PAY ATTENTION TO FATCA
On September 30th, 2015, the Brazilian Internal Revenue Service and the United States Internal Revenue Service will begin to exchange information on accounts held by Brazilian individuals and entities in the United States and information on accounts held by American individuals and entities in Brazil.
This exchange of information will take place within the scope of U.S. Foreign Account Tax and Compliance Act – FATCA and Brazilian Decree No. 8,506/2015, which enacted the agreement executed by the Government of the United States of America and the Government of Brazil on this matter, with the purpose of avoiding tax evasion.
In summary, U.S. Internal Revenue Service shall report to Brazilian Internal Revenue Service information on accounts held by Brazilian individuals or entities in the United States, such as name of the account holder, address, CPF/CNPJ, account number, name and identification number of the financial institution in the United States in which the account is held, the gross amount of interest, the gross amount of dividends, and the gross amount of other income in the United States paid or credited to the account.
As compensation, the Brazilian Internal Revenue Service shall report to the United States Internal Revenue Service information provided by Brazilian financial institutions on accounts held by American individuals or entities in Brazil, or by Brazilian entities controlled by American individuals or legal entities, similarly to the information the United States shall report to Brazil concerning accounts held by Brazilians in that country, besides some additional data, such as the balance of the account held by these individuals or entities in Brazil.
Besides the asymmetry between the information exchanged by authorities in both countries, the intergovernmental agreement signed by the Government of Brazil and the Government of the United States of America on FATCA comprises several details on the implementation of FATCA in Brazil, applicable to Brazilian individuals or entities with accounts and investments in the United States, to American individuals and entities with accounts and investments in Brazil, as well as to Brazilian financial institutions, which must provide this information to Brazilian Internal Revenue Service.
Notice that the matter of Brazilian financial institutions supplying bank data to the Internal Revenue Service had its general repercussion acknowledged by Brazilian Supreme Court, which shall decide whether this practice violates the right to bank secrecy and may affect the legitimacy of FATCA in Brazil.
Machado Meyer has a multidisciplinary team following FATCA since it started to be discussed in Brazil and in the United States, which is ready to assist its clients.
This Report was elaborated with collaboration of lawyers Rafael Capelão Carretero and Victor Rios Simplício.