Slovenia’s Financial Institutions Must Comply with FATCA Due Diligence Requirements
The Republic of Slovenia has signed an agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA), aiming to prevent fiscal evasion by U.S. taxpayers with funds in financial accounts and entities outside the country.
Background
The agreement, which came into effect on July 1, 2014, requires Slovenian financial institutions to perform due diligence procedures to identify U.S. taxpayers and report their financial accounts to the Internal Revenue Service (IRS).
Compliance Requirements
- Non-U.S. financial institutions, including those in Slovenia, must register with the IRS and obtain a Global Intermediary Identification Number (GIIN) for FATCA purposes.
- Failure to comply with these requirements will result in a 30% U.S. withholding tax on taxable payments from U.S. sources.
Agreement Obligations
The agreement between Slovenia and the U.S. defines the obligations of Slovenian financial institutions and the Financial Administration of the Republic of Slovenia related to FATCA implementation.
- Certain Slovenian financial institutions and financial accounts will be exempt from reporting and withholding tax requirements, as defined in Annex II of the agreement.
- Slovenian financial institutions will report information about U.S. taxpayers and their funds to the Financial Administration of the Republic of Slovenia, which will then report the information to the IRS.
Reporting Requirements
- The first reporting of U.S. taxpayers and their funds is expected to take place in 2015 for the calendar year of 2014.
- Slovenian financial institutions must also prepare regulations based on the Act Amending the Tax Procedure Act and IRS FATCA XML Schema for FATCA reporting purposes.
Model 1 Intergovernmental Agreement (IGA)
The agreement is based on Model 1 IGA, which ensures the implementation of FATCA provisions through reporting and exchange of information in accordance with the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital.