. We may also provide you fast and high-quality services to assist you with FATCA compliance.