Does this apply to me?
If your account earns US source ‘fixed or determinable, annual or periodical (FDAP) income’, Euro Pacific Bank (and Euro Pacific Securities, Inc.) is mandated to report this US source FDAP income to the IRS on your behalf, regardless of your residence jurisdiction.
The United States requires all withholding agents to file an information return, known as a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, to report amounts paid to foreign persons that are described under the Amounts Subject to NRA Withholding and Reporting, which includes all Fixed or determinable, annual or periodical (FDAP) income.
IRS EXPANSION OF REPORTING SCOPE
Please note as of January 2017, IRS Section 871(m), has expanded the scope of reporting requirements to include single stock CFDs with a US equity as an underlying asset.
How much does the filing cost?
The cost of filing is $200.00 per account, each year that an account holds investments that pay interest or dividends attributed as ‘US source income’. This means that even if a investment/security has a one-time payment, a filing will need to be made.
This reporting is mandatory and required of all firms offering investments, whereby those investments pay interest or dividends attributed as ‘US source income’. Unfortunately, due to the prohibitive cost of complying, Euro Pacific Bank and Euro Pacific Securities must pass on the cost of these filings to our clients.
Can I avoid this annual filing cost?
You may avoid future withholding and resulting $200 filing cost by requesting to disable all US Equities (i.e. Stocks, Bonds and ETFs) and single stock CFDs in your brokerage account. Please be aware that this does not guarantee that filing will be avoided, as ‘US source’ attribution rules are complex and frequently change.
In the case that a filing is required, even if US equities and single stock CFDs have been disabled, the $200 fee will be withdrawn at that time.
If you do not earn US source FDAP income during the year in question, we will ‘hold’ the $200 until the next year, and release the funds when you close your account.
For any questions about these developments please do not hesitate to contact our Client Services team. For the most up-to-date information on the Bank’s reporting requirements to the IRS please review their website directly.