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Foreign Accounts Tax Compliance Act provisions: Insurance companies

How the U.S. FATCA rules may impact insurance companies


FATCA seeks to impose a 30% withholding tax at the entity level for any Foreign Financial Institution (FFI) that fails to register with the U.S. Internal Revenue Service (IRS). The definition of FFI is broad in scope, and it is widely anticipated that insurance companies and insurance company investment vehicles will be treated as FFIs.

All FFIs that enter into an agreement with the IRS will need to ensure their systems identify and report any U.S. direct or indirect financial account owners by 2013. Any FFI that does not register with the IRS will be termed a “recalcitrant account holder” and will be subject to the 30% withholding tax on U.S. source income, including gross proceeds from the sale of U.S. assets.

Learn more about the new FATCA provisions and how these can impact your company.