You are on: What is FATCA?
FATCA rationale
The objective of this legislation is to identify U.S. persons who may evade U.S. taxes by investing through foreign (non-U.S.) accounts -- either directly, or indirectly through foreign entities such as corporations and trusts.
Who or what is a U.S. person for FATCA purposes?
- A citizen of the U.S. (including an individual born in the U.S. but resident in another country, who has not renounced U.S. citizenship);
- A lawful resident of the U.S. (including a U.S. green card holder);
- A person residing in the U.S.
- A person who spends a certain number of days in the U.S. each year. (For example, some Canadian “snowbirds” may be considered U.S. persons. However, the Canada-U.S. tax treaty allows them to claim benefits to be treated as Canadian rather than U.S. taxpayers. Similar relief is provided under many other treaties with the U.S.)
- U.S. corporations, estates and trusts.
FATCA fundamentals
In its original form, FATCA would have required foreign (non-U.S.) financial institutions (FFIs) to either:
- enter into agreements with the IRS and report information about financial accounts held by U.S. taxpayers -- or held by foreign entities in which U.S. taxpayers hold an ownership interest -- directly to the IRS, or
- face punitive U.S. withholding tax on U.S.-source payments.
To address privacy and regulatory concerns related to FATCA, many countries are negotiating intergovernmental agreements (IGAs) with the U.S. These IGA "partner countries" will enter into one of two standard model agreements, and implement laws to require financial institutions to collect and report information required by FATCA.
FFIs will comply with FATCA in one of three ways:
1) In countries without an IGA, FFIs will enter into agreements with, and report directly to the IRS;
2) In countries with a Model 1 IGA, FFIs will comply under local legislation and report to their local tax authority; in turn, the local tax authority will exchange information with the IRS;
3) In countries with a Model 2 IGA, FFIs will comply with local legislation to enter into agreements with, and report directly to, the IRS.
On January 17th, 2013, the U.S. Treasury and Internal Revenue Service
released final FATCA regulations. These define the detailed requirements
for U.S. financial institutions, and for foreign (non-U.S.) financial
institutions that will enter into agreements directly with the IRS.
Foreign financial institutions in countries entering into IGAs with
the U.S. will still require their local governments to release local
legislation and guidance before they can fully finalize their requirements.
When the final regulations were released, the U.K., Mexico, Denmark,
Ireland, Switzerland, Spain and Norway had signed or initialled IGAs.
The U.S. Treasury indicated it was engaged with more than 50 countries
and jurisdictions globally to complete agreements.
RBC is carefully analyzing the final regulations and IGAs and moving
towards compliance globally starting in Jan. 2014. RBC will continue
to update its FATCA information for clients as details are known.
It's expected that most major countries around the world will negotiate
an IGA with the U.S. by the end of 2013 – and that most of those
agreements will be the Model 1 version.
U.S. financial institutions are automatically required to comply with FATCA.
Virtually every financial institution in the world will be affected by FATCA requirements.
Note: the term "U.S. Reportable Account" used in the FAQs describes an account owned by a U.S. individual (person), U.S. entity, or a non-U.S. entity that has U.S. owners -- regardless of the currency of the account itself.
You are on: RBC's Approach
Context
RBC understands the objectives of the FATCA legislation and the U.S. government's concerns about tax evasion.
Action
RBC is working with industry associations, governments and regulators to carefully analyze and make recommendations related to emerging FATCA requirements, and move towards compliance starting in 2014.
Client Focus
RBC earns the right to be our clients' first choice. We take our clients' privacy seriously and comply with privacy rules in all jurisdictions. We are carefully reviewing FATCA regulations and intergovernmental agreements (IGAs) to minimize the impact of new rules on client service and privacy.
You are on: The Road Ahead
Phase 1 – 2014
The first phase affects new clients of all U.S. and non-U.S. financial institutions and includes new account opening procedures to identify U.S. Reportable Accounts.
Phase 2 – 2014–2015
The second phase affects existing clients and is expected to be completed during 2014 and 2015. This phase includes the identification and reporting of U.S. Reportable Accounts, and withholding procedures.
