The Internal Revenue Service issued final rules April 17 on the reporting requirements for interest on deposits maintained at U.S. offices of certain financial institutions and paid to nonresident aliens.
The regulation (T.D. 9584) will affect commercial banks, savings institutions, credit unions, securities brokerages, and insurance companies that pay interest on deposits.
The regulation applies to payments of interest made on or after January 1, 2013. It becomes effective April 19, the date it is published in the Federal Register.
The key features of this new regulation are the following:
ReplyDelete• The reporting requirement only pertains to interest paid to non-resident individuals (not to corporations such as a company established in the BVI);
• It applies to payments of interest made on or after January 1, 2013;
• The reporting requirement applies to a broad range of financial institutions –banks, brokerage firms, credit unions, insurance companies– but only to interest paid on deposits maintained at the US offices of these institutions (and not at overseas offices or branches);
• The exchange of information will not be automatic (except with Canada under pre-existing rules), but only upon request, although the Treasury Department indicated that this may change in case certain countries agree to automatic exchange of information with the USA going forward. Several European countries –France, Germany, Italy, The Netherlands, Spain and The United Kingdom– are already discussing automatic exchange of information with the USA;
• The USA will only exchange information with countries that have entered into a Tax Information and Exchange Agreement with the USA (see below list).
Antigua & Barbuda
Aruba
Australia
Austria
Azerbaijan
Bangladesh
Barbados
Belgium
Bermuda
British Virgin Islands
Bulgaria
Canada
China
Costa Rica
Cyprus
Czech Republic
Denmark
Dominica
Dominican Republic
Egypt
Estonia
Finland
France
Germany
Gibraltar
Greece
Grenada
Guernsey
Guyana
Honduras
Hungary
Iceland
India
Indonesia
Ireland
Isle of Man
Israel
Italy
Jamaica
Japan
Jersey
Kazakhstan
Korea (South)
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Marshall Islands
Mexico
Monaco
Morocco
The Netherlands Netherlands Island territories: Bonaire, Saba, St. Eustatius and the countries Curaçao, and St. Maarten (Dutch part)
New Zealand
Norway
Pakistan
Panama
Peru
Philippines
Poland
Portugal
Romania
Russian Federation
Slovak Rep.
Slovenia
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Thailand
Trinidad and Tobago
Tunisia
Turkey
Ukraine
United Kingdom
Venezuela
Also the Treasury Department expressed that it will only exchange information with countries that protect confidentiality and use the released data only for tax purposes.