Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

5 new IGAs with 3 business days to go until 30% FATCA withholding on remaining 167 countries begins

Posted by William Byrnes on June 25, 2014


(Updated as of 19:00 EDT June 25, 2014, FFI #s updated June 26 with Haydon Perryman, Director of Compliance Solutions, Strevus)

FATCA FACTS

IGAs: 83 (72,034 FFI/branches)

Model 1: 74 (57,492 FFI/branches)

Model 2: 9 (13,834 FFI/branches)

Non-IGAs: 250 – 83 = 167 (5,212 FFI/branches)

Registered: 77,353 FFI/branches from 205 countries/jurisdictions

Approximately 25% (19,046) of the currently 77,353 registered FFIs are impacted by the FFI agreement changes, including FFIs registrations from the current nine Model 2 countries/jurisdictions and the FFI registrations from the 123 countries/jurisdictions without an IGA.

77,353 financial institutions and their branches registered from 205 countries and jurisdictions, of a total of 250 countries and jurisdictions recognized by the USA.  45 countries / jurisdictions do not yet have any FFI registrations. One of these 45 countries, Kosovo, has an IGA.

Of the total FFIs registered, 72,141 FFIs (93%) registered from the 83 countries/jurisdictions that as of June 25th (at 19:00 EDT) have an IGA.  57,492 FFIs registered from Model I IGA jurisdictions probably most as a category of a Model 1 Deemed Compliant FFI or as a branch.  13,834 (18%) of FFIs registered as Model 2 reporting FFIs or branches.  These 13,834 Model 2 FFI registrations are impacted by the FFI Agreement changes of June 24, 2014.

Non IGA Registrations (Participating FFI and other)

The 5,212 FFIs registered either as Participating FFIs or branches from the remaining 123 countries/jurisdictions (without an IGA) currently are also impacted (note that while there are 83 IGAs as of today, no FFI registered from Kosovo as of the June 2nd GIIN list, thus it is 205 subtracting 82 IGAs).

30% FATCA Withholding Begins July 1st

Meanwhile, 30% withholding on all withholdable payments to nonparticipating FFIs in the 167 non-IGA countries/jurisdictions begins three business days from today, on July 1st. Most commentators expect a rush of over 300,000 FFI registrations by the end of 2014.  Some predict more than a half million entities must still register, based on the UK’s HMRC estimate that 75,000 entities are impacted by FATCA within the United Kingdom (where less than 6,300 are currently registered on the GIIN list). Withholding on IGA jurisdiction non-compliant FFIs only begins January 1st.

Model 2 IGAs – 9 (13,834 FFI Registered)

  1. Armenia (5-8-2014): 28
  2. Austria (4-29-2014): 2,979
  3. Bermuda (12-19-2013): 1,243
  4. Chile (3-5-2014): 325
  5. Hong Kong (5-9-2014): 1.540
  6. Japan (6-11-2013): 3,252
  7. Paraguay (6-6-2014): 17
  8. Switzerland (2-14-2013): 4,041
  9. Taiwan: 409

Below is a selection of the 77,353 registered from 119 of the total 205 countries and jurisdictions on the June 2nd GIIN list.