Vous êtes sur : FAQ
General FAQs
What is FATCA?
FATCA is the Foreign Account Tax Compliance Act. It aims to identify U.S. persons who may evade U.S. taxes by investing through foreign (non-U.S.) accounts -- either directly or indirectly through foreign entities such as corporations and trusts. FATCA is part of the HIRE Act, signed into law on March 18th, 2010 by President Obama. Final FATCA regulations were released in January 2013.
What is the impact of FATCA?
Financial institutions will be required to identify and report financial accounts held by U.S. taxpayers, or held by certain foreign entities in which U.S. taxpayers hold an interest.
Foreign Financial Institutions (FFIs) will comply with FATCA in one of three ways:
1) In countries without an intergovernmental agreement (IGA), FFIs will enter into agreements with, and report directly to the IRS;
2) In countries with a Model 1 IGA, FFIs will comply under local legislation and report to their local tax authorities; in turn, the local tax authority will exchange information with the IRS;
3) In countries with a Model 2 IGA, FFIs will comply with local legislation to enter into agreements with, and report directly to, the IRS.
Virtually every financial institution in the world will be affected, unless qualifying for an exemption.
FATCA Regulations: RBC is reviewing the draft legislation and its implications for RBC and our clients. The detailed requirements were finalized by the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) in January 2013.
Intergovernmental Agreements (IGAs): RBC is also monitoring draft and signed IGAs. Under one of two IGA models, information about U.S. Reportable Accounts will be provided to the local tax authority (e.g. Canada Revenue Agency) rather than directly to the IRS. Under the second model, FFIs would still report directly to the IRS. In November 2012, the United States Treasury announced it was discussing IGAs with approximately 50 countries and jurisdictions world-wide. At the end of November 2012, the U.K., Mexico and Denmark had concluded IGAs with the U.S.
What are the consequences to a Foreign Financial Institution of not complying with FATCA?
- In non-IGA countries, a 30% U.S. withholding tax will be deducted from U.S.-source payments (and potentially non-U.S. source payments in future) received by foreign financial institutions (FFIs) if they do not enter into FFI Agreements with the IRS. This includes payments received by FFIs either on their own account or on account of their clients.
- In countries with IGAs, FFIs will be required under local legislation to comply.
When will FATCA apply?
The first phase – affecting new clients of financial institutions and including new account opening procedures – takes effect January 1, 2014. This includes new clients of:
-
U.S. financial institutions
- FFIs that are not in IGA jurisdictions
- FFIs that are in IGA jurisdictions.
RBC businesses outside the U.S. and not in IGA jurisdictions would finalize agreements with the IRS by Jan. 1, 2014.
The second phase, affecting existing clients, will be completed during 2014 and 2015. This phase includes the identification and reporting of U.S. Reportable Accounts, and withholding procedures.
Will RBC comply with FATCA?
RBC is working through the Canadian Bankers’ Association, other industry organizations and local governments to share issues and concerns with the U.S. Treasury and the IRS. This effort is aimed to reduce the implementation and ongoing compliance burden of FATCA and to move towards compliance beginning in January 2014. RBC’s internal FATCA Program team is mobilizing people, processes and technology across the enterprise to meet FATCA requirements. We will provide further information to our impacted clients once the detailed rules and regulations are released.
Does RBC agree with FATCA?
We understand the objectives of the legislation and the U.S. government's concerns about tax evasion. We are moving towards compliance with FATCA and monitoring the overall impact of this legislation and IGAs, particularly with respect to minimizing its impact on client service, privacy and costs. We are committed to earning the right to be our clients’ first choice.
Client FAQs
What is a U.S. person?
Under U.S. tax law, you are considered a U.S. person if you are:
- A citizen of the U.S. (including an individual born in the U.S. but resident in another country, who has not renounced U.S. citizenship);
- A lawful resident of the U.S. (including a U.S. green card holder);
- A person who resides in the U.S.
