The Foreign Account Tax Compliance Act (FATCA)

FATCA legislation will affect customers who are treated as a US person for tax purposes.

The term US person includes the following (but isn't limited to):

• a person living in the USA, including US Green Card holders
• certain individuals who spend a significant number of days in the USA each year
• US corporations, US partnerships, US estates and US trusts.

We will provide further information to affected customers.

For more information regarding FATCA, please visit the IRS website Opens an overlay [Will show a security message first] or contact your tax adviser.

No. Most banks and other financial organisations will be affected by FATCA; however their approach to adopting FATCA may differ.

To comply with FATCA, we will:

• conduct a review of new and existing customers to identify those that are reportable under FATCA
• report information to the IRS via HMRC on all accounts held directly or indirectly by US persons (see glossary).

No. If your account holds any of the following eight criteria, we might request further information/documents to find out if you are a US person according to FATCA's definition:

• US citizenship or US residence
• US tax residence
• US place of birth
• US address including US PO boxes
• US telephone number
• repeating payment instructions to a US address or an account maintained in the USA
• current Power of Attorney or signatory authority granted to a person with a US address
• in care of or hold mail address which is the sole address for the account holder.

If you are considered a US person (see glossary), you may be asked to supply us with additional information/documentation. You may also wish to visit the IRS website to see if you need to complete and submit any additional IRS forms.

If you are a US person under FATCA, we’ll be required to report information about you and your account to HMRC.

While we will contact affected customers in due course, we can't offer any advice relating to FATCA, and we recommend you contact a professional tax adviser to discuss your personal tax situation.

For most customers, FATCA will have minimal impact, and you won't need to do a thing.

However, we may still contact you to confirm your status as a non-US person.

FATCA doesn't replace the existing US Tax regimes; it may however add additional requirements to the existing tax rules you may already follow. It's best to talk to a professional tax adviser to discuss your personal tax situation.

A joint account which has one US owner is treated as a US account and the entire account is subject to the FATCA legislation.

FATCA is an ongoing process. If your account information changes, we may be required to contact you to obtain additional information to confirm your classification under FATCA.

The information reported to HMRC will depend on the FATCA classification of the customer. This information will usually be of a personal nature (e.g. name, address, US taxpayer identification number), and of a financial nature (e.g. account number, account balance/value).

Yes. If we need extra information from you, we'll give you details of what documents we can accept and how to find them. We'll also give a timeline for returning that information to us.

We may not open new accounts or offer additional products and services to customers who choose not to comply with our requests for documents, and we may close your accounts and end our relationship with you if you decide not to provide the necessary information and documentation within the regulatory timeframe.

We'll probably also need to report customers who choose not to provide the required documentation.

Nothing until we get in touch with you. We'll continue to review the impact of the legislation for our customers and will contact affected customers in due course.

Please note that first direct is unable to offer tax advice. For tax-related questions please contact your professional tax adviser or refer to the IRS website Opens an overlay [Will show a security message first].

FFI refers to a non-US financial institution. The FATCA legislation contains an extensive definition of FFI and includes entities such as banks, custodian institutions, investment funds and certain types of insurance companies.

'Withholding certificates', also referred to as W-forms, are US IRS tax forms.

Form W-9 is a Request for Taxpayer Identification Number and Certification. This US Tax Form is provided by an account holder to confirm and certify their US status. The W-8 series forms are currently used by foreign persons (including corporations) to certify their non-US status. The form establishes that one is a non-resident alien or foreign corporation, to avoid or reduce tax withholding from US source income. These forms will permit a non-US customer to self-certify their status under FATCA.

An IGA is an agreement between the United Stated of America and specific countries to build FATCA compliance into the country's legal framework so that the country can implement FATCA. An IGA will require financial institutions to provide the information on US accounts which they hold either:

• directly to the IRS, or
• to the local tax authority of the resident country (in the UK, first direct must report information to HMRC).

The IRS is the United States government agency responsible for tax collection and tax law enforcement.

A NFFE is a non-US incorporated/established entity that doesn't meet the definition of Foreign Financial Institution (FFI) and includes:

• listed or privately held operating or trading businesses
• professional service firms
• certain entities with a passive (ie not an operating/trading business)
• charitable organisations.

For an individual, this would be their US social security number - for an entity, their employer identification number.

The term specified United States person means any United States person other than:

• a corporation, the stock of which is regularly traded on one or more established securities markets for a calendar year
• any corporation which is a member of the same expanded affiliated group as a corporation the stock of which is regularly traded on one or more established securities markets for the calendar year
• any organisation exempt from taxation under US federal tax law or an individual retirement plan
• the United States or any wholly owned agency or instrumentality thereof
• any state, the District of Columbia, any US territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing
• any bank incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any state thereof
• any real estate investment trust
• any regulated investment company, or any entity registered with the Securities Exchange Commission under the Investment Company Act of 1940
• any common trust fund
• any trust that is exempt from tax or is deemed a charitable trust
• a dealer in securities, commodities, or derivative financial instruments that is registered as such under the laws of the United States or any state
• a broker, and
• any tax exempt trust under a tax exempt or public school annuity plan or governmental plan.

The term 'United States person' means:

• a citizen or resident of the United States
• a partnership created or organized in the United States or under the law of the United States or of any state, or the District of Columbia
• a corporation created or organized in the United States or under the law of the United States or of any state, or the District of Columbia
• any estate or trust other than a foreign estate or foreign trust. (See Internal Revenue Code section 7701(a)(31) for the definition of a foreign estate and a foreign trust.)
• a person that meets the substantial presence test
• any other person that is not a foreign person.

The term 'United States citizen' means:

• an individual born in the United States
• an individual whose parent is a US citizen
• a former alien who has been naturalized as a US citizen
• an individual born in Puerto Rico
• an individual born in Guam, or
• an individual born in the US Virgin Islands.