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Are you a tax resident in the United States?

Are you a tax resident in the United States?

Are you or do you think you could be a tax resident in the United States (US)? Then read the information below carefully. You will read, among other things, information about the US tax law Foreign Account Tax Compliance Act (FATCA) and what you may need to do if you are (potentially) liable to pay tax in the US.

What is FATCA?

The Netherlands has concluded a data exchange agreement with the US government. The reason for this is the aforementioned American tax law FATCA, which came into effect on 1 July 2014. This legislation is intended to ensure that US taxpayers holding assets outside the United States properly file tax returns with the US tax authorities, the IRS.

What does this mean to you?

If it turns out that you may be subject to tax in the US, we are obliged to pass on your details to the Dutch tax authorities. The Dutch tax authorities pass this information on to the American tax authorities (IRS).

If you request a (quote) for a new life insurance policy or make a change request to an existing life insurance policy through your insurance adviser at Flexgarant Assuradeurs BV (FGA), we also ask the following 2 questions:

  1. Are you a tax resident in the United States?
  2. Are you a US person?

If at least one of the questions is answered with “yes”, we may ask you additional questions or request that you send us additional documents. Depending on the answers to the questions or on the basis of the additional documents, FGA will decide whether a new life insurance policy can be taken out. Regular changes to existing life insurance policies are made in accordance with the (special) conditions.

What is the US tax liability?

If you are a tax resident, this means that you have to file a return in the US. Whether you have to pay tax depends, among other things, on the tax treaty between the Netherlands and the US or, for example, your income. The IRS defines a US taxpayer as a US Person.

Are you a US Person?

For US income tax purposes, a “US Person” is a citizen or resident of the United States of America.

United States citizenship is acquired through birth or naturalization following birth. If a person was born outside the United States with at least one parent who is a U.S. citizen, the person is considered a U.S. citizen.

Foreigners residing in the United States are generally taxed in the same way as US citizens. A foreigner is treated as a resident of the United States in a calendar year if and only if that person:

  • has legally obtained permanent residence status for the United States by, for example, meeting the ‘Green Card Test’; or
  • meets the ‘Substantial Presence Test’, a formula that determines the number of days he/she stays in the United States; or
  • makes a ‘First-Year Election’, a formula that allows a foreigner to pass the ‘Substantial Presence Test’ one year earlier than normal.
  • was born in the USA.
  • has a US passport.
  • lives in the US.
  • has a US residential or postal address.
  • periodically transfers money to the US.
  • has an authorized representative with a US address.
  • has a Per Address (P/A) in the US

More information about FATCA and US Persons can be found on the NN website .

Possible US Person with an existing FGA . product

The following products predominantly controlled by FGA are not treated as “financial accounts” and therefore are not U.S. reportable products under the Convention:

  1. All products that are deductible in the accrual phase and taxable in the distribution phase to which Articles 3.124, 3.125 and 3.126a of the Income Tax Act 2001.
  2. A standing right, as described in Article 11, first paragraph, part g, and Article 11a of the Wages and Salaries Tax Act 1964, which will continue to apply after 31-12-2013 on the basis of Article 39f, paragraph 1 of the LB Act.
  3. Annuities, either granted in respect of the surrender of alimony as determined in Article 6.5 or as referred to in Article 6.6 of the 2001 Income Tax Act.

FGA has the obligation to report to the Dutch tax authorities whether there is a US Person. In addition, the tax authorities assess whether or not a product is reported to the American tax authorities, taking into account the exemption policy.