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Rossitza Koleva |
The Bulgarian National Revenue Agency and the US Department of Finance agreed on the text of the agreement between Bulgaria and the US, aimed at improving the compliance of the tax legislation from an international aspect and the enforcement of the Foreign Account Tax Compliance Act (FATCA), voted in 2010. To this effect, Bulgaria is included in the list of countries the US is having a FATCA agreement in force with. FATCA obliges all foreign financial institutions (FFIs) to provide information to the International Revenue Service (IRS) related to those financial accounts which belong to US taxpayers or foreign companies that are controlled by US taxpayers (with more than 10% direct or indirect participation). FFIs that do not participate in FATCA will be subject to 30% withholding tax in the US, which will make their operations on the US markets extremely difficult. Thus, US taxpayers who own financial assets abroad must declare them in the IRS and for this purpose FATCA introduces a regime according to which the FFIs can choose either to assist IRS (participating) or not (non-participating).
One of the essential obligations of the participating financial institutions is to register and receive a special identification number (GIIN). The registration may be done exclusively online via a safe, web -based system maintained by the IRS. The address for registration is www.irs.gov/fatca-registration.
The deadline for the registration of financial institutions located in countries which have signed the Model 1 agreement, Bulgaria being among them, has been prolonged until January 1 2015. Until that date, the financial institutions are not required to specify the GIIN and will not be subject to 30% withholding tax in the US. By the beginning of June, the IRS is expected to announce the list of the participating financial institutions which will be updated on monthly basis.
Rossitza Koleva (rossitza.koleva@eurofast.eu)
Eurofast Global, Sofia Office
Tel: +359 2 988 69 78
Website: www.eurofast.eu
