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Industries’ impact

Introduction

Enacted in 2010 as part of the Hiring Incentives to Restore Employment (“HIRE”) Act, the Foreign Account Tax Compliance Act (“FATCA”) addresses perceived abuses by US taxpayers with respect to offshore financial assets. FATCA compels foreign financial institutions (“FFIs”) to report U.S. financial asset holders to the IRS beginning in 2014.

These institutions include banks, insurance and real estate companies, hedge funds, mutual funds, private equity firms and Professionals of the Financial Sector.

Details of FATCA impact by industry

  • Banking
    Foreign entities that conduct banking or similar business (“foreign banks”) are squarely in the center of the net of proposed FATCA regulations.
  • Insurance
    The draft FATCA regulations released on 8 February 2012 incorporate some of the changes and exclusions that the insurance industry has been lobbying for.
  • Funds
    As an FFI, the fund must enter into an agreement with the IRS in order to become a Participating FFI (PFFI).
  • Private equity and hedge funds
    The new rules will have a significant impact on all private equity and hedge funds which generate US source income.
  • Real estate
    For the real estate industry, the new FATCA rules will impose additional challenges for both US and non-US real estate funds.
  • Professionals of the Financial Sector
    PFS should determine their status for FATCA as to their own activities, but should also reflect on the services to be offered to their own clients.

Contacts

  • Pascal Eber
    Partner - Operations Excellence & Infrastructure Operations
  • Pascal Rapallino
    Partner - Private Wealth Services Leader
  • Pascal Noël
    Partner - Tax - International Tax-GFSI
  • Basil Sommerfeld
    Partner - Operations & Human Capital Leader
  • Alain Verberken
    Directeur - Tax - International Tax-GFSI

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