FATCA and foreign financial institutions

What institutions report

FATCA requires certain foreign financial institutions to report account information about U.S. taxpayers and foreign entities with substantial U.S. ownership. The institutions covered can include banks, investment entities, brokers, and certain insurance companies. Some non-financial foreign entities also report information about their U.S. owners.^[4][5]

As a result, a foreign institution may ask a U.S. citizen opening an account to provide citizenship information. Account documentation can include a self-certification that requests a person's tax residence and taxpayer identification number. The IRS guidance treats a U.S. citizen as a U.S. tax resident even when that person also has tax residence in another jurisdiction.^[4][6]

Identification and due diligence

Participating institutions perform identification and due diligence procedures for account holders. Under the IGA procedures described by the IRS, financial institutions use account information and self-certifications to establish tax residence and identify reportable accounts. A self-certification is obtained when an account is opened under the stated IGA procedure.^[5][6]

The requested self-certification information includes name, address, jurisdiction of tax residence, and taxpayer identification number. For an entity account holder, it also records the entity's FATCA status. For a passive non-financial foreign entity, it includes information about any controlling person who is a specified U.S. person.^[6]

For U.S. citizens, the tax residence rule means citizenship can be relevant even if the account holder lives or pays tax elsewhere. The IRS says the self-certification process can include a U.S. taxpayer identification number, and specifies that a U.S. number is provided when the taxpayer has both U.S. and foreign numbers.^[6]

Registration and GIIN

An FFI that receives withholdable payments and has no registration exemption must register with the IRS and agree to report information about its U.S. accounts. This reporting also includes accounts held by certain foreign entities with substantial U.S. owners. Some categories, including certain certified deemed-compliant FFIs and exempt beneficial owners, are listed as registration exceptions.^[6]

The Global Intermediary Identification Number, or GIIN, identifies registered financial institutions and eligible branches. Registration depends on the institution's FATCA status and the applicable IGA model. The IRS FAQ says financial institutions treated as reporting institutions under a Model 2 IGA register as participating FFIs; a Model 1 reporting institution may register to obtain a GIIN.^[6]

Branch treatment also varies by setting. A branch in a Model 2 IGA jurisdiction or a jurisdiction without an IGA is registered as part of its owner, and may receive a separate GIIN if eligible. A disregarded entity in a Model 1 IGA jurisdiction can register separately from its owner to be treated as a reporting Model 1 FFI and receive its own GIIN.^[6]

A GIIN is used in documentation provided to withholding agents, who may check the number against the IRS FFI list when determining an institution's status for a payment.^[6]

Reporting through intergovernmental agreements

The reporting route depends on the applicable agreement. The IRS describes Model 1 reporting institutions as reporting to the jurisdiction's tax authority under that jurisdiction's IGA. Model 2 reporting institutions register as participating FFIs and report to the IRS under the applicable rules.^[6]

The IRS describes annual reporting of account holders who are U.S. persons and certain foreign entities with substantial U.S. ownership. For a participating FFI, the reporting is made to the IRS. Model 1 arrangements route reporting through the local tax authority, as specified by the agreement.^[5][6]

For a U.S. citizen, this means account information may reach the IRS through an institution's direct reporting or through an IGA reporting channel. The precise route and registration category depend on the institution's classification and the agreement in force for its jurisdiction.^[5][6]

Separate U.S. reporting duties

Institution reporting does not replace a U.S. person's separate reporting obligations. FATCA requires certain U.S. taxpayers above the applicable foreign asset threshold to report on Form 8938 with their annual income tax return. The IRS also describes FBAR filing under FinCEN Form 114 as a separate requirement for qualifying foreign accounts.^[4][5]

The IRS notes that Form 8938 and FBAR rules use different definitions and reporting requirements. Some foreign accounts may be reportable on one form, while others may be reportable on both, depending on the applicable rules.^[4]

U.S. person status and Form W-9 at foreign banks

For individuals, U.S. persons include U.S. citizens and residents. For entities, the definition includes certain U.S.-organized partnerships and corporations, specified trusts, and estates of U.S. citizens or residents.^[13]

For preexisting entity accounts subject to review under the Swiss FATCA agreement, information held for customer relationship or regulatory purposes, such as a U.S. place of organization or U.S. address, can indicate U.S. status. If information points to U.S. status, the institution treats the account as reportable unless it receives a qualifying self-certification or can reasonably determine the holder is not a Specified U.S. Person. A self-certification may use IRS Form W-8 or W-9, or a similar agreed form. A W-8 certification states that the holder is neither a U.S. citizen nor a U.S. resident for tax purposes. If a change in circumstances concerning a New Individual Account causes the Reporting Swiss Financial Institution to know or have reason to know that the original self certification is incorrect or unreliable, it cannot rely on that certification and must obtain a valid self certification establishing whether the holder is a U.S. citizen or resident for U.S. tax purposes.^[13]

The Swiss agreement requires review of specified preexisting entity accounts to determine whether their holders are Specified U.S. Persons, Passive NFFEs with U.S. controlling persons, or Nonparticipating Financial Institutions.^[13]

Separately, the IRS says a U.S. person must file an FBAR when they have a financial interest in, or signature or other authority over, foreign accounts whose combined value exceeds $10,000 at any point in the calendar year reported. A foreign account is generally held at a financial institution outside the United States, and whether it earns taxable income does not affect its FBAR status. The FBAR is an annual electronic report filed through FinCEN's BSA E-Filing System, separate from the federal income tax return. Certain accounts are excluded, including an account held in an individual retirement account of which the U.S. person is an owner or beneficiary.^[14]

Questions and answers

Related resources

Related glossary terms

• Intergovernmental agreement: An intergovernmental agreement appears in FATCA rules for foreign financial institutions. Form 8938 instructions also use the term for certain foreign accounts.
• FATCA: FATCA requires certain U.S. taxpayers to report foreign assets and financial institutions to report accounts to the IRS. Form 8938 may apply at thresholds.
• Participating foreign financial institution: The IRS describes a participating foreign financial institution as an FFI that reports U.S. account holders who are specified U.S. persons under FATCA.

Related articles and guides

• How FATCA Account Information Is Reported: Foreign financial institutions report accounts connected to U.S. taxpayers on Form 8966. Reports can include foreign entities with substantial U.S. ownership.
• Isle of Man trust tax and reporting rules: The Isle of Man Act sets different income tax bases for residents and non-residents, with trustee record rules and IRS reporting rules for foreign trusts.
• Malta reporting frameworks and U.S. trust forms: Malta's rules on financial account information exchange and trust registration, with the IRS reporting framework for U.S. citizens with foreign trusts.

Tools and official documents

• FATCA agreement lookup: Look up any jurisdiction in the U.S. Treasury FATCA table and see its agreement model and status as the Treasury lists them, with a link to the source.

Related pages

• Banking
• Due diligence and controlling persons of a trust
• FBAR and Form 8938 for accounts linked to trusts
• Foreign trust forms and the accounts behind them
• How banks and trust companies work with trusts