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

FATCA Expanded Affiliated Group (EAG) by Country – the FFI List

Posted by William Byrnes on July 2, 2014


free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

3,778 Lead Entities of EAGs among the approximately 88,000 FFI registrations from 250 countries.  Haydon Perryman, FATCA Compliance expert of Strevus, and I are undertaking an analysis of this July 1st FATCA FFI list release by country and by IGA, and now by EAG.  Haydon has put together the below chart based upon the excel formulae he created.  Check out Haydon Perryman’s FATCA blog at http://haydonperryman.wordpress.com/

FATCA EAG Definition

The FFI and its branches and affiliates are defined as an “expanded affiliated group” (“EAG”).  An entity is a part of an EAG if it is affiliated with a common parent that directly or indirectly owns over 50% of the stock by vote and value of such corporation, or in the case of a partnership or non-corporate entity, owns over 50% by value of the beneficial interest of such partnership or non-corporate entity.[1]

Subject to certain phase-in provisions regarding “Limited Branches” and “Limited Affiliates, discussed below, each FFI that is a member of an EAG must obtain the status of either a PFFI or RDCFFI before any of the other group members are able to obtain the benefit of either  such status.  Said another way, one bad apple poisons the barrel, and leads to FATCA withholding for all.

Except to the extent that the rules allowing limited branches and limited affiliates apply (described below the chart), each member of an EAG (including all of its branches, units, offices, and divisions) must conduct due diligence on its accounts, enact FATCA policies and procedures, abide by the terms of the FFI-agreement, and close U.S. accounts if the holder fails to provide required disclosure and reporting information.

  Model 1A IGA Model 1B IGA Model 2 IGA No IGA US Grand Total
Andorra       4   4
Angola       2   2
Anguilla       3   3
Antigua and Barbuda 1         1
Argentina       17   17
Armenia     2     2
Aruba       1   1
Australia 52         52
Austria     71     71
Bahamas 23         23
Bahrain 27         27
Bangladesh       22   22
Barbados 7         7
Belarus 1         1
Belgium 12         12
Belize       5   5
Benin       1   1
Bermuda     103     103
Bolivia, Plurinational State Of       3   3
Botswana       3   3
Brazil 51         51
Brunei Darussalam       2   2
Bulgaria 4         4
Cambodia       2   2
Canada 92         92
Cayman Islands   813       813
Chile     26     26
China 3         3
Colombia 7         7
Cook Islands       36   36
Costa Rica 15         15
Croatia 1         1
Curacao 13         13
Cyprus 12         12
Czech Republic 3         3
Denmark 10         10
Djibouti       1   1
Dominica 1         1
Dominican Republic 2         2
Ecuador       4   4
Egypt       12   12
El Salvador       4   4
Finland 13         13
France 106         106
Georgia 2         2
Germany 65         65
Ghana       4   4
Gibraltar 1         1
Greece       12   12
Guatemala       10   10
Guernsey 98         98
Guyana 2         2
Haiti 1         1
Honduras 6         6
Hong Kong     77     77
Hungary 4         4
Iceland       1   1
India 1         1
Indonesia 9         9
Iraq     3     3
Ireland 37         37
Isle of Man 16         16
Israel 24         24
Italy 33         33
Jamaica 6         6
Japan     167     167
Jersey 92         92
Jordan       10   10
Kazakhstan       9   9
Kenya       11   11
Korea, Republic of 21         21
Kuwait 15         15
Latvia 4         4
Lebanon       18   18
Libya       2   2
Liechtenstein 11         11
Luxembourg 166         166
Macao       2   2
Malawi       1   1
Malaysia 29         29
Malta 19         19
Marshall Islands       3   3
Mauritius 16         16
Mexico 14         14
Monaco       1   1
Mongolia       3   3
Morocco       10   10
Mozambique       1   1
Namibia       4   4
Netherlands 62         62
New Zealand 12         12
Nicaragua     3     3
Nigeria       12   12
Norway 15         15
Oman       3   3
Pakistan       14   14
Panama 32         32
Papua New Guinea       1   1
Peru 8         8
Philippines       15   15
Poland 12         12
Portugal 14         14
Qatar 8         8
Romania 4         4
Russian Federation       42   42
Saint Kitts and Nevis 4         4
Saint Lucia 1         1
Saint Vincent and The Grenadines 2         2
San Marino     5     5
Saudi Arabia 1         1
Serbia 1         1
Seychelles 1         1
Sierra Leone       1   1
Singapore 17         17
Slovenia 3         3
South Africa 16         16
Spain 41         41
Sri Lanka       3   3
Sweden 20         20
Switzerland     157     157
Taiwan     41     41
Tajikistan       1   1
Tanzania, United Republic Of       1   1
Thailand 22         22
Trinidad and Tobago       7   7
Turkey 11         11
Uganda       1   1
Ukraine 3         3
United Arab Emirates 14         14
United Kingdom 290         290
United States         101 101
Uruguay       7   7
Venezuela, Bolivarian Republic Of       4   4
Viet Nam       21   21
Virgin Islands (British) 85         85
WEST BANK AND GAZA       1   1
Yemen       3   3
Zambia       1   1
Grand Total 1847 813 655 362 101 3778

