Wealth & Risk Management Blog

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

Posts Tagged ‘FFI’

OFAC compliance v. FATCA compliance?  Can a SDN FFI Obtain a GIIN?

Posted by William Byrnes on August 4, 2015


The entity I represent is on the Office of Foreign Asset Control’s Specially Designated Nationals list.  Is the entity eligible to register and receive a GIIN?

Answer to be found International Financial Law Prof Blog

 

Posted in FATCA | Tagged: , , , , | Leave a Comment »

Haydon Perryman & William Byrnes’ June FATCA GIIN Update

Posted by William Byrnes on July 1, 2015


The FFI GIIN List Update (Lists from June 1, 2014 through June 1, 2015)

On 1 June 2015 the IRS published its thirteenth FATCA GIIN list of “approved FFIs” (a list of theFATCA_rollfinancial firms that have registered on the IRS FATCA portal).

Total approved FFIs reached 165,461, and increase of only 2,851 during the month of May.  This FATCA registration trend since January has been described as lethargic, with April’s increase just 2,600 additional firms joining, 3,734 additional during March, and 2,479 in February.  But when compared to what was forecast by the IRS, by industry, and by the UK, it’s a troubling low figure.

In its FATCA FAQs, the IRS suggested a 500,000 potential FFI registration figure.  Many industry stakeholders suggested that 800,000 – 900,000 firms fall under the expansive definition of financial institution.

Given the broad definition of a financial institution that must register for a GIIN, the UK HMRC estimated that, even with its IGA and its accompanying local regulations, 75,000 UK entities probably are impacted.  Yet, only the UK GIIN population is only 23,256.

If the UK HMRC is correct that 75,000 entities are impacted in the UK, then extrapolated among other large and sophisticated financial service economies like Japan, China, India, and Germany, the IRS estimate of 500,000 may be low.

90 countries and dependencies have entered into a FATCA IGA with the U.S. based on Model 1A (reciprocal), or are awaiting local ratification, accounting for 100,190 of the registrations.  A further eight countries signed a Model 1B (non-reciprocal), accounting for a further 39,564 GIINs.  A final 14 countries signed a Model 2 version IGA, adding 18,458 FFI registrations covered by an IGA.  Thus in total, 158,212, representing 96% of FFI registrations, are from the 112 IGA states and their dependencies.

The 131 countries and dependencies without an IGA have only registered 6,295 FFIs to date, a surprising low number given that the initial implementation of the 30% withholding for non-compliance with FATCA began 1 July 2014.

The UK and its ten dependencies and overseas territories comprised 74,694 of the GIINs, representing 45% of the total, or without the UK included, 49,898 for 30.6%.  The 34 OECD members have produced 79,057 GIIN registrations.

Cayman remains the FFI registration global leader, with 30,868, throughout the entire FATCA registration process.  Ironic that the EU Commission just black listed it last week.

The major financial industries of the four BRIC countries have only led to 8,254 FFI registrations, which is seen as a worrying point for FATCA acceptance among non-OECD states.  BRIC registrations are now just dripping in, up from 8,186 in May, 8,060 in April and 7,962 in March.

OECD Common Reporting Standard signatories for the a multilateral competent authority agreement to automatically exchange information has reached 61.  But a notable holdout of a signatory that has not yet actually ratified the agreement is the U.S.  88 countries and dependencies are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, the latest being Mauritius which signed June 23.

FATCA IGA Scenarios GIINs Jurisdictions
Model 1A IGA  100,190  90
Model 1B IGA  39,564  8
Model 2 IGA  18,458  14
No IGA  6,295  131
US  886  1
US Territories  68  6
Total  165,461  250

Want to read more GIIN analysis and statistics?  See the International Financial Law Professor blog

I am beginning my new faculty position with Texas A&M University School of Law in a week.  With the resources of Texas A&M Law, my research colleague Haydon Perryman (who is now with UBS Investment Bank where he is responsible for global regulatory reporting of FATCA and the CRS) and I will be able to expand our FATCA and CRS research capacity.  Any readers that want to assist in such research, please contact us at Haydon Perryman or William Byrnes.  Please download my FATCA SSRN article here.

Posted in FATCA | Tagged: , , , , | Leave a Comment »

Haydon and Byrnes’ Analysis of FATCA Updates & GIIN List of March 2015

Posted by William Byrnes on March 20, 2015


GIIN list, IDES Update, 8938 Form Instruction Updates …. read on Wolters Kluwer.

GIIN Lists Analysis: June 2014 through March 2015

In the words of my English colleague Haydon Perryman, March was a “bit of a damp squib”.  Financial institution FATCA registrations have slowed to a trickle with only 2,479 additional ones seeking a GIIN, bringing the ultimate total to 156,276.

Of this total, … read on Wolters Kluwer

Form 8938 (Reporting of Specified Foreign Financial Assets) Instructions Updated

In the Final Regulations effective 12 December 2014, Form 8938 Reporting of Specified Foreign Financial Assets, the IRS International Financial Law Prof Blogaddressed such issues as dual residents, valuation challenges, foreign currency, virtual currency (left for another time), retirement accounts and insurance policies. The Final Regulations can be found on the FATCA – Regulations and Other Guidance page in the For Individual Taxpayers section. However, as of 10 March 2015, the IRS updated December’s changes to the Form 8938 reporting requirements, as well as including additional information not in the December instructions. A summary of important points follows.  Of this total, … read on Wolters Kluwer

Posted in FATCA | Tagged: , , | Leave a Comment »

112 Intergovernmental Agreements and counting …. only 123 countries left out in the FATCA cold

Posted by William Byrnes on January 9, 2015


read the post at International Financial Law Prof Blog.

http://lawprofessors.typepad.com/intfinlaw/2015/01/112-intergovernmental-agreements-and-counting-only-123-countries-left-out-in-the-fatca-cold.html

Posted in FATCA | Tagged: , , | Leave a Comment »

FATCA GIIN January 2015 FFI Registration Analysis … by the numbers

Posted by William Byrnes on January 5, 2015


d27f6-6a00d8341bfae553ef01b7c6eb77bd970b-piThe IRS published its first FATCA GIIN list of 2015 (on New Years Day!) a list of “approved FFIs” i.e. a list of those who have registered on the IRS FATCA portal by December 23, 2014.  FATCA’s 30% withholding regime on “withholdable payments” for non-IGA countries has applied since July 1, 2014.  But since New Years Day this FATCA (Chapter 4) withholding also applies to IGA countries’ FFIs that do not supply a GIIN upon the proper W8 (or ‘equivalent’) certification documentation.

read the full analysis of the numbers at International Financial Law Prof Blog:

http://lawprofessors.typepad.com/intfinlaw/2015/01/fatca-giin-january-2015-ffi-registration-analysis-by-the-numbers-.html

Posted in FATCA | Tagged: , , | Leave a Comment »

UK trusts under the UK-US Intergovernmental Agreement (IGA)

Posted by William Byrnes on September 16, 2014


August 2014, STEP, alongside ICAEW and The Law Society of England and Wales, updated their joint guide to the treatment of UK trusts under the UK-US Intergovernmental Agreement (IGA) to take into account minor revisions from HMRC. The trust tests (left hand side of the flowchart) have been amended. Detailed questions in Appendix II of the guidance have also been revised to reflect this.  The changes are not fundamental.

book cover

 

download for free –> LexisNexis® Guide to FATCA Compliance (Chapter 1, Background and Current Status of FATCA)

 

Posted in FATCA | Tagged: , , , , , | Leave a Comment »

FATCA FFI Update and It Doesn’t Look Pretty. September Did Not Break 100,000!

Posted by William Byrnes on September 2, 2014


The IRS published its September list of 99,861 FFIs registered for FATCA.  But that’s just an increase of about 4,500 registrations since the August list of 95,239.  The disappointing September result is a harbinger of the rough waters ahead for general FATCA compliance.  Considering the growth in registrations has slowed dramtically from the July to August increase of only7,246 additional entities (up from 87,993 in July), many industry watchers are sounding the alarm bells.

How Many Foreign Financial Institutions Are Still Not Registered?  Most!

read the country by country analysis at International Financial Law Prof Blog.

Read the August analysis and a country-by-country, and IGA, breakdown at International Financial Law Professor

Who We Are?

Haydon Perryman, FATCA Compliance expert of Strevus, and I have been undertaking (and publishing) the leading, same-day, analysis of the previous June 2nd  and the July 1st  of the FATCA FFI GIIN list by country, by IGA, by EAG, as well as exploring other interesting aspects of registered FFIs, and FATCA compliance documentation (e.g. W-8s and equivalent forms allowed by IGA). Haydon brings the practical side to bear having established the FATCA compliance system for Tier 1 UK institutions and Tier 1 EU ones, and I the academic side being the primary author of Lexis’ Guide to FATCA Compliance and an international tax professor.

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

Posted in FATCA | Tagged: , , | 2 Comments »

New FATCA FAQ – Application of the Preexisting Obligation Election to Intermediaries and Flow-through Entities

Posted by William Byrnes on August 8, 2014


FATCA book coverQuestion: Notice 2014-33, 2014-21 I.R.B. 1033, provides that a withholding agent or FFI may treat an obligation as a preexisting obligation if the obligation (i) is issued, opened, or executed on or after July 1, 2014, and before January 1, 2015, and (ii) is held by an entity.  How does this provision of Notice 2014-33 apply when the recipient of a payment made under the obligation is a flow-through entity or intermediary?

