The following Banking & Finance guidance note Produced in partnership with RPC provides comprehensive and up to date legal information covering:
The Foreign Account Tax Compliance Act (FATCA) is a piece of US tax legislation enacted by President Obama in 2010. FATCA's primary aim is to help the Internal Revenue Service (IRS) gather information on US taxpayers with investments outside of the US.
The primary FATCA legislation as originally enacted applies to many types of non-US financial institutions, including banks but also certain insurance companies and funds, and also has extreme extra-territorial effect. As a result it has since 2010 provoked much discussion, confusion and even anger from those likely to be affected. Partly in response to this, a number of countries (including the UK) have reached agreement with the US as to how FATCA is enforced/implemented locally.
In this Practice Note we consider only how FATCA might be of relevance to banking lawyers, with a particular focus on loan agreements. We do not look in any detail at the complex registration, due diligence, and information reporting aspects of the FATCA rules. For further information on FATCA in general, see Practice Note: US: Foreign Account Tax Compliance Act (FATCA)—summary.
First, however, we look briefly at how FATCA works and which financial institutions are within its scope. Due to the complexity of the FATCA rules only a high-level overview is provided.
FATCA is mainly
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