Thursday, February 7, 2013

Foreign Trusts With Individual Trustees Are NFFE's & Are Not Subject to FATCA Reporting.

As we reported on Monday, January 28, 2013 in our post Significant Changes in Final FATCA Regulations, the US Treasury Department published final rules governing enforcement of the Foreign Account Tax Compliance Act (FATCA).

The regulations indicate that trusts with individual trustees will be NFFEs (non financial foreign entities), whether those individuals are professional trustees are not. This is good as such trusts would be excluded from the FATCA registration requirements.

However trusts where there is a corporate trustee, will be considered to be financial institutions (FIs) and may have to register as an Investment Company.

This means that foreign trusts with corporate trustees are potentially subject to the FATCA withholding rules and they need to register as an Investment Company and provide the required information in order to avoid FATCA withholding tax obligations.

Stay tuned and FACTA and its associated Regulations continue to develop and unfold! 
Are you a US Person with UNREPORTED INCOME from a Foreign Bank Account???
Are you a Foreign Trust with FATCA Problems???

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation or or Toll Free at 888-8TaxAid (888 882-9243). 



  1. As NFFEs, small trusts will be subject to passive NFFE considerations and should be required to report substantial owners that are specified U.S. persons to U.S. withholding agents. The presumption standards will also have some bearing. Trusts that are professionally managed will still be FFIs but their professional manager will be a FFI and may be a sponsoring FFI so the FATCA compliance burden could fall on the manager, not the trust. Not sure I would say if a single trustee as many small trusts that have co-trustees could still be NFFEs is they are not managed or considered an investment fund.

    By Jerri LS Langer

  2. If this foreign trust has one individual beneficiary )and no assets, not sure why it was set up years ago), does it have to file a 3520A?

    By Jeffrey A. Schneider, EA