Answer: A withholding agent may treat an obligation held by an entity (including an entity acting as an intermediary with respect to the obligation or a flow-through entity) as a preexisting obligation to the extent permitted in Notice 2014-33.  Therefore, an obligation held by an intermediary or flow-through entity is treated as a preexisting obligation if it is issued, opened, or executed before January 1, 2015.  In such a case, the withholding agent may rely on a pre-FATCA Form W-8 to document the holder of the obligation throughout 2014.  If the flow-through entity or intermediary provides the withholding agent with a withholding statement allocating a portion of a payment to a chapter 4 withholding pool of recalcitrant account holders or NPFFIs (or payee-specific information for such persons), then the withholding agent is required to apply chapter 4 withholding to the portion of the payment allocated to each such pool of payees (or each such payee), even though it is not yet required to document the chapter 4 status of the flow-through entity or intermediary.  However, a withholding agent must determine the chapter 4 status of a flow-through entity or intermediary as a PFFI or RDCFFI when provided with a withholding statement allocating a portion of a payment to a chapter 4 withholding rate pool of U.S. payees that the withholding agent reports on Form 1042-S as made to the pool rather than requiring payee-specific documentation for each payee in the pool or withholding and reporting in accordance with the applicable presumption rules.

If the withholding agent receives documentation from a flow-through entity with respect to an interest holder in the entity or from an intermediary with respect to its account holder and confirms (in writing) that the intermediary or flow-through entity treats the obligation as a preexisting obligation (including under Notice 2014-33, if applicable), the withholding agent may treat the obligation as a preexisting obligation provided that the withholding agent does not have documentation showing the interest holder or account holder to be an NPFFI.  The preceding sentence would apply, for example, to documentation provided with respect to a passive NFFE that is an account holder in an intermediary and that does not provide the information or certification described in Treas. Reg. § 1.1471-3(d)(12)(iii) with respect to its owners.

FATCA – FAQsGeneral Compliance, See Q7

download free  –> the 58 page Lexis Guide to FATCA Compliance, Chapter 1.

Posted in FATCA | Tagged: , , , , , , | Leave a Comment »

IRS Posts New and updated FATCA FAQs

Posted by William Byrnes on August 5, 2014


New and updated FATCA Registration System and FFI List FAQs have been posted to the FATCA Website.

  • What is the maximum number of points of contact allowed on the Registration? Updated: 8-1-2014
  • What is the maximum number of points of contact allowed on the Registration? Updated: 8-1-2014
  • What information will be in the notification e-mail the RO receives? Updated: 8-1-2014
  • Why is the RO not receiving FATCA notification emails regarding the FI’s status and account updates? Updated: 8-1-2014

book cover

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

Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA).

Posted in FATCA | Tagged: , , , | Leave a Comment »

August FATCA GIIN list analysed by country and by IGA

Posted by William Byrnes on August 1, 2014


By William Byrnes and Haydon Perryman

Treasury-Dept.-Seal-of-the-IRSThe IRS published its August list of 95,239  FATCA registered FFIs, including entities that completed the registration process by July 25th.  The increase has been disappointing to say the least.  Only 7,246 additional entities completed registration this past month, up from 87,993 in July.

89,718 FFIs (94%) are registered from the 101 IGA countries on the GIIN list.  Only 4,801 FFI (5%) registered from the 143 countries without an IGA for which FATCA withholding began July 1st.

June GIINs 77,354 -> July GIINs 87,993 -> August GIINs 95,239 (7,246 increase)

How Many Foreign Financial Institutions Are Still Not Registered?  Most!

Most pundits thought at least 20% of the FFIs requiring FATCA registration would have done so by now.  We were wrong.  I was personally thinking that 110,000 would be registered for the August 1st FFI list.  The small increase of just 7,246 is troubling.  Total global compliance remains in the single digits by both the IRS and foreign government estimated numbers.

The 30% FATCA withholding began July 1st on 143 countries (101 have IGAs that forestall withholding until January 1, 2015).  Only 4,801 FFI (5%) registered from these 143 countries.  Thus, FATCA compliance is running in the low, single digits for these countries.

read our analysis and a country-by-country, and IGA, breakdown at International Financial Law Professor

Who We Are?

Haydon Perryman, FATCA Compliance expert of Strevus, and I have been undertaking (and publishing) the leading, same-day, analysis of the previous June 2nd  and the July 1st  of the FATCA FFI GIIN list by country, by IGA, by EAG, as well as exploring other interesting aspects of registered FFIs, and FATCA compliance documentation (e.g. W-8s and equivalent forms allowed by IGA). Haydon brings the practical side to bear having established the FATCA compliance system for Tier 1 UK institutions and Tier 1 EU ones, and I the academic side being the primary author of Lexis’ Guide to FATCA Compliance and an international tax professor.

book cover

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

Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA).

Posted in FATCA | Tagged: , , , | 2 Comments »

more Guns & Money, Bribery, Money Laundering, Major Insolvencies, Drug Dealing … and the week is just half way over

Posted by William Byrnes on July 31, 2014


Wednesday’s articles

the secret language of LIBOR traders exposed

DOJ wants more time to examine Barclays

Morgan Stanley pays $275 million fine & disgorgement for $2.5 billion of sub-prime backed securities sales

Analysis of the 88,000 Financial Firms on the IRS’ GIIN List for FATCA

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

FACTA in Swiss Finance Transactions

FATCA Compliance Guide Download

MOnday and Tuesday articles

Guns & Money – Smith & Wesson pays $2 million for bribery

Banco Espírito Santo’s former CEO arrested for Money Laundering & Tax Evasion as bank reports Portugal’s largest loss, Espirito Santo Financial Group seeks creditor protection

Guinea mining FCPA bribery investigation nets first jail sentence

Substantial money laundering penalties but not tax collection from OVDI disclosures

4th guilty plea in Indonesia bribery FCPA case

BOA settles alleged narco kingpin violations for $16 million

SunTrust Admits Issuing Mass Denials After Throwing Away Thousand of Customers Unopened Files

Lloyds Banking Group Will Pay $370 Million, Admits Criminal Wrongdoing

FTC seizes law firm assets, alleges $35 million fees bilked from distressed homeowners

Is FedEx a drug dealer? The $2.4 billion question

Tax Inversions: The Basics

Lionel Messi to be Prosecuted for Alleged Tax Evasion of $5.4 million

Posted in Uncategorized | Tagged: , , , , , , , , , , , , , , , , | 1 Comment »

Guns & Money, Bribery, Money Laundering, Major Insolvencies, Drug Dealing … and the week has just begun

Posted by William Byrnes on July 30, 2014


Links to Articles –

Guns & Money – Smith & Wesson pays $2 million for bribery

Banco Espírito Santo’s former CEO arrested for Money Laundering & Tax Evasion as bank reports Portugal’s largest loss, Espirito Santo Financial Group seeks creditor protection

Guinea mining FCPA bribery investigation nets first jail sentence

Substantial money laundering penalties but not tax collection from OVDI disclosures

4th guilty plea in Indonesia bribery FCPA case

BOA settles alleged narco kingpin violations for $16 million

SunTrust Admits Issuing Mass Denials After Throwing Away Thousand of Customers Unopened Files

Lloyds Banking Group Will Pay $370 Million, Admits Criminal Wrongdoing

FTC seizes law firm assets, alleges $35 million fees bilked from distressed homeowners

Is FedEx a drug dealer? The $2.4 billion question

Analysis of the 88,000 Financial Firms on the IRS’ GIIN List for FATCA

Tax Inversions: The Basics

Lionel Messi to be Prosecuted for Alleged Tax Evasion of $5.4 million

Posted in Uncategorized | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

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.

 

Posted in FATCA | Tagged: , , , , | Leave a Comment »

Analysis of new 2014 FATCA W-8BEN-E Instructions

Posted by William Byrnes on June 25, 2014


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

On June 25, 2014 the IRS released the W-8 BEN-E instructionsRead William Byrnes’ previous April 2 analysis of the W-8BEN-E here.  Read William Byrnes’ analysis of the W-8IMY instructions here.  For analysis of the requirements of the 31 FATCA entity classifications, see William Byrnes’ previous articles:  https://profwilliambyrnes.com/category/fatca/

Analysis of W-8BEN-E Instructions …

Who Must Provide W-8BEN-E?

A foreign entity must submit a Form W-8BEN-E to the withholding agent if it will receive a FATCA withholdable payment, receive a payment subject to chapter 3 withholding, or if it maintains an account with an FFI.

All Beneficial Owners

Form W-8 BEN-E must be provided by ALL the entities that are beneficial owners of a payment, or of another entity that is the beneficial owner.  If the income or account is jointly owned by more than one person, then the income or account will be treated by the withholding agent as owned by a foreign beneficial owner only if Forms W-8BEN or W-8BEN-E are provided by EVERY owner of the account.

Treatment as US Account

If the withholding agent or financial institution receives a Form W-9 from any of the joint owners, then the payment must be treated as made to a U.S. person and the account treated as a U.S. account.  An account will be treated as a U.S. account for FATCA by an FFI if any of the account holders is a specified U.S. person or a U.S.-owned foreign entity (unless the account is otherwise excepted from U.S. account status for FATCA purposes).

Hybrids

Hybrid Entity: A hybrid entity should give Form W-8BEN-E on its own behalf to a withholding agent only for income for which it is claiming a reduced rate of withholding under an income tax treaty or to document its chapter 4 status for purposes of maintaining an account with an FFI requesting this form (when it is not receiving withholdable payments or payments subject to chapter 3 withholding).

Reverse Hybrid: A reverse hybrid entity should give Form W-8BEN-E on its own behalf to a withholding agent only for income for which no treaty benefit is being claimed or to establish its status for chapter 4 purposes (when required).

Who Should Not Use Form W-8BEN-E?

US Person: If the filer is a US person (including US citizens, resident aliens, and entities treated as US persons, such as a corporation organized under the law of a state), then submit Form W-9, Request for Taxpayer Identification Number and Certification.

Foreign Insurance Company: A foreign insurance company that has made an election under section 953(d) to be treated as a U.S. person should submit Form W-9 to certify its “U.S. status” even if it is an FFI for FATCA purposes.  Certain foreign insurance companies issuing annuities or cash value insurance contracts that elect to be treated as a U.S. person for federal tax purposes but are not licensed to do business in the United States are treated as FFIs for purposes of chapter 4. For purposes of providing a withholding agent with documentation for both chapter 3 and chapter 4 purposes, however, such an insurance company is permitted to use Form W-9 to certify its status as a U.S. person.

