FATCA aims to prevent tax evasion by U.S. taxpayers using foreign accounts by requiring foreign financial institutions (FFIs) to report certain key information about financial accounts held by U.S. taxpayers or foreign entities with substantial U.S. ownership. Malta, aligning with this mandate, signed a Model 1 Intergovernmental Agreement (IGA) with the U.S. on December 16, 2013.

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Further to the signing of this agreement, Maltese FFIs are now required to report the necessary information to the Maltese tax authorities, who will proceed to relay the data received to the U.S. Internal Revenue Service (IRS). Maltese financial institutions are required to identify and report all accounts held by U.S. persons.

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CRS is a global standard developed by the OECD for the automatic exchange of financial account information to combat tax evasion. Malta, as a participant in CRS, has committed to this automatic exchange of information, transposing CRS into national law by through various regulations to comply with EU directives.

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Maltese financial institutions are required to collect and report information on accounts held by non-residents. The due diligence procedures involve gathering self-certification from account holders and validating the provided information to identify reportable accounts accurately. This collected data is exchanged annually between participating jurisdictions through secure transmission channels, aiding tax authorities in ensuring tax compliance by their residents.

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Account holders identified as U.S. persons under FATCA or residents of CRS participating jurisdictions may face increased scrutiny. These account holders are to report accurate information to avoid potential issues with their tax authorities.

By understanding and adhering to these frameworks, Maltese financial institutions and taxpayers can navigate their obligations more effectively, ensuring compliance and minimizing potential risks.

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Here at CSB Group, we understand the complexity of FATCA and CRS regulations and are readily available to provide professional tax advice to assist in understanding obligations, ensuring compliance, and managing related risks.