How financial creativity becomes a burden: FATCA 871m and the hurdles to be taken.



The US Internal Revenue Service (IRS) declared further postponement on the shift in delta on the FATCA 871m withholding on non-delta-one transactions until 1st of January 2021. The current delta-one scope is still valid but the target 80% foreseen for EoY 2019 needs further examination.
IRC Section 871m was initiated to counter the creative minds of the financial actors who were able to build financial constructions, facilitating fiscal arbitrage to avoid taxes imposed by FATCA withholding as defined in chapter 3 and 4.
The purpose of the article is to elaborate on the subject not only from a law perspective but also from a product and process/operational perspective. It will also describe the challenges a financial institution or investor should consider to install a clear control framework to be in line with the regulatory requirements. 

The Author


Brian Haeck, Consultant-Manager with +25 years of experience in finance and banking, specialized in financial markets. Brian Graduated as a master in business engineering at the Solvay Business School, completed with a 2-year MBA program at the Vlerick Business School.

Before joining Initio in September 2019, Brian had a successful career path within Société Générale, then ING as domain expert in Equity Derivatives, Credit Derivatives, Exchange Traded Derivatives, Hybrids & Commodity Derivatives.