What is FATCA

FATCA (Foreign Account Tax Compliance Act) is a US regulation, which provides for imposing upon foreign (without registered office in the US) banks and other financial institutions (e.g. insurance companies, brokerage houses, mutual funds) the obligation to inform the US tax authorities about accounts kept for US taxpayers. FATCA is intended to make sure that private persons and entities, who have a US tax obligation, were fulfilling it.

Financial institutions, including Bank Millennium S.A., are fulfilling their obligations in keeping with the Act of 9 October 2015 on implementation of the Agreement between the Government of the United States of America and the Government of the Republic of Poland to Improve International Tax Compliance and to Implement FATCA.

FATCA requirements

FATCA requires financial institutions, including the Bank to:

  • Identify US reportable accounts and accounts of excluded financial institutions;
  • Acquiring and providing information about US reportable accounts to the minister responsible for public finances or an authorised body.

For purposes of identification of US reportable accounts as well as accounts held by excluded financial institutions the Bank follows checking procedures stipulated in the Act and demands presentation of statements on US tax residence, clarifications and documents.

The Bank is required to obtain a US tax residence statement in connection with opening a financial account in the course of procedures involved with opening it.

Statements submitted in connection with implementation of the Act shall be submitted under pain or penal liability for submitting false testimony and they shall contain a clause reading as follows: “I am aware of penal liability for submitting a false statement”.

As a US tax resident, when opening a bank account, the Client is required to provide the Bank with the US TIN (Taxpayer Identification Number).

Who is a US tax resident

A US Citizen or Resident – with respect to individuals – is a person who satisfies at least one of the conditions below:

  1. Is a US Citizen (including an individual born in the US but not residing in the US – acquisition of US citizenship by birth),
  2. According to US laws is a Lawful Permanent Resident of the United States,
  3. In accordance with US immigration laws has received right of permanent residence in the US during a trip to the US or in other circumstances (Green Card),
  4. Meets the substantial presence test i.e.:
    1. Has been physically present in the US for at least 31 days in the current year and,
    2. Has been physically present in the US for 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting all the days the person was present in the current year, and 1/3 of the days the person was present in the first year before the current year, and 1/6 of the days the person was present in the second year before the current year. (i.e. from 2 years ago).
  5. Irrespective of the above also an individual whose place of residence for tax purposes in keeping with the Convention between the Government of the United States of America and the Government of the Polish People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Washington on 8 October 1974 (Journal of Laws of 1976, No. 31, item 178) exists in the US shall also be deemed a US taxpayer.

Exceptions from the above rule.

A US resident is not an individual who satisfies at least one of the conditions below:

  1. Is temporarily present in the US as a diplomat of another country; a representative of another government, an employee of an international organisation under a type A or G,
  2. Is a teacher or trainee temporarily present in the US under a type J or Q visa and satisfies the conditions of approval of the visa,
  3. Is a trainee / student temporarily present in the US under a type F, J, M or Q visa and satisfies the conditions of approval of the visa,
  4. Is a spouse or unmarried child under 21 of the foregoing.

Classification of clients according to FATCA

  • The term “U.S. Person” means a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and (ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the United States. This subparagraph 1(ee) shall be interpreted in accordance with the U.S. Internal Revenue Code;

  • The term “Specified U.S. Person” means a U.S. Person, other than:

    1. a corporation the stock of which is regularly traded on one or more established securities markets;
    2. any corporation that is a member of the same expanded affiliated group, as defined in section 1471(e)(2) of the U.S. Internal Revenue Code, as a corporation described in clause (1);
    3. the United States or any wholly owned agency or instrumentality thereof;
    4. any State of the United States, any U.S. Territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing;
    5. any organization exempt from taxation under section 501(a) of the U.S. Internal Revenue Code or an individual retirement plan as defined in section 7701(a)(37) of the U.S. Internal Revenue Code;
    6. any bank as defined in section 581 of the U.S. Internal Revenue Code;
    7. any real estate investment trust as defined in section 856 of the U.S. Internal Revenue Code;
    8. any regulated investment company as defined in section 851 of the U.S. Internal Revenue Code or any entity registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-64);
    9. any common trust fund as defined in section 584(a) of the U.S. Internal Revenue Code;
    10. any trust that is exempt from tax under section 664(c) of the U.S. Internal Revenue Code or that is described in section 4947(a)(1) of the U.S. Internal Revenue Code;
    11. a dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any State;
    12. a broker as defined in section 6045(c) of the U.S. Internal Revenue Code; or
    13. any tax-exempt trust under a plan that is described in section 403(b) or section 457(g) of the U.S. Internal Revenue Code.

