FATCA and Foreign-Owned Companies

Why a US shareholder can trigger Polish reporting obligations?

FATCA (the Foreign Account Tax Compliance Act) is a US law designed to tighten the US tax system by requiring disclosure of foreign assets held by persons and entities subject to US tax obligations. Poland implemented these commitments through an intergovernmental agreement with the US signed on 7 October 2014 and an implementing act of 9 October 2015; the rules have applied since 1 December 2015.

In practice, FATCA is often associated only with banks, but the circle of entities covered is much wider. The Act defines a “financial institution” broadly enough to include not only banks, brokerage houses, or investment fund companies, but in certain cases also holding companies, investment vehicles, and alternative investment companies. For a corporate group with US involvement, this means a reporting obligation may arise in an unexpected place — not at the bank servicing the company, but within the ownership structure itself.

What this means for a foreign-owned company?

If a shareholder or beneficial owner of a company holds US taxpayer status, the bank maintaining the company’s account may request additional certifications (the W-8 or W-9 forms) and classify the client under the FATCA regime. Failing to provide the correct classification or required information can result in account-opening refusals, frozen funds, or, in extreme cases, a 30% withholding tax imposed by the financial institution on certain US-source payments.

Importantly, if the company itself meets the statutory definition of a financial institution — which happens, for example, in investment structures, alternative investment companies, or special purpose vehicles — it may carry its own independent reporting obligation towards Polish tax authorities, separate from its bank’s obligations. This includes so-called zero reporting, where no reportable accounts are identified.

How to limit the risk?

In practice, this comes down to three steps: determining whether the company falls within the statutory definition of a financial institution under the FATCA Act, verifying the tax status of shareholders and beneficial owners, and — if a reporting obligation does arise — implementing a procedure to identify reportable accounts and filing the report on time. Skipping this analysis can prove costly, particularly in multi-tier corporate groups where FATCA status is not obvious at first glance.

If your company has a foreign, including a US, shareholder and you are not certain whether FATCA obligations arise, it is worth verifying this before a financial institution or tax authority does it for you.