You also may be considered a U.S. person if you spend a certain number of days each year in the U.S. On this basis, some Canadian “snowbirds” may be considered U.S. persons. However, the Canada-U.S. tax treaty allows them to claim benefits to be treated as Canadian rather than U.S. taxpayers. Other treaties with the U.S. provide similar relief. If you are unsure of your U.S. tax status, contact your tax advisor.
U.S. corporations, estates and trusts are also considered U.S. persons.
For more information about U.S. persons and their U.S. tax obligations, visit the IRS Website at:
http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA) 
http://www.irs.gov/businesses/small/international/index.html
I am not a U.S. person. What does FATCA mean for me?
In most cases, FATCA should have little
impact. If you have an existing account and there is an indication
that you may be a U.S. person, or if you are opening a new account,
RBC may ask you to provide additional information or documentation
to demonstrate that you are not a U.S. person.
I am a U.S. person. What does FATCA mean for me?
If you are a U.S. person, you may be asked to complete IRS Form W-9 (Request for Taxpayer Identification Number and Certification) which will be kept on file at RBC. Information about you and your account will be reported to the IRS or your local tax authority on an annual basis. If you have complied with all of your U.S. reporting obligations, reporting by RBC should not result in any increased U.S. tax liability, but you should discuss your personal tax situation with your tax advisor.
If you do not complete IRS Form W-9, depending
on which country your account is in, a tax of 30% may be withheld
on U.S.-source payments (and potentially non-U.S. source payments
in future) that you receive – or details about you and your
account may be reported to the local tax authority.
U.S.-source payments include such items as interest, dividends, and gross proceeds on the sale or maturity of U.S. securities.
I am a U.S. citizen but have not lived in the U.S. for years and do not pay U.S. taxes. Why does this apply to me?
A U.S. citizen who lives outside the U.S. falls within the definition of a U.S. person for U.S. tax purposes, and must file U.S. tax returns. U.S. taxpayers may also have other U.S. reporting obligations. Foreign (non-U.S.) financial institutions will be required to identify the accounts of U.S. persons and report them to the IRS or their local tax authority annually. It is important that you consult with a tax advisor to understand your U.S. reporting obligations.
How will FATCA change RBC’s interaction with its clients?
At a high level, RBC will be required to address FATCA requirements for account identification and documentation, withholding and reporting. Some new processes are still being determined and will vary for each business. RBC will ensure FATCA procedures are clear.
Does FATCA apply to life insurance policies?
Yes, FATCA applies to all types of financial accounts, including life insurance policies with a cash value and annuity contracts.
Where can I find FATCA information provided by the IRS?
Does FATCA comply with privacy legislation?
RBC takes our clients' privacy seriously and complies with privacy rules in all jurisdictions. We are carefully reviewing FATCA regulations as well as intergovernmental agreements to assess their implications for privacy. RBC earns the right to be our clients’ first choice.
What information is RBC required to report about its U.S Reportable Accounts?
For the 2013 and 2014 calendar years (reported in 2015):
- Name, address, and U.S. Taxpayer Identification Number (TIN) of the U.S. person. Or, in the case of a U.S.-owned foreign entity, the name, address and TIN (if any) of the entity, and the name, address and TIN of each substantial U.S. owner
- Account number
- Account balance or value at the end of the year (or immediately prior to account closure).
Are other financial institutions complying with FATCA?
Most major financial institutions around the world are impacted by FATCA. RBC speaks for its businesses and does not comment on steps other institutions are taking.
I am a client of more than one RBC business. Will RBC businesses share my FATCA-related information and documentation?
Each RBC business will need to undertake due diligence with its clients in respect of FATCA. RBC businesses will each maintain client FATCA documentation and, accordingly, you may be contacted separately regarding FATCA by each RBC business with which you have an account. We appreciate your patience.
What authority does RBC have to provide my account information to my local tax authority or directly to the IRS?
RBC will only disclose account information where you’ve provided your consent or where required by law, such as disclosure for tax purposes to the local tax authority (e.g. Canada Revenue Agency).
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