The Foreign Account Tax Compliance Act (FATCA) is a US federal law that requires foreign financial institutions to report information about financial accounts held by US taxpayers to the Internal Revenue Service (IRS). For European fund managers, FATCA compliance is essential when accepting US investors or managing funds with US persons as limited partners.
FATCA reporting and filing requirements
FATCA requires financial institutions, including investment funds, to identify accounts held by US persons and report specific account information annually. Funds must collect IRS Form W-9 from US investors and Form W-8 from non-US investors to document tax status. Reporting obligations extend beyond account identification—funds must report account balances, income and certain transactions. Failure to comply can result in 30% withholding on US-source income.
FATCA in practice
For fund managers operating across European jurisdictions, FATCA compliance intersects with local regulations and the Organisation for Economic Co-operation and Development (OECD)’s Common Reporting Standard. As Dominic Briggs, Co-Founder and General Partner at Blockwall, a bunch client, explains: "Reliable partners on the admin side are indispensable in this process. They bring expertise and resources that help us streamline compliance tasks, mitigate risks, and ensure we stay ahead of regulatory changes." Modern fund administration platforms like bunch automate much of the FATCA documentation process, reducing manual errors and ensuring deadlines are met. Understanding FATCA requirements is particularly important during investor onboarding, where proper documentation must be collected before capital can be accepted.
