FATCA was a pioneering international tax compliance framework. Understanding its relationship with CARF helps contextualize the new crypto reporting requirements.
FATCA Overview
Enacted by the US in 2010, FATCA requires:
- Foreign financial institutions to report US account holders
- US persons to report foreign financial accounts
- Withholding on payments to non-compliant entities
Jurisdictional Scope
FATCA
US-centric: focuses on US taxpayers and US-source income.
CARF
Multilateral: automatic exchange between all participating jurisdictions.
Reporting Requirements
FATCA
- Account holder identification
- Account balance reporting
- Income and proceeds
CARF
- User identification with TINs
- Transaction-based reporting
- Crypto-asset specific data elements
Enforcement
FATCA
30% withholding on US-source payments to non-compliant entities.
CARF
Jurisdiction-specific penalties; no withholding mechanism.
US crypto reporting may involve both domestic requirements (Form 1099-DA proposed) and CARF for international exchange.
Coordination
US crypto reporting may involve both:
- Domestic reporting (Form 1099-DA proposed)
- CARF for international exchange
Conclusion
FATCA pioneered automatic exchange; CARF extends principles to crypto with multilateral reach.
Automate CARF Compliance
Self-certification, TIN validation, transaction reporting, and XML generation for 76 jurisdictions.