FATCA and charities

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If you run a charitable foundation in the UK or are a trustee of a UK charitable foundation, you may have read about the additional tax reporting and regulations imposed by the US Foreign Account Tax Compliance Act (FATCA) rules on bank and financial accounts held by charities. US persons may wonder whether there are any additional reporting requirements that apply by virtue of their involvement with a UK charitable foundation.

First of all, a little background: complex regulations have been released by the US Treasury Department implementing the FATCA rules on a global basis. These regulations include a rather complex variety of procedures for non-US charities to comply with the FATCA reporting requirements. These rules potentially apply both reporting requirements with respect to US persons associated with these charities and a withholding tax on US-source passive income and proceeds of sale of stock.

The fact that a charity has no direct US investments or connection with the US will not prevent FATCA being applied by their bankers and brokers, who will undoubtedly be themselves registering as participating foreign financial institutions under the [majority of the] FATCA rules…

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