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News – 08.01.24
US Supreme Court clarifies Foreign Bank Account Report (FBAR) penalty application
In 2023, the Supreme Court confirmed that the $10,000 penalty for non-wilful failure to file an FBAR will apply per form and not per account … Read more
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2024/25 UK tax rates and allowances guide
Download our 2024/25 UK tax rates and allowances guide, to stay on top of the key tax rates and allowance updates amid day-to-day living. … Read more
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AEOI facilitates the transfer of information relating to income generating assets between the tax authorities of the jurisdictions that might have a tax claim in relation to those assets.
FATCA facilitates the exchange of information relating to US persons between the IRS and the financial institutions of participating jurisdictions. All major jurisdictions have signed up to this regime in one form or another, and it is designed to assist the IRS in tracking down Americans who live outside the US or who own assets outside the US, to ensure they are tax compliant.
Under this regime, financial institutions outside of the US are required to transfer details of each account that is owned by a US person to the IRS, including the highest balance on the account in each year and the income and gains generated by the account. The IRS is then able to compare the information they have received from the overseas financial institutions with the information reports that should have been filed by the account holders.
Where the relevant FATCA form is incomplete or has not been filed, there is a risk that the IRS will open an investigation and the penalty exposure could be very high. As a result, if you’re a US citizen or Green Card holder and you are not compliant with your US reporting obligations, you are at risk of heavy fines, or even imprisonment, if you are discovered.
This regime is very similar to FATCA but it serves other jurisdictions outside the US, helping them to find residents who have assets overseas.
We support individuals and businesses by identifying what steps they need to take in order to comply with the Automatic Exchange of Information regimes.
Our advice will ensure that the right information reporting forms are filed in a timely fashion and the right declarations are made to the financial institutions you have accounts with.
For financial institutions, we can advise on their status under these rules. However, the definition of a financial institution under both regimes is widely drawn. As well as the obvious multinational banks and investment houses, it also includes many privately owned investment companies and trusts that have been set up for tax planning or other financial planning purposes.
Our first step is identifying how the entity is classified for FATCA/CRS purposes. Then, if there is a requirement to register with the relevant tax authorities, we can assist with the registration. There may then be a due diligence obligation in respect of account holders or beneficial owners of the financial institution and, if there are accounts that need to be reported, there will be an annual filing requirement.
Most participating jurisdictions have implemented a penalty regime for financial institutions that do not comply with their obligations under FATCA and CRS so compliance is essential. Whatever the circumstances, we can help you to navigate your way through these complex requirements.
For more information on the above or to speak to one of our tax experts about your requirements, please fill out the form below and we’ll contact you shortly.
