A nuisance called FATCA – Does the UK/US IGA make it bearable?


The introduction by the US of the Foreign Account Tax Compliance Act 2010 (FATCA) set the proverbial cat amongst the pigeons in the international loan financing markets by requiring foreign and domestic borrowers, lenders and agents suddenly to consider and deal with the application of this legislation to their transactions and allocate FATCA risks to one or other party even in cases where there is no obvious US nexus.

Under FATCA, certain specified categories of non-US financial institutions (FFIs) are ‘invited’ by the US Internal Revenue Service (IRS) to enter into an agreement under the terms of which they are required to provide certain information about their US account holders to the IRS (irrespective of whether or not their domestic laws allow the disclosure of such information). An FFI which accepts such an invitation is referred to as a participating FFI (PFFI) and one which does not is referred to, rather uninspiringly, as a non-participating FFI. Declining this invitation has its consequences – primarily FATCA imposes US withholding tax (currently 30%) on a wide variety of payments made to such a non-participating FFI. Furthermore, a PFFI (as reward for accepting such an invitation) is required to assume more obligations (namely to act as the taxing agent of the IRS) and to withhold US tax (currently 30%) on account of FATCA from both US and some non-US source payments to non-participating FFIs.

Originally published in Financial Instruments - April 2013.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.