  1. Afghanistan: 7
  2. Andorra: 34
  3. Anguilla: 71
  4. Antigua & Barbuda: 36
  5. Argentina: 270
  6. Armenia: 28 <– IGA
  7. Aruba: 14
  8. Australia: 1,865 <– IGA
  9. Austria: 2,979
  10. Azerbaijan: 17 <– IGA
  11. Bahamas: 611  <– IGA
  12. Barbados: 124  <– IGA
  13. Belgium: 250  <– IGA
  14. Belarus: 65
  15. Belize: 123
  16. Bermuda: 1,243
  17. Brazil: 2,259  <– IGA
  18. Bulgaria: 73
  19. BVI: 1,838  <– IGA
  20. Canada: 2,265  <– IGA
  21. Cayman Islands: 14,837  <– IGA
  22. China: 212
  23. Christmas Island: 1
  24. Colombia: 173  <– IGA
  25. Comoros Is.: 1
  26. Costa Rica: 123  <– IGA
  27. Cook Is.: 73
  28. Croatia: 51  <– IGA
  29. Curacao: 174  <– IGA
  30. Cyprus: 280  <– IGA
  31. Czech Republic: 93  <– IGA
  32. Denmark: 187  <– IGA
  33. Djibouti: 1
  34. Dominica: 17 <– IGA
  35. Dominican Republic: 68
  36. Ecuador: 22
  37. Egypt: 63
  38. Equatorial Guinea: 1
  39. Estonia: 27  <– IGA
  40. Falkland Islands: 1
  41. Finland: 467  <– IGA
  42. France: 2,290  <– IGA
  43. French Southern Territories: 1
  44. Georgia: 24  <– IGA
  45. Germany: 2,555  <– IGA
  46. Gibraltar: 97  <– IGA
  47. Greece: 92
  48. Greenland: 1
  49. Grenada: 32
  50. Guadeloupe: 1
  51. Guam: 3
  52. Guatemala: 76
  53. Guernsey: 2,396  <– IGA
  54. Honduras: 48  <– IGA
  55. Hong Kong: 1,540 <– IGA
  56. Hungary: 102  <– IGA
  57. Iceland: 5
  58. India: 247  <– IGA
  59. Indonesia: 308 <– IGA
  60. Ireland: 1,757  <– IGA
  61. Isle of Man: 313  <– IGA
  62. Israel: 322 <– IGA
  63. Italy: 457  <– IGA
  64. Jamaica: 42 <– IGA
  65. Japan: 3,252  <– IGA
  66. Jersey: 1,619  <– IGA
  67. North Korea: 4
  68. South Korea: 397
  69. Kuwait: 78
  70. Latvia: 41
  71. Lichtenstein: 240  <– IGA
  72. Lithuania: 22 <– IGA
  73. Luxembourg: 3,561 <– IGA
  74. Macao: 37
  75. Malta: 236  <– IGA
  76. Mauritius: 728  <– IGA
  77. Mexico: 419  <– IGA
  78. Monaco: 99
  79. Netherlands: 2,054  <– IGA
  80. New Zealand: 335  <– IGA
  81. Norway: 313  <– IGA
  82. Other: 23
  83. Panama: 451  <– IGA
  84. Paraguay: 17   <– IGA
  85. Peru: 165  <– IGA
  86. Poland: 165  <– IGA
  87. Portugal: 256  <– IGA
  88. Qatar: 47  <– IGA
  89. Romania: 110 <– IGA
  90. Russia: 515
  91. Saint Pierre & Miquelon: 1
  92. San Marino: 15
  93. Saudi Arabia: 18 <–IGA
  94. Seychelles: 38  <– IGA
  95. Singapore: 784  <– IGA
  96. South Africa: 318  <– IGA
  97. Spain: 1,188  <– IGA
  98. Slovakia: 55  <– IGA
  99. Slovenia:  21  <– IGA
  100. St Kitts & Nevis: 71 <– IGA
  101. St Lucia: 61  <– IGA
  102. St. Vincent and the Grenadines: 105  <– IGA
  103. Sweden: 313  <– IGA
  104. Switzerland: 4,041  <– IGA
  105. Taiwan: 409 <- IGA
  106. Thailand: 768 <-IGA
  107. Timor-Leste: 1
  108. Togo: 4
  109. Tonga: 1
  110. Turkey: 66  <– IGA
  111. Turkmenistan: 1   <-– IGA
  112. Turks & Caicos: 28  <– IGA
  113. Ukraine: 106
  114. United Arab Emirates: 136  <– IGA
  115. United Kingdom: 6,264  <– IGA
  116. USA: 563
  117. Uruguay: 132
  118. Venezuela: 30
  119. Wallis & Fortuna: 1

FFI Registration Among Model 1 IGAs and the Rest

Of a possible 250 countries and jurisdictions recognized by the US State Department and IRS (not including the 14 US dependencies for which FATCA withholding does not apply), 45 do not yet have an FFI registration.  But of the 205 countries and jurisdictions with FFI registrations, 20% of the total registered FFIs are Cayman Islands firms (14,837) (see my article of June 8). 

There is not one reliable number of how many financial entities in the world qualify as a financial institution requiring FATCA registration.  The list of FFIs requiring registration includes, by example, trusts companies, certain trusts, life insurance companies, investment funds, banks.  The IRS has said that “At this time, the full FFI list is expected to be less than 500,000 records.”

