FATCA

AMERICANS IN CROATIA AND OTHER CEE COUNTRIES - BE AWARE OF THE FATCA

And avoid its negative consequences

 

 

What is FATCA?

The U.S. Foreign Account Tax Compliance Act ('FATCA') requires non-U.S. financial institutions (banks, insurance companies, investment companies, etc.) to provide information on their U.S. accounts to the IRS. To implement the FATCA provisions the U.S. and partner countries, including Croatia, have concluded separate intergovernmental agreements. The purpose of the agreement is to improve international tax compliance and to tackle tax evasion.

 

 

How FATCA reporting works?

Once ratified, the declaration implementing FATCA requirements will oblige the national financial institutions to report the accounts held by the U.S. individuals and businesses to the national Tax Authority. The Tax Authority will then communicate that information with the IRS.

 

 

What information will be shared?

The national Tax Authorities will provide the IRS with the following information:

•income from dividends and interest;

•bank balances;

•insurance values;

•proceeds from the sale of financial products.

 

 

What should non-compliant Americans do?

In anticipation of the impact of the FATCA, the IRS is allowing taxpayers to come clean and voluntarily rectify their non-compliance. In this respect, to avoid and prevent possible negative consequences of the FATCA reporting for non-compliant Americans the IRS has set up two programs.

 

 

A. Streamlined Filing Compliance Procedure

•You can participate if you have not filed tax returns before;

•You are required to file only 3 years of delinquent tax returns;

•You need to report your non-U.S. bank accounts to the U.S. Department of the Treasury for the last 6 years (FBAR);

•No penalties are involved with this program.

 

B. Offshore Voluntary Disclosure Program (OVDP)

•Applies to all taxpayers not eligible for the streamlined filing process;

•You are required to amend your tax returns for the last 8 years;

•You need to report your foreign bank accounts for the period also going back 8 years;

•You need to pay a 20% penalty on any tax owed during the 8 years;

•In addition, you will have to pay a penalty amounting to 27.5% of the highest aggregate value in that 8-year period.

 

To see a full text of the agreement between the United States and the Republic of Croatia, click here.

 

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For more information about the U.S. tax return preparation, advisory services and fees in Croatia and Central and Eastern Europe please contact us via e-mail info.cee@onestoptaxprep.com or by phone at

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