NRA: A nonresident alien individual must submit Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).

Disregarded: A U.S. person that is a single owner of a disregarded entity, and that is not also a hybrid entity claiming treaty benefits, should provide Form W-9.  A foreign branch of a U.S. financial institution (other than a branch that operates as a qualified intermediary) that is treated as an FFI under an applicable IGA is permitted to use Form W-9 to certify its status as a U.S. person for chapter 3 and chapter 4 purposes.

But if the single owner is not a U.S. person,is not a branch of an FFI claiming FATCA status, and is not a hybrid entity claiming treaty benefits, it should provide either Form W-8BEN or Form W-8BEN-E as appropriate.

Intermediary: Form W-8IMY is submitted generally by a payment recipient with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Read my analysis of W-8IMY and its instructions in my June 24th article.  An entity treated as a flow-through entity should generally provide Form W-8IMY for chapter 3 or chapter 4 purposes.

Expiration of Form W-8BEN-E.

Generally, a Form W-8BEN-E will remain valid for purposes of both chapters 3 and 4 for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect.  For example, a Form W-8BEN signed on September 30, 2014 remains valid through December 31, 2017.  However, under certain conditions a Form W-8BEN-E will remain in effect indefinitely until a change of circumstances occurs.

Change in circumstances.

If a change in circumstances makes any information on the Form W-8BEN-E incorrect for purposes of either chapter 3 or chapter 4, then the submitting person must notify the withholding agent or financial institution maintaining the account within 30 days of the change in circumstances and you must file a new Form W-8BEN-E (or other appropriate form as applicable).

Certification

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.”

Which of the 30 Parts of the W-8BEN-E to Complete?

The W-8BEN-E form has thirty parts, whereas the former dual-purpose W8BEN in use since 2006 has just four parts.  The new 2014 Form W-8BEN-E includes the FATCA and QI entity classification reporting requirements.

All filers of the new W-8BEN-E must complete Parts I and XXIX. The FATCA classification indicated determines which one of the Parts IV through XXVIII must be completed.

Part I – Identification of Beneficial Owner

Part I of the W-8BEN-E requires general information, the QI status, and the FATCA classification of the filer.

Question 1. A disregarded entity or branch enters the legal name of the entity that owns the disregarded entity (looking through multiple disregarded entities if applicable) or maintains the branch.

Question 2. A corporation must enter its country of incorporation.  Any other type of entity must instead enter the country under whose laws it is created, organized, or governed.

Question 3. A disregarded entity receiving a payment should only enter its name on line 3 if it is receiving a withholdable payment or hold an account with an FFI and

  1. has registered with the IRS and been assigned a GIIN associated with the legal name of the disregarded entity;
  2. is a reporting Model 1 FFI or reporting Model 2 FFI; and
  3. is not a hybrid entity using this form to claim treaty benefits.

If not required to provide the legal name, then a disregarded entity receiving a payment or maintaining an account may instead enter its name on line 10.

Question 4 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 entity.  W-8BEN-E currently lists 31 FATCA classifications of which the entity must check only one box unless otherwise indicated. Completion of the W-8BEN-E other parts depend upon the selection of the FATCA classification.

  1. Nonparticipating FFI (including a limited FFI or an FFI related to a Reporting IGA FFI other than a registered deemed-compliant FFI or participating FFI).
  2. Participating FFI.
  3. Reporting Model 1 FFI.
  4. Reporting Model 2 FFI.
  5. Registered deemed-compliant FFI (other than a reporting Model 1 FFI or sponsored FFI that has not obtained a GIIN).
  6. Sponsored FFI that has not obtained a GIIN. Complete Part IV.
  7. Certified deemed-compliant nonregistering local bank. Complete Part V.
  8. Certified deemed-compliant FFI with only low-value accounts. Complete Part VI.
  9. Certified deemed-compliant sponsored, closely held investment vehicle. Complete Part VII.
  10. Certified deemed-compliant limited life debt investment entity. Complete Part VIII.
  11. Certified deemed-compliant investment advisors and investment managers. Complete Part IX.
  12. Owner-documented FFI. Complete Part X.
  13. Restricted distributor. Complete Part XI.
  14. Nonreporting IGA FFI (including an FFI treated as a registered deemed-compliant FFI under an applicable Model 2 IGA). Complete Part XII.
  15. Foreign government, government of a U.S. possession, or foreign central bank of issue. Complete Part XIII.
  16. International organization. Complete Part XIV.
  17. Exempt retirement plans. Complete Part XV.
  18. Entity wholly owned by exempt beneficial owners. Complete Part XVI.
  19. Territory financial institution. Complete Part XVII.
  20. Nonfinancial group entity. Complete Part XVIII.
  21. Excepted nonfinancial start-up company. Complete Part XIX.
  22. Excepted nonfinancial entity in liquidation or bankruptcy. Complete Part XX.
  23. 501(c) organization. Complete Part XXI.
  24. Nonprofit organization. Complete Part XXII.
  25. Publicly traded NFFE or NFFE affiliate of a publicly traded corporation. Complete Part XXIII.
  26. Excepted territory NFFE. Complete Part XXIV.
  27. Active NFFE. Complete Part XXV.
  28. Passive NFFE. Complete Part XXVI as well as Part XXX if substantial U.S. owners*.
  29. Excepted inter-affiliate FFI. Complete Part XXVII.
  30. Direct reporting NFFE.
  31. Sponsored direct reporting NFFE. Complete Part XXVIII

*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.

FFIs Covered by an IGA and Related Entities

A reporting IGA FFI resident in, or established under the laws of, a jurisdiction covered by a Model 1 IGA should check “Reporting Model 1 FFI.” A reporting FFI resident in, or established under the laws of, a jurisdiction covered by a Model 2 IGA should check “Reporting Model 2 FFI.”

If the FFI is treated as a registered deemed-compliant FFI under an applicable IGA, it should check “Nonreporting IGA FFI” rather than “registered deemed-compliant FFI” and provide its GIIN in Part XII, line 26.

An FFI that is related to a reporting IGA FFI and that is treated as a nonparticipating FFI in its country of residence should check nonparticipating FFI in line 5. An FFI that is related to a reporting IGA FFI and that is a participating FFI, deemed-compliant FFI, or exempt beneficial owner under the U.S. Treasury regulations or an applicable IGA should check the appropriate box for its chapter 4 status.

Requirement to Provide a GIIN

If the entity is in the process of registering with the IRS as a participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI, reporting Model 2 FFI, direct reporting NFFE, or sponsored direct reporting NFFE, but has not received a GIIN, it may complete this line by writing “applied for.” However, the person requesting this form must receive and verify the GIIN within 90 days.

For payments made prior to January 1, 2015, a Form W-8BEN-E provided by a reporting Model 1 FFI need not contain a GIIN. For payments made prior to January 1, 2016, a sponsored direct reporting NFFE or sponsored FFI that has not obtained a GIIN must provide the GIIN of its sponsoring entity.

501(c) Organization

Only foreign entities that are tax-exempt under section 501 should check the 501(c) organization “Tax-exempt organization” box. Such organizations should use Form W-8BEN-E only if they are claiming a reduced rate of withholding under an income tax treaty or a code exception other than section 501. If claiming an exemption from withholding under code section 501, then it must submit Form W-8EXP to document the exemption and chapter 4 status.

Non-Profit Organizations Covered by an IGA

A non-profit entity that is established and maintained in a jurisdiction that is treated as having in effect a Model 1 IGA or Model 2 IGA, and that meets the definition of Active NFFE under Annex I of the applicable IGA, should not check a box for its status on line 5.

Completion of Parts IV through XXVIII

An entity should complete only one part of Parts IV through XXVIII certifying to the chapter 4 status. But an entity that selects nonparticipating FFI, participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI, reporting Model 2 FFI, or direct reporting NFFE (other than a sponsored direct reporting NFFE) is not required to complete any of the certifications in Parts IV through XXVIII.

Part IV Sponsored FFI That Has Not Obtained a GIIN
Part V Certified Deemed-Compliant Nonregistering Local Bank
Part VI Certified Deemed-Compliant FFI with Only Low-Value Accounts
Part VII Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
Part VIII Certified Deemed-Compliant Limited Life Debt Investment Entity
Part IX Certified Deemed-Compliant Investment Advisors and Investment Managers
Part X Owner-Documented FFI
Part XI Restricted Distributor
Part XII Nonreporting IGA FFI
Part XIII Foreign Government, Government of a U.S. Possession, or Foreign Central Bank of Issue
Part XIV International Organization
Part XV Exempt Retirement Plans
Part XVI Entity Wholly Owned by Exempt Beneficial Owners
Part XVII Territory Financial Institution
Part XVIII Excepted Nonfinancial Group Entity
Part XIX Excepted Nonfinancial Start-Up Company
Part XX Excepted Nonfinancial Entity in Liquidation or Bankruptcy
Part XXI 501(c) Organization
Part XXII Non-Profit Organization
Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
Part XXIV Excepted Territory NFFE
Part XXV Active NFFE
Part XXVI Passive NFFE
Part XXVII Excepted Inter-Affiliate FFI
Part XXVIII Sponsored Direct Reporting NFFE
Part XXIX Certification
Part XXX Substantial U.S. Owners of Passive NFFE

Part X – Owner-Documented FFI

Line 24a. An owner-documented FFI must check the box to certify that it meets all of the requirements for this status and is providing this form to a U.S. financial institution, participating FFI, reporting Model 1 FFI, or reporting Model 2 FFI that agrees to act as a designated withholding agent with respect to the FFI identified on line 1. Then select either 24b or 24c.

Line 24b. Check this box to certify that the documentation set forth in the certifications has been provided (or will be provided), including the owner reporting statement described in this line 24b, or

Line 24c. Check this box to certify that the auditor’s letter has been provided (or will be provided).