  • Dealer – a dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any State.

  • Broker – a broker as defined in section 6045(c) of the U.S. Internal Revenue Code.

  • The term "Non-Financial Foreign Entity" (NFFE) – means an entity, which is not a US person and the business of which is other, than the businesses typical of Financial Institutions according to FATCA.

  • The term "Active Non-Financial Foreign Entity" – means a Non-Financial Foreign Entity (NFFE), which is not a US person and the business of which is other, than the businesses typical of Financial Institutions according to FATCA, which satisfies at least one of the criteria below:

    1. Less than 50% of gross profit for previous calendar year or other relevant reported period is passive income and when less than 50% of assets held by NFFE in the previous calendar year or other relevant reported period are assets, which generate or are held to generate passive income;
    2. NFFE shares are regularly traded on stock exchanges or the NFFE is an entity affiliated with an entity whose shares are regularly traded on stock exchanges;
    3. NFFE was established on US territory and all payment owners are bona fide residents on US territory;
    4. NFFE is a government other than the US Government, a field representation of the government (which, for the avoidance of doubt, comprises the country, voivodeships, counties and municipalities), or a public entity performing the functions of such government or field representation; a government of US Territories; an international organisation; an entity other than the US Central Bank or an entity, the sole owner of which is one of the foregoing in this item;
    5. As a rule all activities of NFFE consist in holding (in whole or in part) of a major part of shares or financing and providing services to one or more subsidiaries, which conduct trade or business activity other than activity of a Financial Institution, with the exception of a situation, in which the entity does not quality for NFFE status, if it operates itself as (or it considers itself to be) an investment fund, such as a private equity fund, a venture capital fund, a leveraged buyout fund or any other investment entity, the aim of which is to acquire or create companies and then to hold shares in said companies as assets or investments;
    6. NFFE is not conducting business activity and was not conducting such activity previously, however it is investing capital in assets for the purpose of conducting business activity other than the activity of a Financial Institution. NFFE does not quality for this exception after 24 months from the date of establishment (initial organisation) of the NFFE;
    7. NFFE was not a Financial Institution in the past 5 years and is in the process of liquidation of assets or reorganisation for the purpose of continuation or renewing of activities in an area other than the activity of a financial institution;
    8. NFFE deals primarily with carrying out financial transactions or risk hedging transactions in favour of or with affiliated entities, which are not Financial Institutions and is not financing or providing risk hedging transaction services to any entity, which is not an affiliated entity, provided that the group of such affiliates is first of all engaged in activity other than the activity of a Financial Institution, or
    9. NFFE is an Excepted Non-Financial Foreign Entity, as defined in relevant regulations of the US Treasury Department, or
    10. 10. NFFE satisfies all of the criteria below:
      1. Was established and is kept in the country of its residence solely for religious, charity, scientific, artistic, cultural and educational purposes or was established and is kept in the country of its residence and is a professional organisation, organisation of entrepreneurs, chamber of commerce, labour organisation, union of farmers or allotment gardeners, community organisation or an organisation existing solely to support social development;
      2. Is relieved from income tax in its country of residence;
      3. Does not have shareholders or members who are owners or beneficiaries of its income or assets;
      4. Relevant legal provisions of the country of residence of NFFE or its articles of association do not permit distribution of its income or assets to a private individual or an entity, which is not a charity entity, with the exception of activity consistent with the charity aim of the entity or for distribution as payment or reasonable compensation for provided services or payment reflecting the market price of the assets acquired by this entity, and
      Relevant provisions of the country of registered office of the NFFE or of its articles of association require that in case of liquidation or dissolution of NFFE any and all assets are transferred to a government entity or non-profit organisation, or are beneficially allocated to the government of the entity’s country of residence or the government’s field representation.

  • Passive Non-Financial Foreign Entity (Passive NFFE) – this is understood to mean a NFFE, which is not an Active Non-Financial Foreign Entity.