FATCA – What The IRS Tells Your Tax Man

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The Foreign Account Tax Compliance Act (FATCA) started on July 1, 2014 and means big changes in the way the Internal Revenue Service (IRS) digs up data on US taxpayers.

More than 100 countries have joined the FATCA network, but not all of them have the same information exchange agreements with the IRS.

Here’s a brief guide to what the IRS and your local tax authority know about you, depending on where you live in the world.

Countries with Model 1A agreements

Most of the FATCA network has a Model 1A agreement with the US government.

A Model 1A FATCA treaty allows the IRS and your local tax authority to have a two-way automatic exchange of tax and financial information.

This means if you are not a US resident or expat but have a bank account or investments in the US, the IRS will tell your local tax authority about the extent of your holdings.

US taxpayer reporting depends on whether they are resident or non-resident in the USA.

The IRS will receive financial information about US resident taxpayers with bank accounts or assets of $50,000 or more held overseas.

The reporting limit for expat taxpayers is $200,000.

Countries with Model 1A agreements:

  • Algeria
  • Anguilla
  • Antigua and Barbuda
  • Australia
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Barbados
  • Belarus
  • Belgium
  • Brazil
  • British Virgin Islands
  • Bulgaria
  • Cabo Verde
  • Canada
  • Cayman Islands
  • China
  • Colombia
  • Costa Rica
  • Croatia
  • Curaçao
  • Czech Republic
  • Cyprus
  • Denmark
  • Dominica
  • Dominican Republic
  • Estonia
  • Finland
  • France
  • Georgia
  • Germany
  • Gibraltar
  • Greenland
  • Grenada
  • Guernsey
  • Guyana
  • Haiti
  • Hungary
  • Honduras
  • India
  • Indonesia
  • Ireland
  • Isle of Man
  • Israel
  • Italy
  • Jamaica
  • Jersey
  • Kosovo
  • Kuwait
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malaysia
  • Malta
  • Mauritius
  • Mexico
  • Montenegro
  • Netherlands
  • New Zealand
  • Norway
  • Panama
  • Peru
  • Poland
  • Portugal
  • Qatar
  • Romania
  • St. Kitts and Nevis
  • St. Lucia
  • St. Vincent and the Grenadines
  • Saudi Arabia
  • Serbia
  • Seychelles
  • Singapore
  • Slovak Republic
  • South Africa
  • South Korea
  • Spain
  • Slovenia
  • Sweden
  • Thailand
  • Turkey
  • Turkmenistan
  • Turks and Caicos Islands
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Uzbekistan

Countries with Model 2A agreements

Model 2A agreements are one-way streets which allow financial institutions in the country with the treaty to send financial information to the IRS, but the IRS does not reciprocate.

Countries with a Model 2A agreement:

  • Austria
  • Bermuda
  • Chile
  • Japan
  • Switzerland
  • Armenia
  • Hong Kong
  • Iraq
  • Nicaragua
  • Moldova
  • Paraguay
  • San Marino
  • Taiwan

Countries without a FATCA agreement

Financial institutions must register on the IRS FATCA portal to become FATCA compliant. If they do not, they are considered as ‘non-participators’ and could be subject to a 30% withholding charge on all their transactions with FATCA compliant organisations.

These financial institutions must make direct arrangements to supply financial data to the IRS.