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Frequently asked questions about FATCA

Retail Banking and Wealth Management – Hong Kong SAR

FATCA overview

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a new piece of legislation to help counter tax evasion in the US.

Introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS), the purpose of FATCA is to encourage better tax compliance by preventing US persons (see glossary) from using banks and other financial organisations to avoid US taxation on their income and assets.

A significant number of countries worldwide are expected to sign inter-governmental agreements (IGAs) relating to FATCA compliance with the United States government. These IGAs will result in the FATCA legislation becoming part of these countries’ local laws (please refer to the glossary for IGA definition).

What is the impact of FATCA?

On an annual basis, banks and other financial organisations will be required to report information on financial accounts held directly or indirectly by US persons.

HSBC is committed to being fully FATCA compliant in all countries where we operate. We will therefore be reviewing our existing customer base to confirm the FATCA status of our customers and where necessary we may need to engage our customers from time to time to help us understand them better.

How do I know if I am affected?

FATCA legislation will affect both personal and business customers who are treated as a US person (see glossary) for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.

The term ‘US person’ includes the following (but is not limited to):

  • a citizen of the US, including an individual born in the US but resident in another country (who has not given up their US citizenship)
  • a person residing in the US, including US green card holders
  • certain persons who spend a significant number of days in the US each year
  • US corporations, US partnerships, US estates and US trusts.

Over the next few months we will be reviewing the impact of the legislation to our customers, and will provide further information to affected customers in due course.

For more information regarding FATCA, please visit the IRS website or contact a professional tax advisor.

When will the FATCA legislation become effective?

The FATCA legislation became effective on 1 July 2014.

HSBC is committed to being fully FATCA compliant in all countries where we operate, in accordance with the legislative timeline.

Is HSBC the only bank to be affected by FATCA?

No. HSBC is committed to being fully FATCA compliant in all countries where we operate. Other banks and financial organisations will also be affected. However, their approach to ensuring compliance with FATCA may differ to that of HSBC.

Why does HSBC participate in FATCA when HSBC is not a US corporation?

HSBC is committed to being fully FATCA compliant in all countries where we operate. Other banks and financial organisations will also be affected. However, their approach to ensuring compliance with FATCA may differ to that of HSBC.

What does HSBC have to do to comply with FATCA?

To comply with FATCA, HSBC will:

  • conduct a review of new and existing customers to establish their status as either a US person or non-US person in accordance with FATCA
  • classify business customers according to the FATCA legislation (for example, as US persons, foreign financial institutions or non-financial foreign entities)
  • report information to the IRS or local tax authority on all accounts held directly or indirectly by US persons.

In addition, HSBC may also need to report information about customers who do not allow us to understand their status.

In certain circumstances and where customers do not allow us to understand their status or when doing business with non-compliant entities, HSBC may be required to apply 30% US withholding tax on certain types of US income paid to such customers.

Please refer to the glossary for the definitions of US persons, foreign financial institutions, non-financial foreign entities and withholding tax.

Am I affected?

Is FATCA applicable to personal or business customers?

FATCA legislation will impact both personal and business customers who hold an account or product with HSBC.

Am I only affected if I am a citizen of the US?

No. If an individual’s account holds any of the following seven criteria, HSBC may engage you in order to establish your status as either a US person or non-US person in accordance with FATCA.

  • US citizenship or US residence.
  • US place of birth.
  • US address including US PO boxes.
  • US telephone number.
  • Repeating payment instructions to pay amounts to a US address or an account maintained in the US.
  • Current power of attorney or signatory authority granted to a person with a US address.
  • In care of or hold mail address which is the sole address for the account holder.
What does FATCA mean for me if I am a US person?

If you are considered a US person (see glossary), we may need to engage you from time to time to help us understand you better. You may also wish to visit the IRS website to determine if you need to complete and submit any additional IRS forms.

If you are a specified US person (see glossary), HSBC will be required to report information about you and your account to the local tax authority or the IRS on an annual basis.

We will correspond with affected customers in due course. For any detailed queries on the FATCA legislation, and what it may mean for you, please consult a professional tax and/or legal advisor for specific tax or legal advice.

What does FATCA mean for me if I am not a US person?

For most customers, FATCA will have minimal impact, and there will be no action required.

However, HSBC may still engage you to establish your status as a non-US person if we have reason to believe you are potentially a US person for FATCA purposes.

Do I need to proactively inform HSBC when my status changes to a US person?

