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Bahamas reporting and U.S. foreign trust rules

The Bahamas describes its CRS arrangements and FATCA agreement, and IRS reporting rules apply to U.S. citizens who own or receive distributions from foreign trusts.

Bahamas CRS approach

The Bahamas implements CRS on a non-reciprocal basis under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Under its wider approach, financial institutions collect and retain CRS information for all account holders, including non-residents, so it is ready for reporting. Financial institutions transmit CRS information to the Competent Authority only after receiving notification to do so.[2]

Due diligence also covers accounts whose holder, or controlling person, is tax resident in an overseas jurisdiction that is not reportable. Financial institutions submit only the mandatory information about reportable accounts when the Competent Authority requests it. These are duties of financial institutions, not a filing requirement for individual account holders.[2]

FATCA agreement status

The U.S. Treasury table lists the Bahamas under a Model 1 FATCA agreement and gives its status as in force.[4]

Beneficial ownership and trust registers

The Bahamas keeps a beneficial ownership register under the Register of Beneficial Ownership Act. The register is not open to the public. The Securities Commission's supervisory scope includes corporate service providers and certain trust service roles. CRS covers financial account due diligence and account information collection.[1]

IRS reporting for U.S. persons

The IRS describes several information reporting regimes that can relate to foreign trust transactions, ownership, or distributions. A U.S. person includes a U.S. citizen, and the IRS says reporting may involve Forms 3520 and 3520-A, Form 8938, and FinCEN Form 114, also called FBAR.[6]

Form 3520

Form 3520 is the annual return used to report certain transactions with foreign trusts and receipt of certain foreign gifts. IRS instructions describe filing triggers that include a U.S. person treated as the owner of any part of a foreign trust's assets, and a U.S. person who receives a distribution. The form also covers certain loans or uncompensated use of trust property involving an owner or beneficiary.[7]

The IRS instructions say the U.S. person generally files a separate Form 3520 for each foreign trust involved. A U.S. owner completes Part II, including when there were no trust transactions during the tax year. A beneficiary who receives a distribution generally completes Part III under the instructions.[7]

Form 3520-A

Form 3520-A is the annual information return for a foreign trust with a U.S. owner. The IRS says U.S. persons treated as owners under grantor trust rules must ensure that the trust files a complete, timely return and furnishes annual statements to U.S. owners and beneficiaries. If the trust does not file, the U.S. owner attaches a substitute Form 3520-A to the owner's timely Form 3520 and provides the required statements.[6]

Form 8938 and FBAR

Form 8938 reports specified foreign financial assets, while FBAR is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. The IRS says a U.S. person may have these obligations in addition to foreign trust reporting. It also says specified exceptions from Forms 3520 and 3520-A do not remove any separate Form 8938 or FBAR obligation.[6][7]

Questions and answers

How does the Bahamas describe its CRS approach?

The Bahamas says financial institutions collect and retain CRS information for all account holders, with information on non-residents ready for reporting. Financial institutions report information on reportable accounts to the Competent Authority when it requests it.[2]

What FATCA agreement model does Treasury list for the Bahamas?

The Treasury table lists a Model 1 agreement for the Bahamas and marks its status as in force.[4]

Does the Bahamas have a beneficial ownership register?

Yes. The Bahamas keeps a beneficial ownership register under the Register of Beneficial Ownership Act, and the register is not open to the public. The Securities Commission supervises corporate service providers and certain trust service roles, and CRS covers financial account due diligence.[1]

When does Form 3520 relate to a foreign trust?

The IRS instructions include U.S. owners of foreign trust assets and U.S. persons who receive distributions among Form 3520 filing situations. The instructions also cover specified loans or uncompensated trust property use involving an owner or beneficiary.[7]

Who is responsible for Form 3520-A when a foreign trust has a U.S. owner?

The IRS says U.S. persons treated as owners must ensure that the foreign trust files Form 3520-A and furnishes annual statements. If the trust does not file, the U.S. owner attaches a substitute return to Form 3520.[6]

Are Form 8938 and FBAR automatic for every foreign trust owner or beneficiary?

The IRS says a U.S. person may be required to file Form 8938 and may be required to file FBAR. Whether an owner or beneficiary must file either form depends on the applicable filing requirements.[7]

Related glossary terms

  • Intergovernmental agreement: An intergovernmental agreement appears in FATCA rules for foreign financial institutions. Form 8938 instructions also use the term for certain foreign accounts.
  • Foreign grantor trust beneficiary statement: A foreign grantor trust beneficiary statement appears on page 5 of Form 3520-A. It reports distributions to U.S. beneficiaries and identifies the trust's owner.

Related articles and guides

Tools and official documents

  • FATCA agreement lookup: Look up any jurisdiction in the U.S. Treasury FATCA table and see its agreement model and status as the Treasury lists them, with a link to the source.

Talk to Richard

Sources and data notes
  1. Securities Commission of The Bahamas, Supervision. https://scb.gov.bs/supervision/. Retrieved .
  2. The Bahamas Competent Authority, Ministry of Finance, Bahamas Approach to Common Reporting Standard and Key Dates. https://taxreporting.finance.gov.bs/bahamas-approach-to-common-reporting-standard-and-key-dates/. Retrieved .
  3. Department of Inland Revenue, The Bahamas, ABOUT DIR. https://inlandrevenue.finance.gov.bs/about-dir/. Retrieved .
  4. U.S. Department of the Treasury, Foreign Account Tax Compliance Act: agreements and understandings by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  5. Internal Revenue Service, United States income tax treaties, A to Z. https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z. Retrieved .
  6. Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
  7. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .

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