Some financial pundits are estimating as many as twice this figure.  Yet it seems that the categories of ‘certified deemed compliant’ FFIs and exempt FFIs should soak up a number of small, local FFIs.  Yet,  the UK Revenue HMRC estimates 75,000 of its FFIs are impacted by FATCA (http://www.hmrc.gov.uk/fatca/itc-regs-2013.pdf – page 4) (down from 300,000 prior to the UK-USA IGA).   If the UK, as one albeit important financial center, requires anything close to 75,000 FFI registrations, then the IRS figure of 500,000 FFI registrations is far too low.  Note that the ‘500,000’ FFI figure, if it excludes the corresponding branch registrations in other jurisdictions, and if it excludes the five classifications of “Certified Deemed Compliant”, seems more realistic.

BRIC Registration

Brazil leads the BRIC countries with 2,258 FFI registered, followed by Russia (515), India (247) with China only having 212.

NAFTA Registrations

2,265 FFIs registered from Canada and Mexico at 419.

Major OECD Countries Registrations

The United Kingdom (6,264) Revenue has recently announced that it will not adopt the IRS issued six-month extension (until December 31, 2014) for entity accounts (see my articles of May 5th and 2nd).  Thus, from July 1st, UK FFIs must document all personal and entity accounts under the requirements for “new” accounts as opposed as to “pre-existing” account due diligence procedures.

Australia (1,865), France (2,291), Germany (2,255), Ireland (1,757) and Netherlands (2,054).

European Financial Centers Registrations

Switzerland (4,041), Luxembourg (3,561), Austria (2,979), Lichtenstein (240).  Guernsey (2,396), Jersey (1,619), Isle of Man (313) and Gibraltar (97).

Caribbean Financial Centers Registrations

BVI (1,838), Bahamas (611), Bermuda (1,243) and Panama (451).

State of Palestine Registrations

23 FFIs registered with the IRS, listed as from the State of Palestine.  Primarily MENA banks and a branch of HSBC Middle East Bank.  See June 8th article  about this contentious issue.

North Korean Registrations

While North Korean remains a sanctioned country by OFAC (see http://www.treasury.gov/resource-center/sanctions/Programs/pages/nkorea.aspx) with a FINCEN AML update available at http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-A005.pdf, it had 4 FFI branches register.

“Other” Registrations

23 financial firms listed “other” as the country / jurisdiction.  By example, Harneys Nevis by example should probably register under Nevis (or where it is incorporated, if not Nevis)?  Why is the Austrian insurance group, Sigal Life UNIQA group Austria,  registered under “Other”?  Perhaps the July 1st list will have movement from “Other” to actual countries?

Interesting Research on the UK FFI List (by the subscriber “Edelweiss” in the comments on this blog)

Edelweiss has posted his research on the UK’s 6.264 registered FFIs (under comments to another one of this blog’s articles).  I think his research bears repeating in this article.  By example, he reviewed the list by GIIN and determined that about 1% of the global sign-ups of the June 2nd GIIN list are affiliated with AXA SA, the French financial services firm.

He then compares the 6,264 entities registered from the UK with the HMRC estimate (pg. 4) of 75,000 impacted FFIs (down from 300,000 prior to the IGA), finding that less than 10% of UK FFIs registered for the June GIIN list.  Either the HMRC estimated horribly wrong, or most UK FFIs are still undertaking initial FATCA preparation (relying on the October 25th registration deadline imposed by HRMC instead).

  • The UK list is dominated by fund management firms and their various funds, private equity and the plethora of feeder funds investment trusts and quite a few trusts. Bridgepoint, a small UK private equity firm, has 72 entities (globally), while 3i, a similarly small UK private equity firm, has 45 entities (globally).
  • There are quite a few entities that appear to have names suggesting they are part of a private equity holding company structure.
  • Globally, he found 26 mentions of “Bidco”, 157 of “Holdco”, 37 “Midco”, 44 “Topco”, 144 “Acquisition”, 156 “Mezzanine”.
  • He found 321 instances of “LLP” and “265″ instances of partnership
  • Finally, he found 16 “deceased” and 33 “will trust”

Model 1 IGA – 31 (followed by number of registered FFIs/branches)

