U.S. Foreign Account Tax Compliance Act (FATCA). Important Information for our clients.
FATCA is legislation from the United States enacted since 2010 and that will become effective during 2014. It is intended to prevent “U.S. Persons” from evading U.S. Tax obligations using financial accounts held outside of the United States, by requiring Foreign Financial Institutions (FFIs) to provide to the IRS with information on certain US Persons and foreign entities owned by USPersons. This law will have an extraterritorial reach through intergovernmental agreements, like the one signed by Costa Rica back in November, 2013.
FFIs that do not comply with FATCA requirements will be subject to a 30% withholding penalty on all payments arising from:
• US source income (such as interest and dividend payments).
• sales and redemption proceeds from certain US securities.
• so-called foreign passthru payments, amongst others.
According to U.S. Tax law, a U.S. person is:
• 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 lawfulresident of the U.S. (including a U.S. green card holder);
• A person residing in the U.S.
• You also may be considered a U.S. Person if you spend a considerable amount of time in the U.S. on a yearly basis.
• U.S. corporations, estates and trusts are also considered U.S. persons.
• Any other Person subject to U.S. income tax obligations.
At Banco de Costa Rica (BCR) we want to respectfully inform our clients about the implications of the recently adopted FATCA regulations and how this US Law may impact some of our processes:
• According to Banco de Costa Rica’s approved Code of Conduct, we condemn and strictly prohibit any practices or procedures that may facilitate our clients or account holders any assistance in avoiding FATCA compliance within our Conglomerate.
• Beginning July 1st, 2014, Banco de Costa Rica’s on-boarding processes and legal agreements will incorporate FATCA due diligence requirements regarding the identification of the accounts held directly or indirectly (via interposed structures) by any US Persons or FATCA Exposed Persons (FEPs).
• Certain pre-existing accounts will require additional due diligence procedures.
• Some US Person related Accounts shall be reported to the Costa Rican Treasury and then to the IRS.
• Banco de Costa Rica will ask all applicable key counterparties and other stakeholders on whether they intend to be compliant with FATCA.
For more information about FATCA, please visit the IRS website:
Or contact us; our dedicated FATCA team is ready to help answer your queries at: