Reports Required About U.S. Citizens Investments

Financial companies must provide reports about their clients who are United States citizens under penalty of withholding 30% of the transfers that they make from that country.

Tuesday, October 18, 2011

The measure, which will apply from July 2013, is a consequence of the Law on Foreign Account Tax Compliance (FATCA), which requires foreign banks to sign an agreement with the Internal Revenue Service (IRS), and report this to their customers, U.S. citizens - so that they can authorize information sharing about their accounts.

If the client refuses to give permission, the bank must close the account, in order to avoid being penalized by withholding 30% from interest, dividends or profits transferred to them from the United States.

Analysts recognize that the implementation of this measure by financial companies will be complex and costly, and there are still many questions to be clarified, but in general are all of them can be answered with the recommendation that the necessary agreements be signed with the IRS, in order to avoid being placed at a disadvantage in respect to those operators that do.

Recommended reading on this topic is provided in an analysis by Procopius: "FATCA: Its meaning and relevance to the financial and corporate sectors in Mexico and Latin American with contacts in the United States "

More on this topic

The Truth About Foreign Account Compliance Act

January 2013

Government to government agreements simplify compliance with the rule that seeks transparency in the finances of U.S. citizens abroad. reports that "the Foreign Account Compliance Act (FATCA) is a reality and the truth is that to date, there are very few financial institutions in our region who are prepared to meet the requirements of this U.S.

Three months Until FATCA Comes into Force

September 2012

From January 2013 financial institutions outside the U.S. will have to report on the accounts of citizens from that country, for tax purposes.

An analysis of the issue in an article in focuses on Panama and risk management, but can be extrapolated to the entire Central American region.

Doubts Over Foreign Account Tax Compliance Act

April 2012

There is still uncertainty among U.S. citizens and companies abroad, regarding the effects of this law’s extraterritorial reach.

The start of registration stipulated by FATCA law (Foreign Account Tax Compliance Act) of the United States is January 1st, 2013, with enforcement beginning on 1st July of that year.

FATCA Extends to Corporations

October 2011

Legally registered companies must also report to the tax authorities of the U.S.

This new measure will be taken to comply with the Foreign Account Tax Compliance Law (FATCA, for short), which requires information disclosure by companies where a U.S. citizen is involved.

In addition, banks who hold deposits belonging to North American clients must also report to the Internal Revenue Service (IRS), and entities that do not will be subject to a retention of 30% on the interest and dividends generated.