  1. Australia (4-28-2014): 1,865
  2. Belgium (4-23-2014): 250
  3. Canada (2-5-2014): 2,265
  4. Cayman Islands (11-29-2013): 14,837
  5. Costa Rica (11-26-2013): 123
  6. Denmark (11-19-2012): 187
  7. Estonia (4-11-2014): 27
  8. Finland (3-5-2014): 467
  9. France (11-14-2013): 2,291
  10. Germany (5-31-2013): 2,555
  11. Gibraltar (5-8-2014): 97
  12. Guernsey (12-13-2013): 2,396
  13. Hungary (2-4-2014): 102
  14. Honduras (3-31-2014): 48
  15. Ireland (1-23-2013): 1,757
  16. Isle of Man (12-13-2013): 313
  17. Italy (1-10-2014): 457
  18. Jamaica (5-1-2014): 42
  19. Jersey (12-13-2013): 1,619
  20. Liechtenstein (5-19-2014): 240
  21. Luxembourg (3-28-2014): 3,561
  22. Malta (12-16-2013): 236
  23. Mauritius (12-27-2013): 728
  24. Mexico (4-9-2014): 419
  25. Netherlands (12-18-2013): 2,054
  26. New Zealand (6-12-2014) 335
  27. Norway (4-15-2013): 313
  28. Slovenia (6-2-2014): 21
  29. South Africa (6-9-2014): 318  
  30. Spain (5-14-2013): 1,188
  31. United Kingdom (9-12-2012): 6,264

Model 2 IGA – 5

  1. Austria (4-29-2014): 2,979
  2. Bermuda (12-19-2013): 1,243
  3. Chile (3-5-2014): 325
  4. Japan (6-11-2013): 3,252
  5. Switzerland (2-14-2013): 4,041

Jurisdictions that have reached agreements in substance:

Model 1 IGA – 43 (followed by number of registered FFIs)

  1. Antigua and Barbuda (6-3-2014): 36
  2. Azerbaijan (5-16-2014): 17
  3. Bahamas (4-17-2014): 611
  4. Barbados (5-27-2014): 124
  5. Belarus (6-6-2014): 65
  6. Brazil (4-2-2014): 2,259
  7. British Virgin Islands (4-2-2014): 1,838
  8. Bulgaria (4-23-2014): 73
  9. Colombia (4-23-2014): 173
  10. Croatia (4-2-2014): 51
  11. Curaçao (4-30-2014): 174
  12. Czech Republic (4-2-2014): 93
  13. Cyprus (4-22-2014): 280
  14. Dominica (6-19-2014): 17 < – new entry
  15. Georgia (6-12-201): 25
  16. Grenada (6-16-2014): 32 < – new entry
  17. India (4-11-2014): 247
  18. Indonesia (5-4-2014): 308
  19. Israel (4-28-2014): 322
  20. Kosovo (4-2-2014) – nil
  21. Kuwait (5-1-2014): 78
  22. Latvia (4-2-2014): 41
  23. Lithuania (4-2-2014): 22
  24. Panama (5-1-2014): 451
  25. Peru (5-1-2014): 165
  26. Poland (4-2-2014): 165
  27. Portugal (4-2-2014): 256
  28. Qatar (4-2-2014): 47
  29. Romania (4-2-2014): 110
  30. St. Kitts and Nevis (6-4-2014): 71
  31. St. Lucia (6-12-2014): 61
  32. St. Vincent and the Grenadines (6-2-2014): 105
  33. Saudi Arabia (6-24-2014): 18 < – new entry
  34. Seychelles (5-28-2014): 38
  35. Singapore (5-5-2014): 784
  36. Slovak Republic (4-11-2014): 55
  37. South Korea (4-2-2014): 397
  38. Sweden (4-24-2014): 313
  39. Thailand (6-24-2014): 768 < – new entry
  40. Turkey (6-3-2014): 66
  41. Turkmenistan (6-3-2014): 1  
  42. Turks and Caicos Islands (5-12-2014): 28
  43. United Arab Emirates (5-23-2014): 136

Model 2 IGA – 4

  1. Armenia (5-8-2014): 28
  2. Hong Kong (5-9-2014): 1.540
  3. Paraguay (6-6-2014): 18  
  4. Taiwan (6-23-2014): 409 < – new entry

Practical Compliance Guide for FATCA

The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters by 50 industry experts 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 challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: