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Trustees: assume nothing and monitor developments

New regulation has an impact on trusts from both the US and the EU, says Lucy Brennan

20 May 2014

The press has been writing about the US FATCA (Foreign Account Tax Compliance Act) and the effect on UK trusts. I suspect that many trustees believe that because their trusts lack US connections, FATCA does not apply to them.

Unfortunately, this is incorrect and all UK trusts need to consider their position and whether it applies. And, even if a trust does not need to register or report, it will still need to provide certification to banks, fund managers and insurance companies that it lacks US connections in order to confirm its status.

The penalty for failure to register
or provide certification is substantial: a
30 per cent withholding tax applied against payments to the trust by the financial institutions holding the trust’s investments. The tax will be withheld regardl...

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