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Monaco’s Financial Institutions Face FATCA Compliance Requirements

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The Foreign Account Tax Compliance Act (FATCA) is an extraterritorial regulation that applies to a broad range of financial institutions worldwide, including banks, investment funds, asset managers, and life-insurance companies. Under the regulations, these institutions must identify US persons and report them annually to the Internal Revenue Service (IRS) to facilitate automatic cross-checks with individual tax declarations.

FATCA Obligations Vary by Country

The FATCA obligations vary depending on the country where the financial institution is located. To reduce local declarative burdens, over 100 countries have signed or committed to sign a bilateral agreement known as an Intergovernmental Agreement (IGA). There are two types of IGAs:

  • Model 1: Requires financial institutions in countries like France and the UK to apply local rules and consult with their local authorities.
  • Model 2: Applies hybrid rules and involves collaboration between local authorities and the IRS. Institutions in countries that have not signed an IGA, such as Monaco, must comply with the full FATCA regulations and interact directly with the IRS.

Consequences of Non-Compliance

Financial institutions that fail to respect these obligations may face sanctions, including:

  • A 30% withholding tax on certain US-source income

Societe Generale’s Position on FATCA

The Societe Generale group has complied with all FATCA regulatory requirements in every country where it operates. The group’s financial institutions have been registered with the IRS and are part of the tax transparency framework established by American authorities. As a result, they have received Global Intermediary Identification Numbers (GIINs) from the IRS, demonstrating their level of compliance regarding third-party reporting.

Commitment to Tax Transparency

To further encourage tax transparency, Societe Generale has committed to fulfilling all its FATCA obligations in accordance with the Group’s Tax Code of Conduct.

The Impact on Societe Generale Clients

Societe Generale is working closely with its clients, both natural and legal persons, to ensure they are aware of and comply with the FATCA regulations. The group gathers information from clients regarding their FATCA status upon onboarding and requires them to provide documentation, including:

  • US tax forms
  • Authorizations for lifting banking secrecy

Clients who do not present a US indicia must complete self-certification forms justifying their tax residence or provide other relevant information. In the event of changes in circumstances or detection of a US indicia, clients must submit updated documentation to remain compliant with FATCA.

Failure to Comply

Failure to comply with FATCA regulations may result in:

  • A 30% flat-rate withholding tax on certain US-source income
  • Societe Generale will report its American taxpayers annually to the IRS, providing information on client identification, account balances, financial income, and gross proceeds.