We are receiving more and more queries on the new US reporting for foreign entities, FATCA, as banks, insurance bond providers and investment advisers seek to understand the category of their client to ensure that they report things correctly. This is particularly relevant in relation to trusts, whether these are family trusts or trusts simply set up to hold insurance policies.
FATCA is a fairly recent piece of bureaucracy which means that various countries have to collect information to share with the US.
The FATCA rules are extremely complex and use terminology that is specific only to these rules. Unfortunately the rules apply to every entity around the world, regardless of whether there is any connection to the US. In other words a simple family trust in the UK with only UK trustees and beneficiaries will need to be reviewed to ascertain its status.
There may be little reporting required if the entity is a Non-Financial Foreign Entity but the banks, insurance providers and other investment advisers will need to satisfy themselves of this classification before giving any advice or continuing to act. The UK have more simplified reporting requirements, having signed up under the Model 1 Intergovernmental Agreement to exchange information.
We have navigated our way through the complicated rules and are able to provide advice on how to comply with FATCA requirements.
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