William Byrnes' Tax, Wealth, and Risk Intelligence

[updated May 1 to include two IGAs posted this morning by Treasury] 60 days remain until the July 1st deadline that FATCA’s 30% withholding applies to payments from US sources. As of April 30th, the list of IGAs now to be treated in effect has expanded to 57, including 30 that have been signed and 27 that are agreed (but not yet officially signed).  8 IGAs have been added this past week, including Belgium, Bulgaria, Curaçao, Colombia, Cyprus, Estonia, Israel, and Sweden (albeit Estonia was signed over 2 weeks past but had not yet been included).  The Mexico-USA IGA of November 19, 2012 has been revised and re-issued (see Mexico (4-17-2014)).  Finally, the IGAs of Austria and Australia have now been released. 

Conspicuously, the most important US FDI jurisdictions that are not yet included on the list are China, Hong Kong and Taiwan, as well as the Middle Eastern jurisdictions such as United Arab Emirates and Saudi Arabia.  Recent US tension with Russia over the Ukraine and Crimea brought its treasury negotiations to a standstill.

But of immediate importance is the 4 days remaining for foreign financial institutions (FFIs) to register by May 5 with the IRS to obtain a GIIN and to be included on the IRS’ list of participating FFIs in order to avoid the attracting the 30% withholding by US withholding agents.   However, FFIs in IGA jurisdictions have an extension to register with the IRS – until December 22, 2014 to obtain their GIINs.

Financial Institutions that are treated as Reporting Financial Institutions under a Model 1 IGA register as Registered Deemed-Compliant Foreign Financial Institutions, whereas Financial Institutions that are treated as Reporting Financial Institutions under a Model 2 IGA register as Participating Foreign Financial Institutions.   One month ago now the IRS released the new 2014 Form W-8BEN-E that must be used by entities that are beneficial owners of a U.S. source payment, or of another entity that is the beneficial owner.  Form W-8BEN-E has thirty parts.  All filers will complete Parts I and XXIX.

Part I of the form requires general information, the QI status, and the FATCA classification of the filer.  Question 4 of Part I requests the QI status. If the filer is a disregarded entity, partnership, simple trust, or grantor trust, then the filer must complete Part III if the entity is claiming benefits under a U.S. tax treaty. Question 5 requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IV through XXVIII must be completed.

Part XXIX requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf.  This part of the final form also contains the following language that does not appear in the current form: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Note that if the filer is a passive NFFE, it must complete Part XXVI as well as Part XXX if it has substantial U.S. owners.  For a Passive NFFE, a specified U.S. person is a substantial U.S. owner if the person has more than a 10 percent beneficial interest in the entity.  Completion of the other parts of the final form W-8BEN-E will depend upon the FATCA classification of the filer.  For further analysis of that form, see  https://profwilliambyrnes.com/2014/04/02/irs-releases-final-fatca-form-w-8ben-e/

The following jurisdictions are treated as having a FATCA intergovernmental agreement (IGA) in effect. jurisdictions that have reached agreements in substance (beginning on the date indicated in parenthesis):

Model 1 IGA = 27

1. Bahamas (4-17-2014)
2. Brazil (4-2-2014)
3. British Virgin Islands (4-2-2014)
4. Bulgaria (4-23-2014)  <— new
5. Curaçao (4-30-2014)  <— new
6. Colombia (4-23-2014)   <— new
7. Croatia (4-2-2014)
8. Czech Republic (4-2-2014)
9. Cyprus (4-22-2014)   <— new
10. Gibraltar (4-2-2014)
11. India (4-11-2014)
12. Israel (4-28-2014) <— new
13. Jamaica (4-2-2014)
14. Kosovo (4-2-2014)
15. Latvia (4-2-2014)
16. Liechtenstein (4-2-2014)
17. Lithuania (4-2-2014)
18. New Zealand (4-2-2014)
19. Poland (4-2-2014)
20. Portugal (4-2-2014)
21. Qatar (4-2-2014)
22. Slovak Republic (4-11-2014)
23. Slovenia (4-2-2014)
24. South Africa (4-2-2014)
25. South Korea (4-2-2014)
26. Sweden (4-24-2014)   <— new
27. Romania (4-2-2014)

Model 2 IGA = 0

jurisdiction that have signed and entered into a formal IGA

Practical Compliance Aspects of FATCA and GATCA: The LexisNexis® Guide to FATCA Compliance (2^nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance requirements (Chapters 17–34), including  information exchange protocols and systems.  The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA.  Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, and insights as to the application of FATCA and the IGAs for BRIC and European country chapters.  

If you are interested in discussing the Master or Doctorate degree in the areas of financial services or international taxation, please contact me https://profwilliambyrnes.com/online-tax-degree/