Foreign Account Tax Compliance Act (FATCA)

The FATCA (Foreign Account Tax Compliance Act) is a unilateral US tax law aiming to identify all income and assets held directly or indirectly by US persons with banks and other financial institutions that are not domiciled in the US as well as their disclosure to the US Internal Revenue Service (IRS). The current FATCA agreement in force between Switzerland and the US follows Model 2. The Federal Council approved a mandate to negotiate a change to Model 1 in October 2014. In contrast to Model 2, information is not provided directly to the US tax authorities by the financial institution, but the financial institution submits its report to the Swiss Federal Tax Administration from where it is passed on to the US tax authorities.

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  • 2 Consultation period 03/13-03/13
  • 3 Result of consultation 04/13-05/14
  • 7 Enactment / transitional period 06/14-07/14
  • 8 Application of the rule of law 07/14-12/99
Status
The FATCA came into force on 1 July 2014.

KPMG View

Under the FATCA, Swiss and other non-US financial institutions have to comply with far-reaching documentation, tax and reporting obligations. Swiss financial institutions must in particular carry out a periodic review of their FATCA compliance program and confirm their compliance with the FATCA regulations to the IRS. Other companies outside of the financial industry also have cooperation obligations, such as having to confirm their FATCA status to financial institutions and to disclose the identity of any US persons who own a substantial share of the company.

Further information


1 Comment

  1. Simon C

    Thanks for sharing Jason and I think you are the first person to go to the trouble of listing a simple yet practical timeline of FATCA’s implementation. I have recently discovered that there are a number of countries that have remained FATCA recalcitrant in an article by an British Economist in Adelaide Australia named Dan Hadley https://www.nestegg.com.au/investment-insights/11963-f-a-t-c-a-the-all-stick-and-no-carrot-approach-to-u-s-taxation-reporting

    Found this to be very enlightening and opened up the question of non US citizen privacy breaches.

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