Entities Providing Certifications Under an Applicable IGA

In lieu of the certifications contained in Parts IV through XXVIII of Form W-8BEN-E, a reporting Model 1 FFI or reporting Model 2 FFI in certain cases may request alternate certifications to document its account holders pursuant to an applicable IGA or it may otherwise provide an alternate certification to a withholding agent.

A withholding agent that is an FFI may provide a chapter 4 status certification other than as shown in Parts IX through XXVIII in order to satisfy its due diligence requirements under an applicable IGA. In such a case, attach that alternative certification to this Form W-8BEN-E in lieu of completing a certification otherwise required in Parts IV through XXVIII provided that

1) the certification accurately reflects the chapter 4 status or under an applicable IGA; and

2) the withholding agent provides a written statement that it has provided the certification to meet its due diligence requirements as a participating FFI or registered deemed-compliant FFI under an applicable IGA.

An applicable IGA certification may be provided with the W-8BEN-E if determining chapter 4 status under the definitions provided in an applicable IGA and that certification identifies the jurisdiction that is treated as having an IGA in effect and describes the status as an NFFE or FFI in accordance with the applicable IGA.

However, if under an applicable IGA the entity’s status is determined to be an NFFE, it must still determine if it is an excepted NFFE under the FATCA Regulations. Additionally, the entity must comply with the conditions of its status under the law of the IGA jurisdiction.

book coverLexis Guide to FATCA Compliance – 2015 Edition 

1,200 pages of analysis of the compliance challenges, over 54 chapters by 70 FATCA contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2015 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2015 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

A free download of the first of the 34 chapters is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

<— Subscribe by email on the left menu to the FATCA Updates on this blog:  https://profwilliambyrnes.com/category/fatca/

If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”

  • Chapter 1 Background and Current Status of FATCA
  • Chapter 1A The International Financial System and FATCA
  • Chapter 2 Practical Considerations for Developing a FATCA Compliance Program
  • Chapter 2A FATCA Internal Policy
  • Chapter 3 FATCA Compliance and Integration of Information Technology
  • Chapter 4 Financial Institution Account Remediation
  • Chapter 4A FATCA Customer Outreach
  • Chapter 5 FBAR and Form 8938 Reporting and List of International Taxpayer IRS Forms
  • Chapter 6 Determining U.S. Ownership of Foreign Entities
  • Chapter 7 Foreign Financial Institutions
  • Chapter 7A Account reporting under FATCA
  • Chapter 8 Non-Financial Foreign Entities
  • Chapter 9 FATCA and the Offshore Trust Industry
  • Chapter 10 FATCA and the Insurance Industry
  • Chapter 11 Withholding and Qualified Intermediary
  • Chapter 12 FATCA Withholding Compliance
  • Chapter 13 “Withholdable” Payments
  • Chapter 13A Reporting Payments
  • Chapter 14 Determining and Documenting the Payee
  • Chapter 14A W8 Equivalents
  • Chapter 15 Framework of Intergovernmental Agreements
  • Chapter 16 Analysis of Current Intergovernmental Agreements
  • Chapter 17 European Union Cross Border Information Reporting
  • Chapter 18 The OECD Role in Exchange of Information: The Trace Project, FATCA, and Beyond
  • Chapter 19 Germany
  • Chapter 20 Ireland
  • Chapter 21 Japan
  • Chapter 22 Mexico
  • Chapter 23 Switzerland
  • Chapter 24 United Kingdom
  • Chapter 25 Brazil
  • Chapter 26 British Virgin Islands
  • Chapter 27 Canada
  • Chapter 28 Spain
  • Chapter 29 China
  • Chapter 30 Netherlands
  • Chapter 31 Luxembourg
  • Chapter 32 Russia
  • Chapter 33 Turkey
  • Chapter 34 India
  • Chapter 35 Argentina
  • Chapter 36 Aruba
  • Chapter 37 Australia
  • Chapter 38 Bermuda
  • Chapter 39 Colombia
  • Chapter 40 Cyprus
  • Chapter 41 Hong Kong
  • Chapter 42 Macau
  • Chapter 43 Portugal
  • Chapter 44 South Africa
  • Chapter 45 France
  • Chapter 46 Gibraltar
  • Chapter 47 Guernsey
  • Chapter 48 Italy

Posted in FATCA, W-8BEN-E | Tagged: , , , , , , , | 3 Comments »

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.

Posted in FATCA | Tagged: , , , , | Leave a Comment »

New 2014 FATCA Form W-8IMY and Instructions Analysis

Posted by William Byrnes on June 24, 2014


W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting)

On June 19, 2014 the IRS released the new Form W-8IMY instructions.

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Form W-8IMY requires a tax identification number.

The new Form W-8IMY has 28 parts whereas the previous August 2013 FATCA draft W-8IMY only contained 26.  The new 2014 Form W-8IMY is vastly different from the seven-part 2006 predecessor form.

Filing Form W-8IMY with the withholding agent before payment.

The filer does not send Form W-8IMY to the IRS.  Instead, the filer gives it to the withholding agent who is requesting it. Generally, this withholding agent will be the one from whom the filer receives a payment, who credits the filer’s account, or a partnership that allocates income to the filer.  The filer should give Form W-8IMY to the withholding agent requesting it before income is paid, credited, or allocated to the filer account.

Form W-8IMY by Part

  • Part I Identification of Entity
  • Part II Disregarded Entity or Branch Receiving Payment.

Part I of the W8-IMY Form adds FATCA classification.   Part I of the form requires general information, the Chapter 3 QI status, and the Chapter 4 FATCA classification of the filer.

Question 4 of Part I requests the QI status:

  • If the filer is a Qualified Intermediary, then the filer must complete Part III Qualified Intermediary.  If the filer is a Nonqualified Intermediary, then the filer must complete Part IV Nonqualified Intermediary.
  • Territory Financial Institutions complete Part V. U.S. Branches complete Part VI.
  • Withholding Foreign Partnership or Withholding Foreign Trusts complete Part VII.
  • Nonwithholding Foreign Partnership, Nonwithholding Foreign Simple Trust, and Nonwithholding foreign grantor trusts must complete Part VIII.

Question 5 requests the FATCA classification of the filer of 25 potential classifications. The classification indicated determines which one of the further W-8IMY Parts IX through XXVII must be completed.

  1. Nonparticipating FFI (including a limited FFI or limited branch). Complete Part IX (if applicable).
  2. Participating FFI.
  3. Reporting Model 1 FFI.
  4. Reporting Model 2 FFI.
  5. Registered deemed-compliant FFI (other than a reporting Model 1 FFI or sponsored FFI that has not obtained a GIIN).
  6. Territory financial institution. Complete Part V. 
  7. Sponsored FFI that has not obtained a GIIN (other than a certified deemed-compliant sponsored, closely held investment vehicle). Complete Part X.
  8. Certified deemed-compliant nonregistering local bank. Complete Part XII. 
  9. Certified deemed-compliant FFI with only low-value accounts. Complete Part XIII.
  10. Certified deemed-compliant sponsored, closely held investment vehicle. Complete Part XIV. 
  11. Certified deemed-compliant limited life debt investment entity. Complete Part XV. 
  12. Owner-documented FFI. Complete Part XI.
  13. Restricted distributor. Complete Part XVI.
  14. Foreign central bank of issue. Complete Part XVII. 
  15. Nonreporting IGA FFI. Complete Part XVIII. 
  16. Exempt retirement plans. Complete Part XIX.
  17. Excepted nonfinancial group entity. Complete Part XX.
  18. Excepted nonfinancial start-up company. Complete Part XXI.
  19. Excepted nonfinancial entity in liquidation or bankruptcy. Complete Part XXII.
  20. Publicly traded NFFE or NFFE affiliate of a publicly traded corporation. Complete Part XXIII. 
  21. Excepted territory NFFE. Complete Part XXIV.
  22. Active NFFE. Complete Part XXV. 
  23. Passive NFFE. Complete Part XXVI. 
  24. Direct reporting NFFE.
  25. Sponsored direct reporting NFFE. Complete Part XXVII.

Part II of the W-8IMY is to be completed if the entity is a disregarded entity or a branch receiving payment as an intermediary. Part II only applies to branches of an FFI outside the FFI’s country of residence.

Who Must File W-8IMY?

An entity should provide Form W-8IMY when receiving a reportable amount or withholdable payment on behalf of another person or as a flow-through entity.

  •  A foreign person, or a foreign branch of a U.S. personto establish that it is a qualified intermediary that is not acting for its own account, to represent that it has provided or will provide a withholding statement, as required, or, if applicable, to represent that it has assumed primary withholding responsibility under chapters 3 and 4 of the Code and/or primary Form 1099 reporting and backup withholding responsibility.
  •  A foreign person to establish that it is a nonqualified intermediary that is not acting for its own account, to certify its chapter 4 status (if required), to certify whether it reports U.S. accounts under chapter 4 (if required), and to indicate, if applicable, that it is using the form to transmit withholding certificates and/or other documentary evidence and has provided, or will provide, a withholding statement, as required.  A U.S. person cannot be a nonqualified intermediary.
  •  A U.S. branch that is acting as an intermediary to represent that the income it receives is not effectively connected with the conduct of a trade or business within the United States and either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify to its chapter 4 status and to transmit the documentation of the persons for whom it receives a payment and has provided, or will provide, a withholding statement, as required.
  •  A financial institution incorporated or organized under the laws of a U.S. territory that is acting as an intermediary or is a flow-through entity to represent that it is a financial institution (other than an investment entity that is not also a depository institution, custodial institution, or specified insurance company) and either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify that it is transmitting documentation of the persons for whom it receives a payment and has provided, withholding statement, as required.
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a withholding foreign partnership or withholding foreign trust under the regulations for sections 1441 and 1442 and to certify its chapter 4 status (if required).
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a nonwithholding foreign partnership or nonwithholding foreign simple or grantor trust for purposes of sections 1441 and 1442, to certify to its chapter 4 status (if required), and to represent that the income is not effectively connected with a U.S. trade or business, that the form is being used to transmit withholding certificates and/or documentary evidence, and that it has provided or will provide a withholding statement as required.
  •  A foreign partnership or foreign grantor trust to establish that it is an upper-tier foreign partnership or foreign grantor trust for purposes of section 1446 and to represent that the form is being used to transmit withholding certificates and/or documentary evidence and that it has provided, or will provide, a withholding statement, as required.
  •  A flow-through entity (including a foreign reverse hybrid entity) transmitting withholding certificates and/or other documentary evidence to claim treaty benefits on behalf of its owners, to certify its chapter 4 status (if required), and to certify that it has provided, or will provide, a withholding statement, as required.
  •  A nonparticipating FFI acting as an intermediary or that is a flow-through entity using this form to transmit a withholding statement and withholding certificates or other documentation for exempt beneficial owners described in Regulations section 1.1471-6.
  •  A QSL certifying to a withholding agent that it is acting as a QSL with respect to U.S. source substitute dividends received from the withholding agent pursuant to a securities lending transaction (as described in Notice 2010-46).
  •  A foreign intermediary or flow-through entity not receiving withholdable payments or reportable amounts that is holding an account with a participating FFI or registered deemed-compliant FFI providing this form for purposes of documenting the chapter 4 status of the account holder.  However, no withholding statement is required to be provided along with Form W-8IMY if it is being provided by an FFI solely to document such an account when no withholdable payments or reportable amounts are made to the account. Also note that the entity may instead provide Form W-8BEN-E when it is not receiving withholdable payments or reportable amounts to document its status as an account holder.