If a change in circumstances makes any information on a certificate or other documentation for FATCA incorrect, then the person named on the certificate/documentation must inform HSBC within 30 days of the change and provide a new certificate or documentary evidence.

Does FATCA replace existing US tax rules that I already follow?

FATCA does not replace the existing US tax regimes, it may however add additional requirements and complexity to the existing US tax rules you may already follow. We recommend you contact a professional tax advisor to discuss your personal tax situation.

In light of the FATCA documentation requirements, what do I need to prepare if I am a US person and want to open a new account with HSBC?

We will advise customers of the FATCA documentation requirements. Documents may include US tax forms (also referred to as withholding certificates or W forms) or self-declarations of FATCA status.

For the full list of documents required, please also refer to the IRS website.

What happens if a joint account is held by a US person and a non-US person?

A joint account which has one US person is treated as a US account and therefore the entire account is subject to the FATCA legislation.

How frequently will I be engaged in order to comply with FATCA?

FATCA is an ongoing process. If your account information changes, we may need to engage you from time to time to help us understand you better so that we are able to update your account status under FATCA.

What is the meaning of changes of account information and its criteria?

FATCA is an ongoing process. If any of your account information changes, for example, change of telephone number, address or nationality, please inform HSBC within 30 days of the change and we may need to engage you in order to update your status under FATCA.

What information will HSBC report to my local tax authority or the IRS?

The information reported to the IRS or to a customer’s local tax authority will depend on the FATCA status of the customer. This information will typically be of a personal nature (for example, name, address, US taxpayer identification number), and of a financial nature (for example, account number, account balance/value). We will be communicating with the affected customers in detail on these requirements.

If you are not able to provide the required documents by the due date, we will then be unable to establish your status in accordance with FATCA requirements. This may result in certain monetary/investment restrictions being placed on your account(s) and may result in the withholding of monies on certain US payments and/or the closure of your account(s) with HSBC (please see the response to ‘What does HSBC have to do to comply with FATCA?’).

What do I need to do?

What do I need to prepare to respond to HSBC?

We will advise customers of the FATCA documentation requirements. Documents may include US tax forms (also referred to as withholding certificates or W forms) or self-declarations of FATCA status.

Will HSBC supply me with all the forms I need to complete?

Yes. HSBC will send you the relevant forms or direct you to a website where you can download them.

If I am a US person, when and how will HSBC engage me? What should I do if I do not receive any FATCA related correspondence?

If you are considered a US person, we may need to engage you from time to time to help us understand you better. Please visit the IRS website for further information.

Letters will be sent in batches in the second half of 2014. If you do not receive any FATCA related correspondence by the end of March 2015, please contact us by calling (852) 2233 3322 for HSBC Premier customers, (852) 2748 8333 for HSBC Advance customers, (852) 2233 3000 for other personal banking customers, (852) 2748 8288 for commercial banking customers or send an email to dfv.enquiry@hsbc.com.hk for all personal banking customers, commercialbanking@hsbc.com.hk for commercial banking customers. Please do not provide your account or disclose any confidential information or banking instructions in your email.

While we will communicate with affected customers in due course, HSBC cannot offer any advice relating to FATCA and we recommend you contact a professional tax advisor to discuss your personal tax situation.

When do I have to respond to the request for FATCA documentation?

In general, customers should respond to the request for FATCA documentation by the date contained within the communication.

What will HSBC do if I do not respond to the request for FATCA documentation?

HSBC is committed to being fully FATCA compliant in all countries where we operate.

We regret that we may be unable to open new accounts or offer additional products and services to customers who choose not to comply with FATCA requirements.

In accordance with the FATCA regulations, if customers do not allow us to understand their status as either a US person or non-US person in accordance with FATCA within the regulatory timeframe, their accounts with HSBC may have to be closed.

HSBC may also need to report information about customers who do not allow us to understand their status as either a US person or non-US person in accordance with FATCA.

In addition, we may also be required to withhold tax on certain US source payments coming into your account (please refer to the glossary for further information on withholding tax).

What do I need to do if I am affected by FATCA?

Over the next few months we will continue to review the impact of the legislation for our customers and will correspond with affected customers in due course. For more information regarding FATCA, please visit the IRS website, or contact a professional tax advisor for advice.

If you have multiple relationships with us, you may be approached by different members or businesses of the HSBC Group. To help us serve you better and capture your information accurately, in light of different laws or regulations in different countries, your response to all our requests will be much appreciated.

Please note that HSBC is unable to offer tax advice. For tax related questions please contact a professional tax advisor or refer to the IRS website.

(Page last updated July 2021)