The USA will not provide its ‘reciprocal’ FATCA partners any information about...

[FATCA]

In case you didn't know, here's some good information. I can't confirm if this is‌ 100% true but I believe the writer analyzed the FATCA agreement texts. For example, this‍ one: https://home.treasury.gov/system/files/131/FATCA-Agreement-Sweden-8-8-2014.pdf

I'd like to ask some questions about this.

1. If you have a margin account︄ at a broker, that's a non-cash account? I suppose yes
2. If you get paid︅ dividends from stocks, that's US-sourced income? I suppose yes
3. If you avoid holding dividend︆ paying stocks, you wouldn't have US-sourced income for this category, right? I suppose yes
4. If you get paid interest on the cash sitting in your account, is that a︇ US-sourced income? I assume yes. Even if its like $10 per year? So this $10︈ would make US provide information about your account (and what's in the account) to the︉ FATCA partner country? I suppose yes
5. How can you avoid getting this interest so you wouldn't have US sourced income? This means US wouldn't provide information to FATCA partner︊ country.
6. If you talk to your broker, can they change the interest to 0%?︋

7. Can a US LLC (entity instead of individual) own a US bank account? So︌ you can essentially have a cash account.
8. I assume "hold" means the same thing︍ with "own"?

These questions might be more interesting
9. Do US brokers (or banks) get︎ notified by countries about where people reside?
10. Will my US broker (or bank) know️ that I reside in country X, if X knows I officially reside in X?
11. If I don't interact with my US broker (or bank) from X, and if I‌ don't tell my broker I live in X, can my broker know that I live‍ in X? (By not interacting, I mean no debit or credit card usage in X.⁠ No logins from X. No call or text interaction from X. No apps on the⁤ phone)

12. If you own US LLC, you have to fill out 1120 and 5472⁣ every year and send them to the IRS. Can those forms tell your US broker⁢ (or bank) that you live in X?
13. What if you say you don't live︀ in X in those forms? Maybe you're in X only temporarily for a few years︁ and maybe your actual permanent residence is NOT in X. In that case, I suppose︂ this would be ok?

I'm just trying to learn the current system before it changes.︃ I also would ike to learn the jargon. I'd really appreciate it if you can︄ help me understand

 

[extremedox101]

michael reader .....??​

 

[fshore]

4. The banks only notify irs about the account if the account earned at least‌ $10 interest. That's also why fatca doesn't cover accounts with less than $10 earned (as‍ irs/the government doesn't know about them).

 

[FATCA]

I don't understand what you mean

Thanks for sharing. To fix⁠ this problem, can one split his accounts so each one earns <$9? 🙂

 

[fshore]

It might‍ be $10 across accounts in the same bank. Note that this is for banks, not⁠ brokers.

 

[OffshorePhantom]

Just open‍ a US account that does pay 0% interest on deposits. That way technically you can⁠ keep even $100M without earning any interest thus avoiding the reporting.
Also, this applies only⁤ to individual accounts. LLC/Companies depository accounts are not reported as per the bilateral facta agreements.⁣

 

[extremedox101]

https://www.offshorecorptalk.com/search/899228/
i see something‌ in common

 

[Marzio]

Foreign owned LLC bank account details are not shared with the tax residency‌ country of the beneficial owner?

 

[OffshorePhantom]

No, depository account information is shared only‍ for individual accounts and if they earned more than $10 of interest per year.
You can read it in every FACTA bilateral agreement. LLC depository bank account information is not⁠ shared as per agreement.

Example: https://home.treasury.gov/system/files/131/FATCA-Agreement-Germany-5-31-2013.pdf

The term “German Reportable Account” means a Financial Account⁤ maintained by a Reporting U.S. Financial Institution if: (i) in the case of a Depository⁣ Account, the account is held by an individual resident in the Federal Republic of Germany⁢ and more than $10 of interest is paid to such account in any given calendar︀ year; or (ii) in the case of a Financial Account other than a Depository Account,︁ the Account Holder is a resident of the Federal Republic of Germany, including entities that︂ certify that they are resident in the Federal Republic of Germany for tax purposes, with︃ respect to which U.S. source income that is subject to reporting under chapter 3 or︄ chapter 61 of subtitle A of the U.S. Internal Revenue Code is paid or credited.︅

Depository accounts (checking and saving accounts) are shared only for individuals.

Funny thing is that︆ on the other side Germany for example has to share all the bank accounts of︇ US individual without the $10 interest note, so it is a bilateral agreement but not︈ very equal on both sides 🙂

This shows how US has the power to do what︉ it wants and in my option has added those loopholes in order to retain the︊ offshore tax-heaven advantages that it has.

