What is the Foreign Account Tax Compliance Act (FATCA) and why does it matter to me?
FATCA stands for the Foreign Account Tax Compliance Act. It is a piece of legislation introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS) in 2014.
The purpose of FATCA is to encourage better tax compliance by preventing US persons from using banks and other financial organisations to avoid US taxation on their income and assets.
A significant number of countries and territories worldwide have signed inter-governmental agreements (IGAs) relating to FATCA compliance with the United States government. These IGAs have resulted in the FATCA legislation becoming part of their local laws. The United Kingdom Government entered into a IGA with the US on 12 September 2012. This has been incorporated into UK law though the International Tax Compliance Regulations, SI 2015/878.