Israeli Bank Accounts and FATCA

On March 18, 2010, the US government instituted the FATCA (Foreign Account Tax Compliance Act) provisions in attempt to combat evading US taxes by opening accounts outside the US.

On January 17, 2013, the US Department of Treasury enacted regulations for implementing the law's provisions. According to the provisions, since July 1, 2014, financial institutions (such as banks) operating outside the US are required to report accounts held by what is called US Persons to US authorities, and to impose sanctions (such as withholding from payments to customers) on customers who do not cooperate with the financial institution. A financial institution that does not cooperate with US authorities will itself be subject to various sanctions, in particular withholding of 30 percent on US-source payments to them.

FATCA legislation affects both individual and corporate customers who are treated as a ‘US person' for US tax purposes, which includes (but is not limited to) the following:

1. A citizen of the USA, including an individual born in the US but resident in another country (and who has not given up their US citizenship).

2. A person residing in the USA, including US Green Card holders.

3. US corporations, US partnerships, US estates and US trusts.

FATCA also captures certain non US entities, where the controlling persons are US persons.

The Government of Israel has entered into an intergovernmental agreement with the US government to implement the FATCA provisions in Israel.

Effectively, since July 2014 every non-Israeli corporation, every Israeli registered branch of a non-Israeli corporation and most non-Israeli individuals requesting to open a bank account in Israel are required to fill a detailed FATCA questionnaire and reveal the details of the owners of the account until the individual beneficial owners of the account.

This information may be available and revealed by the bank to Israeli authorities, US authorities as well as other European or other governments.

Please don't hesitate to contact us for additional information.