"US Person" status
A ‘US Person’ can create and use a Lydia and/or Sumeria account. They only need to declare their status at the time of identity verification (or during the completion of the contract if their situation changes).
The US Foreign Account Tax Compliance Act (FATCA) has major consequences for those customers.
Restrictions
Limits
The sum total of the Lydia and Sumeria account balances of each US person cannot exceed €40,000.
This could be a bank transfer received, a credit card top-up, a payment between friends or a purchase refund. The customer will then receive a message detailing the amount, date and type of transaction rejected.
Features
US person’ customers will not have access to the following features:
- The remunerated current account
- The trading account
- Scratch cards
- Shared accounts
- The express loan
- The referral program
Advantages
A “US Person” can open an account for free with a French IBAN, a Visa card for daily payments, as well as fee-free payments abroad.
They can send and receive payments between friends, create Lydia money pots, and benefit from additional features by subscribing to Sumeria offers.
The FATCA regulation
The status of “US Person” is defined by the US extraterritorial FATCA regulation. FATCA has applied in France since 1 July 2014 and requires financial institutions to identify US taxpayers and declare their financial assets annually to the French tax authorities (DGFIP), which will then liaise with the US tax authorities (IRS - Internal Revenue Service). To combat tax evasion, the law requires foreign financial institutions to declare financial assets held by “US Persons” to the US tax authorities.
Financial institutions such as Lydia Solutions must therefore identify and declare each year the accounts held by US Persons to the French authorities, failing which they may be subject to a 30% withholding tax on certain income of US origin.
By the same token, a US Person who fails to declare this status to a financial institution and who does not declare accounts and assets held abroad may be liable to a flat-rate withholding tax of 30% on certain taxable payments of US-source income, and may be subject to heavy fines. In the future, depending on regulatory developments, FATCA withholding may also apply to certain foreign pass-through payments.
What is a “US Person”?
Under US regulations, a “US Person” can be :
- An American citizen, i.e. any person born in the United States who resides in France or another country and who has not renounced American citizenship or who has obtained this nationality through naturalisation.
- A legal resident, in particular Green Card holders.
- A permanent resident of the United States.
- Any person spending a sufficiently long period of time in the United States. This generally includes people who have been physically present in the United States for at least 31 days in the current year and a total of 183 days in the last three years (counting all days present in the current year, 1/3 of days present in the previous year and 1/6 of days present in the year before last).
- More generally, any person presenting Americanism indicators as defined by the FATCA regulations and the agreement of 14 November 2013 between France and the United States (IGA 1 - Intergovernmental Agreement).
How do financial institutions identify US Persons?
The US indicia (criteria for identifying persons likely to be considered US Persons) are defined by US law as follows:
- Place of birth in the United States;
- US nationality ;
- Address of residence in the United States;
- Known address marked ‘Attention’ or ‘General Delivery’;
- Telephone number in the United States;
- Power of attorney given to a natural person with an address in the United States;
- Standing order to transfer funds to an account opened in the United States.
Financial institutions are required to presume that any person who meets the FATCA criteria for US Person status is a US Person, unless the person proves otherwise.
The US Person at Lydia Solutions
A “US Person” can create an account and use Sumeria. Customers need only self-certify this status at the time of identity verification (or during the performance of the contract if their situation changes, and they become or are considered to be a ‘US Person’ within the meaning of US regulations).
If a customer has US Person status but does not have a TIN (Tax Identification Number), he must download and complete the SSA form, which will enable him to apply for a TIN, attaching his passport and birth certificate and sending the whole file to the following address:
Code Center Information
3 RD FLOOR
123 WILLIAM STREET
NEW YORK NY 10038
USA
