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Frequently asked questions about FATCA

Retail Banking and Wealth Management – Mexico

To assist you, we have put together some frequently asked questions about FATCA.

Please note that HSBC is unable to offer tax advice. For tax related questions please contact your tax advisor.

FATCA overview

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a piece of US legislation, the purpose of which is to prevent US persons (both individuals and legal entities) from using foreign financial institutions to avoid taxation on their income and assets.

This applies in Mexico, as the Mexican government has signed an inter-governmental agreement (IGA) with the United States government (see glossary). This will result in the FATCA legislation becoming a local regulation, which means we will be required to request information and report it to the Mexican authorities.

How do I know if I am affected?

FATCA legislation will affect both personal and business customers who are treated as ‘US persons’ 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 those who hold an official identification issued by the United States government
  • certain persons who spend a significant number of days in the US each year.
When will the FATCA legislation become effective?

The FATCA legislation became effective on 1 July 2014.

Is HSBC the only bank to be affected by FATCA?

No. Banks and other financial institutions worldwide will be affected by FATCA.

Am I affected?

Is FATCA applicable to individuals and legal entities?

Yes, the FATCA legislation will impact both individuals and legal entities which have any US indicia (see glossary).

What does FATCA mean for me if I am a US person?

If you are considered a US person, you may be asked to supply HSBC with additional information or documentation.

HSBC cannot offer any advice relating to FATCA and we recommend you contact a tax advisor to discuss your particular situation.

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 contact you to confirm your status.

Are joint accounts are subject to FATCA?

Only joint accounts that have at least one US owner.

How frequently will I have to provide information for FATCA purposes?

If your account information changes, we may be required to contact you to obtain additional information.

How does FATCA apply to me if I am a sole proprietor/sole trader?

You will be treated in the same way as an individual.

What do I need to do?

What types of information and/or documents can I expect to supply to HSBC?

We will be communicating with the affected customers to provide full details of the information and documentation HSBC needs for FATCA purposes. Documents may include US tax forms, also referred to as withholding certificates or W-9/W-8BEN forms (see glossary).

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

Yes. Your account executive will provide you with the information required to obtain them.

When do I have to provide the requested information and/or documentation for FATCA?

In general, customers should supply the requested documentation and information by the date contained within the communication.

In accordance with the FATCA regulations, will Mexico apply withholding tax?

No. The inter-governmental agreement (IGA) signed between Mexico and the US establishes no tax withholding for income generated in Mexico.

(Page last updated July 2014)