I have also read an article (EU hits︋ out at US for ‘lack of reciprocity’ under Fatca) where it says that US︌ hasn't reported any accounts even if it signed those bilateral agreements.

 

[Marzio]

So a German with a single member LLC that receives dividiends or royalties payments in‌ a US bank account is not reported? Man this is really hard to believe even‍ if i read the agreement.

Maybe when they say "the account is held by an⁠ individual resident in the Federal Republic of Germany" they mean that the beneficial owner is⁤ an individual resident in the Federal Republic of Germany?

In that case the US bank⁣ account is for the LLC but the beneficial owner is German.

 

[OffshorePhantom]

No, individual refers to an individual account (personal account, i.e. I open an account in‌ my personal name in a US Bank), not a beneficial owner.
For entities (like a‍ US LLC), it clearly states that only the non-depository account of some specific kind are⁠ reported.
The agreement also has a definition for "Controlling person" but they do not use⁤ it for German Reportable account.

They use it for US Reportable accounts:

The term “U.S.⁣ Reportable Account” means a Financial Account maintained by a Reporting German Financial Institution and held⁢ by one or more Specified U.S. Persons or by a Non-U.S. Entity with one or︀ more Controlling Persons that is a Specified U.S. Person. Notwithstanding the foregoing, an account shall︁ not be treated as a U.S. Reportable Account if such account is not identified as︂ a U.S. Reportable Account after application of the due diligence procedures in Annex I.

That is why previously I said it is incredible how they want all whole information from︃ other countries but they share only a little. The bilateral agreement in theory should have︄ the same definition both for German Reportable Account and US Reportable Account (in terms︅ of who is reported) if it was really bilateral, while in reality it isn't.

It is hard to believe but it is what the agreement says.
Also in the second︆ article I linked, it clearly states that one of the loopholes that US has is︇ that it does not report the beneficial owner.

Clearly, you have to file forms 5472︈ and 1120 to IRS (every year) for foreign-owned LLC stating all the transactions between you︉ and the LLC, this document may be exchanged from IRS to the beneficial owner country︊ but there is no agreement or treaty stating it and I frankly doubt IRS shares︋ it seeing how the system currently works.

 

[lavel]

so if you are⁠ serious you will get reported.. if you have less than $10 in interest in the⁤ account you don't need any account.

 

[FATCA]

Oh ok, then one should do this‍ across multiple banks.
Do brokers snitch on clients even if interest is like $2 per⁠ year?
I can't find any brokers that have 0% interest. Seems like they purposely pay⁤ some low interest so clients can be reported

 

[JosephLL]

"For entities (like a US LLC), it clearly states that only the non-depository account of‌ some specific kind are reported"

What can those be?

 

[fshore]

However a llc is disregarded and taxed as you personally. If you have a brokerage‌ account for the llc they will report interest income to you personally to IRS.

 

[FATCA]

Why don't they do the same for LLC bank account? That's⁠ also pass-through, isn't it?

Seems like the best solution as a work around is to⁤ get 0% interest. But how?

 

[OffshorePhantom]

This is the definition of a Depository Account:

The term “Depository Account” includes any commercial, checking,‍ savings, time, or thrift account, or an account that is evidenced by a certificate of⁠ deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a⁤ Financial Institution in the ordinary course of a banking or similar business. A Depository Account⁣ also includes an amount held by an insurance company pursuant to a guaranteed investment contract⁢ or similar agreement to pay or credit interest thereon.

In the agreement I linked it︀ also present other definition like Custodial Account, etc. I do not know if a brokerage︁ account falls in the definition of Depostiory Account, in the definition it refers also to︂ investment certificate but I am not an expert here to say what it includes and︃ what it doesn't.

 

[fshore]

Interest from a LLC bank account will also be⁠ reported by the banks on the 1099-int form.
https://www.irs.gov/forms-pubs/about-form-1099-int
It's relatively easy to open a⁤ non interest bearing bank account.

 

[FATCA]

Can you elaborate?
Its easy to open an account but they all have interest‍ like 0.1 or 0.01 or something

 

[Golden Fleece]

There are plenty of banks‍ in the U.S. that offer zero interest bank accounts. Whether you can open one as⁠ a foreigner is another question. It is probably best to first compile a list of⁤ banks that most easily open accounts for foreigners -- and then identify those on the⁣ list that offer zero interest bank accounts to prevent wasting time.