 

Limited Branches and Affiliates Exceptions Under Regs

A FFI is, however, allowed to be a PFFI even if one or more of its branches cannot satisfy all of the requirements of an FFI-agreement under important exceptions to the general rule regarding “limited branch” and “limited FFI affiliates”.

An FFI is permitted to obtain “participating FFI” status if one or more of its branches are non-compliant under the “limited branch” exception. The limited branch exception applies to those FFIs that are in a jurisdiction that has applicable law that prohibits the FFI from reporting, closing, or transferring U.S. accounts, or withholding, closing, blocking, or transferring recalcitrant or nonparticipating FFI accounts. In such case, the limited branch is treated as a “nonparticipating FFI” even though it is an affiliated branch of the “participating FFI.” The other branches with “participating FFI” status must withhold on payments to the limited branch. The limited branch must not open U.S. accounts and must identify itself as a “nonparticipating FFI” to withholding agents.

The exception to the EAG requirements for “limited FFI” affiliates is similar to the regulatory scheme for limited branches. Under the relevant transition rule, a “participating FFI” may be permitted to have an affiliated FFI that is not compliant with FATCA until December 31, 2015 provided that such affiliates are separately identified as a nonparticipating FFI and the PFFI agrees to withhold on payments it makes to, or receives on behalf of, that branch or affiliate and agrees to report (or provide sufficient information to its U.S. withholding agents to allow them to report) payments made to these limited branches and affiliates as required on Forms 8966 or 1042/1042-S.

A Reporting Model IGA FFI may continue to treat branches and affiliates as compliant under the limited branch and limited FFI exceptions even after the expiration of the transitional rule, provided that the branch or affiliate is still unable to comply with FATCA due to restrictions under local law and the Reporting Model FFI continues to comply with its obligations under the IGA with respect to such limited branches or affiliates.

 

book cover

Read a detailed analysis of the EAG with many examples in 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.

 

 

[1] 26 U.S. Code § 1471 – Withholdable payments to foreign financial institutions

(e) Affiliated groups (1) In general

The requirements of subsections (b) and (c)(1) shall apply—

(A) with respect to United States accounts maintained by the foreign financial institution, and

(B) except as otherwise provided by the Secretary, with respect to United States accounts maintained by each other foreign financial institution (other than any foreign financial institution which meets the requirements of subsection (b)) which is a member of the same expanded affiliated group as such foreign financial institution.

(2) Expanded affiliated group

For purposes of this section, the term “expanded affiliated group” means an affiliated group as defined in section 1504 (a), determined—

(A) by substituting “more than 50 percent” for “at least 80 percent” each place it appears, and

(B) without regard to paragraphs (2) and (3) of section 1504 (b).

A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity is controlled (within the meaning of section 954 (d)(3)) by members of such group (including any entity treated as a member of such group by reason of this sentence).

 

26 U.S. Code § 1504 – Definitions

(a) Affiliated group defined

For purposes of this subtitle—

(1) In general

The term “affiliated group” means—

(A) 1 or more chains of includible corporations connected through stock ownership with a common parent corporation which is an includible corporation, but only if—

(B)

(i) the common parent owns directly stock meeting the requirements of paragraph (2) in at least 1 of the other includible corporations, and

(ii) stock meeting the requirements of paragraph (2) in each of the includible corporations (except the common parent) is owned directly by 1 or more of the other includible corporations.

(2) 80-percent voting and value test

The ownership of stock of any corporation meets the requirements of this paragraph if it—

(A) possesses at least 80 percent of the total voting power of the stock of such corporation, and

(B) has a value equal to at least 80 percent of the total value of the stock of such corporation.

 

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