Partnership allocations

Form W-8IMY may be submitted and accepted to satisfy documentation requirements for purposes of withholding on certain partnership allocations to foreign partners under section 1446. Section 1446 generally requires withholding when a partnership is conducting a trade or business in the United States and allocates income effectively connected with that trade or business (ECI) to foreign persons that are partners in the partnership. Section 1446 can also apply when certain income is treated as effectively connected income of the partnership and is so allocated.

Chapter 3 and Chapter 4 status Certification by Filer required with Applicable Documentation 

In general, intermediaries and flow-through entities receiving reportable amounts will be required to provide both their chapter 3 status and the chapter 3 status of persons for whom they receive such payments.

An intermediary or flow-through entity receiving a withholdable payment will also be required to provide its chapter 4 status and the chapter 4 status of persons for whom it receives a withholdable payment when required for chapter 4 purposes.

Parts III – VIII: Chapter 3 Status Certifications

Parts III – VIII of this form address the QI Status of the entity.

  • Part III Qualified Intermediary
  • Part IV Nonqualified Intermediary
  • Part V Territory Financial Institution
  • Part VI Certain U.S. Branches
  • Part VII Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)
  • Part VIII Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust

Part III is to be completed if the entity is a QI, and requires the entity to certify that it is a QI and has provided appropriate documentation.  Part IV is to be completed if the entity is a Nonqualified Intermediary (NQI), and requires the entity to certify that it is a NQI not acting for its own account.  Part V is to be completed if the entity is a Territory Financial Institution.  Part VI is to be completed by a U.S. branch only if the branch certifies on the form that it is the U.S. branch of a U.S. bank or insurance company, and that the payments made are not effectively connected to a U.S. trade or business.  Part VII is to be completed if the entity is a Foreign Withholding Partnership (WP) or a Withholding Foreign Trust (WT).  Part VIII is to be completed if the entity is either a Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust.

Parts IX – XXVI: Chapter 4 Status Certifications

Parts IX – XXVI of this form address the filer certifying the FATCA Status of the entity, beginning with a check the box selection of “I certify that …”, followed by the definition components of each classification.  These classifications include the new classification of a Restricted Distributor (Part XVI), but do not include the new classification of a Reporting NFFE.

  • Part IX Nonparticipating FFI with Exempt Beneficial Owners
  • Part X Sponsored FFI That Has Not Obtained a GIIN
  • Part XI Owner-Documented FFI
  • Part XII Certified Deemed-Compliant Nonregistering Local Bank
  • Part XIII Certified Deemed-Compliant FFI with Only Low-Value Accounts
  • Part XIV Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
  • Part XV Certified Deemed-Compliant Limited Life Debt Investment Entity
  • Part XVI Restricted Distributor
  • Part XVII Foreign Central Bank of Issue
  • Part XVIII Nonreporting IGA FFI
  • Part XIX Exempt Retirement Plans
  • Part XX Excepted Nonfinancial Group Entity
  • Part XXI Excepted Nonfinancial Start-Up Company
  • Part XXII Excepted Nonfinancial Entity in Liquidation or Bankruptcy
  • Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
  • Part XXIV Excepted Territory NFFE
  • Part XXV Active NFFE
  • Part XXVI Passive NFFE
  • Part XXVII Sponsored Direct Reporting NFFE

Part IX is not required to be completed unless the filer is a nonparticipating FFI providing documentation on behalf of an exempt beneficial owner (by example, a local qualifying retirement fund).

Part XI – An owner-documented FFI should only complete Form W-8IMY if it is a flow-through entity receiving income allocable to its partners, owners, or beneficiaries. An owner-documented FFI is not permitted to act as an intermediary with respect to a withholdable payment.

Part XVIII – A nonreporting FFI pursuant to an IGA must indicate that it is to be treated as such under an applicable IGA, including an entity treated as a registered deemed-compliant FFI under an applicable IGA.  The nonreporting IGA FFI must identify the applicable IGA by entering the name of the jurisdiction that has the applicable IGA in effect with the United States. It must also provide the withholding agent with the class of entity described in Annex II of the IGA applicable to its nonreporting FFI IGA status.  If the nonreporting FFI IGA is claimed pursuant to a Model 2 IGA, then the FFI treated as a registered deemed-compliant FFI under that applicable Model 2 IGA must provide a GIIN in the space provided.

If the filer is a sponsored FFI in a Model 1 IGA jurisdiction or other nonreporting FFI in a Model 1 IGA jurisdiction that is required to report an account, it is not currently required to provide a GIIN in this Part. However, a future version of this form may require it to provide a GIIN.

Entities Providing Certifications Under an Applicable IGA

A withholding agent that is an FFI may provide a chapter 4 status certification other than as shown in Parts IX through XXVII in order to satisfy its due diligence requirements under an applicable IGA. In such a case, attach the alternative certifications to this Form W-8IMY in lieu of completing a certification otherwise required in Parts IX through XXVII provided that the withholding agent:

  1. determine that the certification accurately reflects the status for chapter 4 purposes or under an applicable IGA; and
  2. the withholding agent provides a written statement that it has provided the certification to meet its due diligence requirements as a participating FFI or registered deemed-compliant FFI under an applicable IGA.

The filer may also provide with this form an applicable IGA certification if it determines its chapter 4 status under the definitions provided in an applicable IGA and that certification identifies the jurisdiction that is treated as having an IGA in effect and describes the filer status as an NFFE or FFI in accordance with the applicable IGA.  However, if the filer determines its status under an applicable IGA as an NFFE, it must still determine if it is an excepted NFFE under the regulations in order to complete this form.  Additionally, it is required to comply with the conditions of its chapter 4 status under the law of the IGA jurisdiction if it determines its status under an applicable IGA.

Entities Providing Alternate Certifications Under Regulations

If the filer qualifies for a chapter 4 status that is not shown in Part I, line 5, of this form, it may attach applicable certifications for such status from any other Form W-8 on which the relevant certifications appear.

For example, if the filer is a certified deemed-compliant investment advisor or investment manager described in Regulations section 1.1471-5(f)(2)(v)
that is a flow-through entity, it may instead attach the certifications found in Part IX of Form W-8BEN-E.

If the applicable certifications do not appear on any Form W-8 (if, for example, new regulations provide for an additional chapter 4 status and this form has not been updated) then the filer may provide an attachment certifying that it qualifies for the applicable status described in a particular Regulations section in lieu of checking a box in Part I, line 5. The filer must also include a citation to the applicable provision in the Regulations.

Final Statement of Certification

Part XXVIII requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. Finally, the form contains the following language: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Expiration of Form W-8IMY 

Generally, a Form W-8IMY remains valid until the status of the person whose name is on the certificate is changed in a way relevant to the certificate or there is a change in circumstances that makes the information on the certificate no longer correct. The indefinite validity period does not extend, however, to any other withholding certificates, documentary evidence, or withholding statements associated with the certificate.

Change in circumstances. 

If a change in circumstances makes any information on the Form W-8IMY (or any documentation or a withholding statement associated with the Form W-8IMY) have submitted incorrect for purposes of chapter 3 or chapter 4 (when relevant), the intermediary must notify the withholding agent within 30 days and file a new Form W-8IMY or provide new documentation or a new withholding statement (as applicable).

The information associated with Form W-8IMY must be updated as often as is necessary to enable the withholding agent to withhold at the appropriate rate on each payment and to report such income.

(See Regulations sections 1.1441-1(e)(4)(ii)(D) for the definition of a change in circumstances for purposes of chapter 3. See Regulations section 1.1471-3(c)(6)(ii)(E) for the definition of a change in circumstances for purposes of chapter 4.)

