Text or WhatsApp (808) 600-9260
Flag of Bahamas

Bahamas tax treaty and FATCA agreement position

For a U.S. citizen, the IRS treaty list and Treasury's FATCA table describe different kinds of U.S. arrangements with the Bahamas. The IRS list does not include the Bahamas among the jurisdictions shown, while Treasury lists a FATCA agreement entry for the jurisdiction.

What the two lists show

The United States has no income tax treaty with the Bahamas, and the IRS list of U.S. income tax treaty countries has no Bahamas entry. Treasury's FATCA agreements table lists the Bahamas with status "In Force (9-17-2015)" and agreement type Model 1. The Treasury entry also carries a correction notation and the date 6-30-2014. The Bahamas FATCA agreement is an information reporting arrangement, not an income tax treaty.[3][4]

A treaty list entry is relevant to rules for specified kinds of income between countries. The Treasury table is part of the U.S. Foreign Account Tax Compliance Act material and identifies a jurisdiction's intergovernmental agreement status.[3][4]

What the official pages list for the Bahamas
SourceListing
IRS income tax treaty A to ZNo Bahamas entry. The United States has no income tax treaty with the Bahamas.[4]
Treasury FATCA agreements tableBahamas. In Force (9-17-2015). Model 1. Correction. 6-30-2014.[3]

What an income tax treaty describes

The IRS says U.S. income tax treaties can reduce or remove U.S. tax on certain U.S.-source income received by residents of foreign countries. Under the same treaties, U.S. residents or citizens can receive reduced rates or exemptions from foreign taxes on certain income from foreign sources. The rates and exemptions differ by country and by income item.[4]

If a treaty does not cover a type of income, or if there is no treaty between the country and the United States, the income is taxed according to the applicable U.S. return instructions. The IRS publishes U.S. income tax treaty texts by country, and Treasury publishes the related treaty documents.[4]

What the FATCA agreement describes

Treasury explains that FATCA requires foreign financial institutions to report information to the IRS about accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold substantial ownership interests. Institutions can register directly with the IRS under FATCA rules or comply with intergovernmental agreements treated as in effect in their jurisdictions.[3]

Treasury says it published a Model Intergovernmental Agreement to improve tax compliance and implement FATCA. In this context, the agreement is an arrangement addressing how FATCA compliance operates across jurisdictions. The Bahamas agreement is a Model 1 intergovernmental agreement, listed by Treasury as in force from 9-17-2015.[3]

Separately, IRS foreign trust materials state that U.S. persons may have income tax consequences and information reporting duties in transactions with a foreign trust.[3][5]

Separate U.S. trust reporting rules

The IRS defines a U.S. person to include a U.S. citizen or resident. Under IRS rules, a U.S. person who creates a foreign trust, has transactions with one, is treated as its owner, or receives distributions from one may have information reporting requirements. These rules are separate from the Treasury table's jurisdiction listing.[5]

The IRS identifies Form 3520 for certain transactions involving foreign trusts and receipt of certain foreign gifts. It also identifies Form 3520-A in connection with a U.S. person treated as an owner of a foreign trust. The filing circumstances depend on the transaction or status described by the IRS; the FATCA table does not replace those separate form rules.[5]

Related reading

Bahamas reporting and U.S. foreign trust rules provides related context on reporting frameworks. Bahamas Trust Tax and Reporting Rules covers Bahamas trust taxation and reporting. Trust types and statutory regimes in The Bahamas describes Bahamas trust structures. Bahamas trusts and U.S. reporting requirements connects these subjects in the broader Bahamas guide.

Questions and answers

Does the IRS list the Bahamas as an income tax treaty jurisdiction?

No. The United States has no income tax treaty with the Bahamas, so the Bahamas does not appear on the IRS list of treaty countries. Treasury's separate FATCA table does list a Bahamas entry.[3][4]

What does Treasury list for the Bahamas under FATCA?

Treasury lists the Bahamas with status "In Force (9-17-2015)" and Model 1. The Treasury entry also includes a correction notation and the date 6-30-2014.[3]

What does the IRS say an income tax treaty can do?

The IRS says a treaty can reduce or remove U.S. taxes on certain U.S.-source income received by residents of foreign countries. It also says U.S. residents or citizens may receive reduced foreign tax rates or exemptions on certain foreign-source income.[4]

What information does FATCA reporting cover?

Treasury says FATCA requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers. It also covers accounts held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.[3]

Which IRS forms apply to foreign trusts?

The IRS identifies Form 3520 for certain transactions with foreign trusts and receipt of certain foreign gifts. It also discusses Form 3520-A for foreign trusts with a U.S. person treated as an owner under grantor trust rules.[5]

Related glossary terms

  • Foreign entity: Form 8938 instructions treat interests in foreign corporations and partnerships, and in trusts and estates, as specified foreign financial assets in some cases.
  • Trust: The Hague Convention describes a trust as a relationship in which a settlor places assets under a trustee's control for beneficiaries or a specified purpose.
  • Common Reporting Standard: The Common Reporting Standard sets rules for exchanging financial account information, covering reporting institutions, covered accounts and due diligence.

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. 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 .
  2. Department of Inland Revenue, The Bahamas, ABOUT DIR. https://inlandrevenue.finance.gov.bs/about-dir/. Retrieved .
  3. 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 .
  4. 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 .
  5. 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 .
  6. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .

Dates in this block record when each source was read for this page.