What obliges Hedonova to withhold a 30% amount of your money?

## **What is FATCA?**

FATCA, short for the Foreign Account Tax Compliance Act, is a U.S. law established as part of the 2010 Hiring Incentives to Restore Employment (HIRE) Act. It was created to address tax evasion by U.S. individuals who hold financial assets and accounts in foreign countries.

Under FATCA, foreign financial institutions (FFIs) and specific non-financial foreign entities must report financial assets held by U.S. account holders to the IRS. If they fail to do so, they may face withholding taxes on certain payments.

Additionally, U.S. taxpayers who have financial assets located outside the United States are also required to report these assets to the IRS. Failure to comply with FATCA reporting can result in significant penalties.

## **Why does Hedonova need to comply with FATCA?** 

FATCA primarily affects two groups: U.S. taxpayers with foreign financial accounts and foreign financial institutions.

U.S. funds are generally not required to register with the IRS except in limited circumstances, such as when a U.S. fund serves as a "sponsoring entity" for a non-U.S. fund. However, U.S. funds are subject to due diligence, withholding and reporting obligations under FATCA.

To report these assets, we must obtain consent from our investors. If an investor refuses to provide the necessary information, we are obligated to withhold a 30% tax on certain U.S. payments as defined by the IRS FATCA regulations.

Furthermore, *[FATCA mandates a 30% withholding tax](https://www.irs.gov/businesses/corporations/fatca-information-for-united-states-entities)* on specific U.S. income payments, known as fixed or determinable, annual or periodical income (FDA), unless the payee's documentation meets all of FATCA's requirements.

## **FATCA compliance: What is expected from investors?**

To comply with withholding and other obligations, we must ascertain the FATCA status of our investors. This is generally done by obtaining a *[Form W-9](https://www.irs.gov/forms-pubs/about-form-w-9)* from U.S. investors and the applicable *[Form W-8](https://www.irs.gov/forms-pubs/about-form-w-8-ben)* from foreign investors. Investors should provide accurate and complete information when filling out these forms. By doing so, we can avoid the obligation to withhold 30% of their income, leaving investors with the full withdrawal amount.

A U.S. fund's FATCA responsibilities extend beyond just "getting the forms." We are required to conduct specific due diligence to authenticate the validity of the withholding certificates, ensuring that accurate information is provided on the forms. \
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At Hedonova, we go the extra mile to make FATCA compliance as hassle-free as possible for our clients. Instead of sending traditional paper forms, we've developed our own intuitive electronic process within our app. This innovative approach simplifies the FATCA reporting for our investors. They can conveniently complete the necessary forms and provide essential information electronically, ensuring a smoother experience for all parties involved.\
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[Steps to file form W-9: A guide for U.S. citizens](https://docs.google.com/document/d/1Krk6-ccMMhHqgARnk-vrCSnqQqj2mMgATnkcRbKjaVs/edit)

[Steps to file form W-8BEN: A guide for foreign individual](https://docs.google.com/document/d/1N_OCdgNowcGmR8mgXkVmBs5jVupBPi-fH9cajKO-oGo/edit)

For any issues encountered during W-8BEN or W-9 certification, please contact Hedonova support or reach out via email at [hello@hedonova.io](mailto:hello@hedonova.io) 

## **The significance of FATCA compliance at Hedonova**  

We recognize that compliance with FATCA holds great significance for our clients and our commitment to providing top-tier financial services. FATCA compliance plays a pivotal role in safeguarding our clients' investments and ensuring transparency in their financial dealings.

**Ensuring regulatory compliance:** Compliance with FATCA is not just a legal requirement; it is an essential component of maintaining our commitment to regulatory integrity. By adhering to FATCA regulations, we demonstrate our dedication to upholding the highest standards of financial responsibility and ethical conduct.

**Protecting client investments:** Compliance with FATCA helps protect our clients' investments. Non-compliance can result in significant consequences, including the imposition of a 30% withholding tax on certain payments. By ensuring that all necessary documentation is in order and that our clients' FATCA status is accurately determined, we mitigate the risk of withholding taxes that could impact their returns on investment. In essence, FATCA compliance acts as a shield safeguarding the financial interests of our clients.

**Enhancing client credibility:** Maintaining FATCA compliance enhances our clients' credibility in the international financial landscape. Being compliant with global tax regulations reinforces the reputation of our clients as responsible and trustworthy investors. This credibility can be especially valuable for clients engaged in international financial activities, where transparency and accountability are paramount.

**Streamlining investment processes:** By adhering to FATCA regulations, we streamline the investment process for our clients. We ensure that the necessary forms and documentation are obtained efficiently, reducing administrative hassles and delays. This allows our clients to focus on their investment strategies without being bogged down by regulatory complexities.

**Facilitating responsible financial practices:** FATCA compliance aligns with our commitment to promoting responsible financial practices. It encourages transparent financial reporting and discourages tax evasion, fostering an environment of financial integrity and accountability. Compliance with FATCA reflects our dedication to ethical financial conduct, aligning our values with those of our clients.

Under FATCA, foreign financial institutions (FFIs) and specific non-financial foreign entities must report financial assets held by U.S. account holders to the IRS. If they fail to do so, they may face withholding taxes on certain payments.


What obliges Hedonova to withhold a 30% amount of your money?

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