  • Part XXVII Sponsored Direct Reporting NFFE

book coverLexis Guide to FATCA Compliance – 2015 Edition 

1,200 pages of analysis of the compliance challenges, over 54 chapters by 70 FATCA contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2015 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2015 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

A free download of the first of the 34 chapters is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

<— Subscribe by email on the left menu to the FATCA Updates on this blog:  https://profwilliambyrnes.com/category/fatca/

If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”

  • Chapter 1 Background and Current Status of FATCA
  • Chapter 1A The International Financial System and FATCA
  • Chapter 2 Practical Considerations for Developing a FATCA Compliance Program
  • Chapter 2A FATCA Internal Policy
  • Chapter 3 FATCA Compliance and Integration of Information Technology
  • Chapter 4 Financial Institution Account Remediation
  • Chapter 4A FATCA Customer Outreach
  • Chapter 5 FBAR and Form 8938 Reporting and List of International Taxpayer IRS Forms
  • Chapter 6 Determining U.S. Ownership of Foreign Entities
  • Chapter 7 Foreign Financial Institutions
  • Chapter 7A Account reporting under FATCA
  • Chapter 8 Non-Financial Foreign Entities
  • Chapter 9 FATCA and the Offshore Trust Industry
  • Chapter 10 FATCA and the Insurance Industry
  • Chapter 11 Withholding and Qualified Intermediary
  • Chapter 12 FATCA Withholding Compliance
  • Chapter 13 “Withholdable” Payments
  • Chapter 13A Reporting Payments
  • Chapter 14 Determining and Documenting the Payee
  • Chapter 14A W8 Equivalents
  • Chapter 15 Framework of Intergovernmental Agreements
  • Chapter 16 Analysis of Current Intergovernmental Agreements
  • Chapter 17 European Union Cross Border Information Reporting
  • Chapter 18 The OECD Role in Exchange of Information: The Trace Project, FATCA, and Beyond
  • Chapter 19 Germany
  • Chapter 20 Ireland
  • Chapter 21 Japan
  • Chapter 22 Mexico
  • Chapter 23 Switzerland
  • Chapter 24 United Kingdom
  • Chapter 25 Brazil
  • Chapter 26 British Virgin Islands
  • Chapter 27 Canada
  • Chapter 28 Spain
  • Chapter 29 China
  • Chapter 30 Netherlands
  • Chapter 31 Luxembourg
  • Chapter 32 Russia
  • Chapter 33 Turkey
  • Chapter 34 India
  • Chapter 35 Argentina
  • Chapter 36 Aruba
  • Chapter 37 Australia
  • Chapter 38 Bermuda
  • Chapter 39 Colombia
  • Chapter 40 Cyprus
  • Chapter 41 Hong Kong
  • Chapter 42 Macau
  • Chapter 43 Portugal
  • Chapter 44 South Africa
  • Chapter 45 France
  • Chapter 46 Gibraltar
  • Chapter 47 Guernsey
  • Chapter 48 Italy

Posted in FATCA | Tagged: , , | 6 Comments »

new Form W-8IMY Instructions released June 19!

Posted by William Byrnes on June 19, 2014


W-8IMY: Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting

On June 19, 2014 the IRS released the new Form W-8IMY instructions.

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Form W-8IMY requires a tax identification number.

The new Form W-8IMY has 28 parts whereas the previous August 2013 FATCA draft W-8IMY only contained 26.  The new 2014 Form W-8IMY is vastly different from the seven-part 2006 predecessor form.

Who Must File?

An entity should provide Form W-8IMY when receiving a reportable amount or withholdable payment on behalf of another person or as a flow-through entity.

Form W-8IMY must be provided by the following persons:

  •  A foreign person, or a foreign branch of a U.S. person, to establish that it is a qualified intermediary that is not acting for its own account, to represent that it has provided or will provide a withholding statement, as required, or, if applicable, to represent that it has assumed primary withholding responsibility under chapters 3 and 4 of the Code and/or primary Form 1099 reporting and backup withholding responsibility.
  •  A foreign person to establish that it is a nonqualified intermediary that is not acting for its own account, to certify its chapter 4 status (if required), to certify whether it reports U.S. accounts under chapter 4 (if required), and to indicate, if applicable, that it is using the form to transmit withholding certificates and/or other documentary evidence and has provided, or will provide, a withholding statement, as required.  A U.S. person cannot be a nonqualified intermediary
  •  A U.S. branch that is acting as an intermediary to represent that the income it receives is not effectively connected with the conduct of a trade or business within the United States and either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify to its chapter 4 status and to transmit the documentation of the persons for whom it receives a payment and has provided, or will provide, a withholding statement, as required.
  •  A financial institution incorporated or organized under the laws of a U.S. territory that is acting as an intermediary or is a flow-through entity to represent that it is a financial institution (other than an investment entity that is not also a depository institution, custodial institution, or specified insurance company) and either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify that it is transmitting documentation of the persons for whom it receives a payment and has provided, withholding statement, as required.
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a withholding foreign partnership or withholding foreign trust under the regulations for sections 1441 and 1442 and to certify its chapter 4 status (if required).
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a nonwithholding foreign partnership or nonwithholding foreign simple or grantor trust for purposes of sections 1441 and 1442, to certify to its chapter 4 status (if required), and to represent that the income is not effectively connected with a U.S. trade or business, that the form is being used to transmit withholding certificates and/or documentary evidence, and that it has provided or will provide a withholding statement as required.
  •  A foreign partnership or foreign grantor trust to establish that it is an upper-tier foreign partnership or foreign grantor trust for purposes of section 1446 and to represent that the form is being used to transmit withholding certificates and/or documentary evidence and that it has provided, or will provide, a withholding statement, as required.
  •  A flow-through entity (including a foreign reverse hybrid entity) transmitting withholding certificates and/or other documentary evidence to claim treaty benefits on behalf of its owners, to certify its chapter 4 status (if required), and to certify that it has provided, or will provide, a withholding statement, as required.
  •  A nonparticipating FFI acting as an intermediary or that is a flow-through entity using this form to transmit a withholding statement and withholding certificates or other documentation for exempt beneficial owners described in Regulations section 1.1471-6.
  •  A QSL certifying to a withholding agent that it is acting as a QSL with respect to U.S. source substitute dividends received from the withholding agent pursuant to a securities lending transaction (as described in Notice 2010-46).
  •  A foreign intermediary or flow-through entity not receiving withholdable payments or reportable amounts that is holding an account with a participating FFI or registered deemed-compliant FFI providing this form for purposes of documenting the chapter 4 status of the account holder.  However, no withholding statement is required to be provided along with Form W-8IMY if it is being provided by an FFI solely to document such an account when no withholdable payments or reportable amounts are made to the account. Also note that the entity may instead provide Form W-8BEN-E when it is not receiving withholdable payments or reportable amounts to document its status as an account holder.

Giving Form W-8IMY to the withholding agent. Do not send Form W-8IMY to the IRS. Instead, give it to the person who is requesting it. Generally, this person will be the one from whom you receive the payment, who credits your account, or a partnership that allocates income to you.

When to provide Form W-8IMY to the withholding agent? Give Form W-8IMY to the person requesting it before income is paid, credited, or allocated to your account.

Expiration of Form W-8IMY. Generally, a Form W-8IMY remains valid until the status of the person whose name is on the certificate is changed in a way relevant to the certificate or there is a change in circumstances that makes the information on the certificate no longer correct. The indefinite validity period does not extend, however, to any other withholding certificates, documentary evidence, or withholding statements associated with the certificate.

Change in circumstances. If a change in circumstances makes any information on the Form W-8IMY (or any documentation or a withholding statement associated with the Form W-8IMY) have submitted incorrect for purposes of chapter 3 or chapter 4 (when relevant), the intermediary must notify the withholding agent within 30 days and file a new Form W-8IMY or provide new documentation or a new withholding statement (as applicable).

The information associated with Form W-8IMY must be updated as often as is necessary to enable the withholding agent to withhold at the appropriate rate on each payment and to report such income.

See Regulations sections 1.1441-1(e)(4)(ii)(D) for the definition of a change in circumstances for purposes of chapter 3. See Regulations section 1.1471-3(c)(6)(ii)(E) for the definition of a change in circumstances for purposes of chapter 4.

Chapter 3 and Chapter 4 Status

In general, intermediaries and flow-through entities receiving reportable amounts will be required to provide both their chapter 3 status and the chapter 3 status of persons for whom they receive such payments.

An intermediary or flow-through entity receiving a withholdable payment will be required to provide its chapter 4 status and the chapter 4 status of persons for whom it receives a withholdable payment when required for chapter 4 purposes.

Partnership Allocations

Form W-8IMY may be submitted and accepted to satisfy documentation requirements for purposes of withholding on certain partnership allocations to foreign partners under section 1446. Section 1446 generally requires withholding when a partnership is conducting a trade or business in the United States and allocates income effectively connected with that trade or business (ECI) to foreign persons that are partners in the partnership. Section 1446 can also apply when certain income is treated as effectively connected income of the partnership and is so allocated.

Form W-8IMY

Part I of the W8-IMY Form adds FATCA classification.   Part I of the form requires general information, the Chapter 3 QI status, and the Chapter 4 FATCA classification of the filer.

Question 4 of Part I requests the QI status:

  • If the filer is a Qualified Intermediary, then the filer must complete Part III Qualified Intermediary.  If the filer is a Nonqualified Intermediary, then the filer must complete Part IV Nonqualified Intermediary.
  • Territory Financial Institutions complete Part V. U.S. Branches complete Part VI.
  • Withholding Foreign Partnership or Withholding Foreign Trusts complete Part VII.
  • Nonwithholding Foreign Partnership, Nonwithholding Foreign Simple Trust, and Nonwithholding foreign grantor trusts must complete Part VIII.

Question 5 requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IX through XXVII must be completed.

Part II of this form is to be completed if the entity is a disregarded entity or a branch receiving payment as an intermediary. Part II only applies to branches of an FFI outside the FFI’s country of residence.

Chapter 3 Status Certifications  Parts III – VIII

Parts III – VIII of this form address the QI Status of the entity. Part III is to be completed if the entity is a QI, and requires the entity to certify that it is a QI and has provided appropriate documentation. Part IV is to be completed if the entity is a Nonqualified Intermediary (NQI), and requires the entity to certify that it is a NQI not acting for its own account.

Part V is to be completed if the entity is a Territory Financial Institution. Part VI is to be completed by a U.S. branch only if the branch certifies on the form that it is the U.S. branch of a U.S. bank or insurance company, and that the payments made are not effectively connected to a U.S. trade or business. Part VII is to be completed if the entity is a Foreign Withholding Partnership (WP) or a Withholding Foreign Trust (WT). Part VIII is to be completed if the entity is either a Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust.

Chapter 4 Status Certifications Parts IX – XXVI

Parts IX – XXVI of this form address the FATCA Status of the entity. These classifications include the new classification of a Restricted Distributor (Part XVI), but do not include the new classification of a Reporting NFFE.

