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FATCA Information For Customers

FATCA and the Malta-US Intergovernmental Agreement (IGA): Information for customers

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is legislation that was passed in the United States in 2010. FATCA is aimed at Foreign Financial Institutions (FFI) and other Financial Intermediaries to prevent tax evasion by US citizens and residents through accounts held outside of the United States. Under FATCA, non-US financial institutions would be required to report relevant information to the US tax authorities, the Internal Revenue Service (IRS), about financial accounts held by identified US persons.

What is the Intergovernmental Agreement (IGA)?

On the 16th of December 2013, the governments of Malta and the United States announced that they signed a FATCA Intergovernmental Agreement (IGA). The Malta - US IGA is based on the Model 1 IGA providing for the reciprocal exchange of information.  Under the IGA, financial institutions in Malta will report relevant information on accounts of US persons to the Maltese CIR (Commissioner of Inland Revenue). The CIR will then exchange the information with the IRS through the provisions in the existing agreement.

For more information on the IGA please click here

Who is a US person?

According to US tax law, a person may be considered as a US reportable entity if he/she is:
     • A citizen of the US (including an individual born in the US but resident in another country,
       who has not renounced US citizenship);
     • A lawful resident of the US (including a US green card holder);
     • A person residing in the US
     • A person spending a considerable amount of time in the US on a yearly basis
US corporations, estates and trusts may also be considered US persons.

How will banks determine which accounts have to be reported to the CIR?

Under the IGA, banks will be required to review new and existing client accounts to look for any indication that an individual may be considered a US person. Indicators that someone may be a US person include US identification used to open an account or a US address associated with the account. FIMBank may ask for additional documentation for account holders having US indicators and declaring otherwise. If this additional documentation is not provided upon request, FIMBank will be required to send the account information to the CIR which may share it with the IRS.

Does the IGA apply to businesses or just individuals?

FIMBank will have to identify account holders that are US entities or certain non-US entities in which US residents or US citizens have an interest. FIMBank may rely on information that is already available however and may ask customers to provide a certification to declare whether the client is a US person under US tax law. The client may also be asked to identify the type of business due to different requirements for different types of businesses.

The above information is intended to provide general guidance only and is not an exhaustive analysis of all provisions of the IGA. The above information should not be construed as legal or financial advice.