FATCA
FATCA — the Foreign Account Tax Compliance Act — is US legislation enacted in 2010 that requires foreign financial institutions to report to the IRS information about financial accounts held by US persons. It is the most consequential cross-border tax-information regime affecting UHNW families with US connections.
FATCA compliance is operationalised through intergovernmental agreements (Models 1 and 2), under which foreign jurisdictions either report to their own tax authorities (which then exchange with the IRS) or directly to the IRS. Family offices with US-person beneficiaries, settlors, or structure participants face documentation, reporting, and (in non-compliant cases) withholding consequences.
FATCA compliance for family offices begins with classifying every entity and account in the structure (US person, FFI, NFFE, exempt) and maintaining current documentation (W-8 / W-9 series). Compliance failures are operationally costly and create reputational exposure with banking counterparties.
Deeper reading
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