Statement of Certification

Part XXVIII requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. Finally, the form contains the following language: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Structure of New Form Form W-8IMY

  • Part I Identification of Entity
  • Part II Disregarded Entity or Branch Receiving Payment.

Chapter 3 Status Certifications

  • Part III Qualified Intermediary
  • Part IV Nonqualified Intermediary
  • Part V Territory Financial Institution
  • Part VI Certain U.S. Branches
  • Part VII Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)
  • Part VIII Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust

Chapter 4 Status Certifications

  • Part IX Nonparticipating FFI with Exempt Beneficial Owners
  • Part X Sponsored FFI That Has Not Obtained a GIIN
  • Part XI Owner-Documented FFI
  • Part XII Certified Deemed-Compliant Nonregistering Local Bank
  • Part XIII Certified Deemed-Compliant FFI with Only Low-Value Accounts
  • Part XIV Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
  • Part XV Certified Deemed-Compliant Limited Life Debt Investment Entity
  • Part XVI Restricted Distributor
  • Part XVII Foreign Central Bank of Issue
  • Part XVIII Nonreporting IGA FFI
  • Part XIX Exempt Retirement Plans
  • Part XX Excepted Nonfinancial Group Entity
  • Part XXI Excepted Nonfinancial Start-Up Company
  • Part XXII Excepted Nonfinancial Entity in Liquidation or Bankruptcy
  • Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
  • Part XXIV Excepted Territory NFFE
  • Part XXV Active NFFE
  • Part XXVI Passive NFFE
  • Part XXVII Sponsored Direct Reporting NFFE

book coverPractical Compliance Aspects of FATCA and GATCA

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.   A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf

<— Subscribe by email on the left menu to the FATCA Updates on this blog:  https://profwilliambyrnes.com/category/fatca/

Posted in FATCA | Tagged: , , , | Leave a Comment »

Updated FATCA GIIN List of FFI Registrations by Country and IGA

Posted by William Byrnes on June 16, 2014


Below is a selection of the 77,353 registered from 115 of the total 205 countries and jurisdictions on the June 2nd list. Of the total registered as of June, 70,811 FFIs (91.5%) registered from the 78 countries and jurisdictions that as of June 15th have an IGA.  Thus, these 70,811 probably registered either as Deemed Compliant FFIs or as branches by the initial May 5th extended deadline.

Only 6,542 FFIs registered from the remaining 172 countries and jurisdictions either as Participating FFIs or branches.  Withholding agents are finalizing systems to begin 30% withholding on the Non-Participating FFIs within these 172 non-IGA countries.  Withholding on IGA jurisdiction non-compliant FFIs only begins January 1st.

  1. Afghanistan: 7
  2. Andorra: 33
  3. Anguilla: 70
  4. Antigua & Barbuda: 35
  5. Argentina: 269
  6. Armenia: 27 <– IGA
  7. Aruba: 13
  8. Australia: 1,864 <– IGA
  9. Austria: 2,978
  10. Azerbaijan: 16 <– IGA
  11. Bahamas: 610  <– IGA
  12. Barbados: 123  <– IGA
  13. Belgium: 249  <– IGA
  14. Belarus: 64
  15. Belize: 122
  16. Bermuda: 1,242
  17. Brazil: 2,258  <– IGA
  18. Bulgaria: 72
  19. BVI: 1,837  <– IGA
  20. Canada: 2,264  <– IGA
  21. Cayman Islands: 14,836  <– IGA
  22. China: 211
  23. Christmas Island: 1
  24. Colombia: 172  <– IGA
  25. Comoros Is.: 1
  26. Costa Rica: 122  <– IGA
  27. Cook Is.: 72
  28. Croatia: 50  <– IGA
  29. Curacao: 173  <– IGA
  30. Cyprus: 279  <– IGA
  31. Czech Republic: 92  <– IGA
  32. Denmark: 186  <– IGA
  33. Djibouti: 1
  34. Dominica: 17
  35. Dominican Republic: 67
  36. Ecuador: 22
  37. Egypt: 62
  38. Equatorial Guinea: 1
  39. Estonia: 26  <– IGA
  40. Falkland Islands: 1
  41. Finland: 466  <– IGA
  42. France: 2,290  <– IGA
  43. French Southern Territories: 1
  44. Georgia: 24  <– IGA
  45. Germany: 2,554  <– IGA
  46. Gibraltar: 96  <– IGA
  47. Greece: 91
  48. Greenland: 1
  49. Grenada: 31
  50. Guadeloupe: 1
  51. Guam: 3
  52. Guatemala: 75
  53. Guernsey: 2,395  <– IGA
  54. Honduras: 47  <– IGA
  55. Hong Kong: 1,539 <– IGA
  56. Hungary: 101  <– IGA
  57. Iceland: 5
  58. India: 246  <– IGA
  59. Indonesia: 307 <– IGA
  60. Ireland: 1,756  <– IGA
  61. Isle of Man: 312  <– IGA
  62. Israel: 321 <– IGA
  63. Italy: 456  <– IGA
  64. Jamaica: 41  <– IGA
  65. Japan: 3,251  <– IGA
  66. Jersey: 1,618  <– IGA
  67. North Korea: 4
  68. South Korea: 396
  69. Kuwait: 77
  70. Latvia: 40
  71. Lichtenstein: 239  <– IGA
  72. Lithuania: 21 ß IGA
  73. Luxembourg: 3,560 ß IGA
  74. Macao: 36
  75. Malta: 235  <– IGA
  76. Mauritius: 727  <– IGA
  77. Mexico: 418  <– IGA
  78. Monaco: 98
  79. Netherlands: 2,053  <– IGA
  80. New Zealand: 334  <– IGA
  81. Norway: 312  <– IGA
  82. Other: 22
  83. Panama: 450  <– IGA
  84. Paraguay: 17   <– IGA
  85. Peru: 164  <– IGA
  86. Poland: 164  <– IGA
  87. Portugal: 255  <– IGA
  88. Qatar: 46  <– IGA
  89. Romania: 109 <– IGA
  90. Russia: 514
  91. Saint Pierre & Miquelon: 1
  92. San Marino: 14
  93. Saudi Arabia: 17
  94. Seychelles: 37  <– IGA
  95. Singapore: 783  <– IGA
  96. South Africa: 317  <– IGA
  97. Spain: 1,187  <– IGA
  98. Slovakia: 54  <– IGA
  99. Slovenia:  20  <– IGA
  100. St Kitts & Nevis: 70 <– IGA
  101. St Lucia: 60  <– IGA
  102. St. Vincent and the Grenadines: 104  <– IGA
  103. Sweden: 312  <– IGA
  104. Switzerland: 4,040  <– IGA
  105. Taiwan: 408
  106. Turkey: 65  <– IGA
  107. Turkmenistan: 1   <-– IGA
  108. Turks & Caicos: 27  <– IGA
  109. Ukraine: 105
  110. United Arab Emirates: 135  <– IGA
  111. United Kingdom: 6,263  <– IGA
  112. USA: 562
  113. Uruguay: 131
  114. Venezuela: 29
  115. 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 (14,836) (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 (514), India (246) with China only having 211.

NAFTA Registrations

2,264 FFIs registered from Canada and Mexico at 418.

Major OECD Countries Registrations

The United Kingdom (6,263) 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 (1,864), France (2,290), Germany (2,254), Ireland (1,756) and Netherlands (2,053).

European Financial Centers Registrations

Switzerland (4,040), Luxembourg (3,560), Austria (2,978), Lichtenstein (239).  Guernsey (2,395), Jersey (1,618), Isle of Man (312) and Gibraltar (96).

Caribbean Financial Centers Registrations

BVI (1,837), Bahamas (610), Bermuda (1,242) and Panama (450).

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 “Edelweiss” in the comments on this blog)

Edelweiss has posted his research on the UK’s 6.263 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 6,263 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.  I presume they have an affiliation with a US private equity shareholder. Globally, there are 26 mentions of “Bidco”, 157 of “Holdco”, 37 “Midco”, 44 “Topco”, 144 “Acquisition”, 156 “Mezzanine” (not exclusively private equity, also specialty finance like mezz funds).
  • I found 321 instances of “LLP” and “265″ instances of partnership
  • I found 16 “deceased” and 33 “will trust”

Three Questions raised by Edelweiss

  • For some reason, the large UK retailers Marks and Spencer (a plc) and John Lewis (a co-operative) found it necessary to register. M&S offers a savings account (which presumably explains why) but John Lewis doesn’t.  Could it be credit card related?

Response: A FFI is eligible to be classified as a “registered deemed-compliant” FFI (“RDCFFI”) if it completes a registration process with the IRS (See Lexis Guide to FATCA Compliance § 7.04) and either is a Reporting Model 1 FFI, or falls within one of six categories listed in Treasury Regulations Section 1.1471-5(f)(1)(i). These six categories include:

  1. local FFIs; 
  2. nonreporting members of participating FFI groups; 
  3. qualified collective investment vehicles; 
  4. restricted funds; 
  5. qualified credit card issuers; or 
  6. sponsored investment entities and controlled foreign corporations. 

Qualified Credit Card Issuers 

A “qualified credit card issuer” is an entity that is an FFI solely because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of a balance due on the card and the overpayment is not immediately returned to the customer. …

  • Also present is Alliance-Boots, the UK’s largest pharmacy. They have 16 entities in the UK and Ireland (under AB Acquisition and Alliance Boots) though I assume this is because they are part owned by KKR.
  • I would be curious to get your take on why Nestle Suisse SA found it necessary to register as an FFI. Is this to avoid confiscation of 30% of principal and interest on the repayment of intercompany loans from a US subsidiary? Is it because it’s a finance subsidiary and they have US source income from bonds?

book coverPractical 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.   A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf

Posted in FATCA, Uncategorized | Tagged: , , , | 1 Comment »

8 IGAs announced since June 3rd leave only 172 countries’ FFIs to withhold upon July 1st

Posted by William Byrnes on June 13, 2014


As mentioned in the June 8th article about the passing of the July GIIN List inclusion deadline, the estimate of states and jurisdictions that probably could benefit from an IGA (Model 2 for jurisdictions without populations) is the full number of countries and non-US Dependencies recognized by the US, which is 250, to accommodate the territories like British Indian Ocean Territory and French Southern Territories from which FFIs registered (to my, and many others, surprise).  Therefore, with 78 IGAs announced thus far, as of Friday June 13th, 172 countries and jurisdictions are without IGAs that could benefit from one – because withholding on their non-(FATCA) compliant financial institutions will begin July 1st.

The current 78 recognized IGAs as of June 12 include 31 signed Model 1s with another 39 treated as if signed, and 5 signed Model 2s with 3 treated as if signed.

Which firms are covered by the FATCA term “Financial Institutions”?

The definition of a financial institution in the final regulations includes any entity that is primarily engaged in the business of investing, reinvesting, or trading in securities, commodities, partnership interests, etc. For this purpose, an entity is primarily engaged in such activities if its gross income attributable to such activities equals or exceeds 50 percent during the relevant testing period.

Thus, foreign funds, collective investment vehicles, and passive investment corporations are considered financial institutions (FFIs) and not passive nonfinancial foreign entities (NFFEs), which is relevant in terms of compliance requirements.  Fund managers, as well as the funds that they manage, are likely considered FFIs under this definition.  However, passive investment corporations may not be captured by this definition because they do not generally engage in any of the activities for customers, nor are they generally managed by an entity that does.

Form 8957 FFI Registration

The instructions to Form 8957 indicate that the following FFIs and branches are eligible to register (on behalf of themselves and their branches) to obtain a GIIN (unless the entity is a Limited FFI or Limited Branch):

  1. Entities not covered by an IGA that wish to enter into an FFI agreement and become a PFFI;
  2. Reporting Model 1 FFIs (including branches of U.S. financial institutions that will be treated as such), registering as an RDCFFI;
  3. Reporting Model 2 FFIs that agree to comply with the terms of an FFI agreement, as modified under the applicable IGA;
  4. Limited FFIs or Limited Branches that confirm that they will comply with applicable terms;
  5. Sponsoring FFIs that agree to perform due diligence, reporting, and withholding on behalf of one or more Sponsored FFIs;
  6. QIs (or Withholding Partnerships and Withholding Trusts) wishing to renew their QI, WP, or WT Agreements; and
  7. Lead FIs/Compliance FIs wishing to identify themselves as such for the purposes of registering members and affiliates.

Model 1 IGA FFIs with a GIIN are classified as “Registered Deemed-Compliant Foreign Financial Institutions” (RDCFFI) on the new W-8BEN-E (see previous article) instead of as Participating Foreign Financial Institutions (PFFIs) pursuant to the regular FATCA FFI agreement and Model 2 IGA.

What is a “Compliance FI”? 

A Compliance FI means a PFFI, Reporting FI under a Model 1 or 2 IGA, or USFI that agrees to establish and maintain a consolidated compliance program and to perform a consolidated periodic review on behalf of one or more Member FIs that are part of its EAG (the compliance group).  A Compliance FI must meet the requirements to register as a Lead FI, and as part of that registration, it must identify each Member FI that is included in its compliance group.  A Compliance FI must also have the authority to terminate the FATCA status of each Member FI within its compliance group.

What is an Expanded Affiliated Group (EAG)? 

An Expanded Affiliated Group of FFIs (EAG) means one or more chains of includible corporations connected through stock ownership with a common parent corporation which is an includible corporation, but only if the common parent owns directly stock in at least one of the other includible corporations totaling more than 50 percent of the total voting power of the stock of such corporation, and with a value equal to more than 50 percent of the total value of the stock of such corporation, and if stock meeting these vote and value requirements in each of the includible corporations (except the common parent) is owned directly by one or more of the other includible corporations.  A partnership or any entity other than a corporation shall be treated as a member of EAG if such entity is controlled by members of such EAG.

Must Each Member of an EAG separately Register?

In general, all FFIs, other than exempt beneficial owners or certified deemed-compliant FFIs, that are part of the same EAG must be registered. For purposes of registration, an EAG may have more than one Lead FI and may organize itself for purposes of registration into subgroups under different Lead FIs.

For example, an EAG of 10 FFIs may decide to select two different Lead FIs, Lead FI 1 and Lead FI 2. Lead FI 1 can carry out FATCA registration on behalf of four of its Member FIs and Lead FI 2 can carry out FACTA registration on behalf of four of its other Member FIs.  All 10 FFIs within the same EAG will be registered, even though they are registered under two different Lead FIs.

If an EAG has in place a consolidated compliance program, then Member FIs that elect to participate in the same consolidated compliance program should be registered as Member FIs by the Lead FI that is acting as the Compliance FI for that compliance group.

What is a Sponsored FFI?

A sponsored FFI means an investment entity or an FFI that is a controlled foreign corporation (CFC) having a Sponsoring Entity that will perform the due diligence, withholding, and reporting obligations on its behalf.  An FFI that is a Sponsored FFI will be registered by its Sponsoring Entity.

Must an Registered FFI that also acts as a Sponsoring Entity Register a Second Time?

Yes.  An FFI that will also act as a Sponsoring Entity for one or more Sponsored Entities is required to submit a second 8957 registration form to act as a Sponsoring Entity.  The Sponsoring Entity will receive a separate Sponsoring Entity GIIN and should only use that GIIN when it is fulfilling its obligations as a Sponsoring Entity.

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

  1. Australia (4-28-2014): 1,864
  2. Belgium (4-23-2014): 249
  3. Canada (2-5-2014): 2,264
  4. Cayman Islands (11-29-2013): 14,836
  5. Costa Rica (11-26-2013): 122
  6. Denmark (11-19-2012): 186
  7. Estonia (4-11-2014): 26
  8. Finland (3-5-2014): 466
  9. France (11-14-2013): 2,290
  10. Germany (5-31-2013): 2,554
  11. Gibraltar (5-8-2014): 96
  12. Guernsey (12-13-2013): 2,395
  13. Hungary (2-4-2014): 101
  14. Honduras (3-31-2014): 47
  15. Ireland (1-23-2013): 1,756
  16. Isle of Man (12-13-2013): 312
  17. Italy (1-10-2014): 456
  18. Jamaica (5-1-2014): 41
  19. Jersey (12-13-2013): 1,618
  20. Liechtenstein (5-19-2014): 239
  21. Luxembourg (3-28-2014): 3,560
  22. Malta (12-16-2013): 235
  23. Mauritius (12-27-2013): 727
  24. Mexico (4-9-2014): 418
  25. Netherlands (12-18-2013): 2,053
  26. New Zealand (6-12-2014) 334 < – moved from below list
  27. Norway (4-15-2013): 312
  28. Slovenia (6-2-2014): 20
  29. South Africa (6-9-2014): 317  < – moved from below list
  30. Spain (5-14-2013): 1,187
  31. United Kingdom (9-12-2012): 6,263

Model 2 IGA – 5

  1. Austria (4-29-2014): 2,978
  2. Bermuda (12-19-2013): 1,242
  3. Chile (3-5-2014): 324
  4. Japan (6-11-2013): 3,251
  5. Switzerland (2-14-2013): 4,040

Jurisdictions that have reached agreements in substance:

Model 1 IGA – 39 (followed by number of registered FFIs)

  1. Antigua and Barbuda (6-3-2014): 35 < – new entry
  2. Azerbaijan (5-16-2014): 16
  3. Bahamas (4-17-2014): 610
  4. Barbados (5-27-2014): 123
  5. Belarus (6-6-2014): 64 < – new entry
  6. Brazil (4-2-2014): 2,258
  7. British Virgin Islands (4-2-2014): 1,837
  8. Bulgaria (4-23-2014): 72
  9. Colombia (4-23-2014): 172
  10. Croatia (4-2-2014): 50
  11. Curaçao (4-30-2014): 173
  12. Czech Republic (4-2-2014): 92
  13. Cyprus (4-22-2014): 279
  14. Georgia (6-12-201): 24 < – new entry
  15. India (4-11-2014): 246
  16. Indonesia (5-4-2014): 307
  17. Israel (4-28-2014): 321
  18. Kosovo (4-2-2014) – nil
  19. Kuwait (5-1-2014): 77
  20. Latvia (4-2-2014): 40
  21. Lithuania (4-2-2014): 21
  22. Panama (5-1-2014): 450
  23. Peru (5-1-2014): 164
  24. Poland (4-2-2014): 164
  25. Portugal (4-2-2014): 255
  26. Qatar (4-2-2014): 46
  27. Romania (4-2-2014): 109
  28. St. Kitts and Nevis (6-4-2014)
  29. St. Lucia (6-12-2014): 60 < – new entry
  30. St. Vincent and the Grenadines (6-2-2014): 104 < – new entry
  31. Seychelles (5-28-2014): 37 < – new entry
  32. Singapore (5-5-2014): 783
  33. Slovak Republic (4-11-2014): 54
  34. South Korea (4-2-2014): 396
  35. Sweden (4-24-2014): 312
  36. Turkey (6-3-2014): 65
  37. Turkmenistan (6-3-2014): 1  < – new entry
  38. Turks and Caicos Islands (5-12-2014): 27
  39. United Arab Emirates (5-23-2014): 135

Model 2 IGA – 3

  1. Armenia (5-8-2014): 27
  2. Hong Kong (5-9-2014): 1.539
  3. Paraguay (6-6-2014): 17  < – new entry

 

book coverPractical Compliance Aspects of FATCA and GATCA

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.   A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf

Posted in FATCA | Tagged: , , | 1 Comment »

77,353 FFI Listed by IRS as FATCA compliant – here’s a breakdown

Posted by William Byrnes on June 2, 2014


The IRS has published the FATCA compliant Foreign Financial Institution (FFI) list in downloadable XMS (excel) format.  The list contains the current 77,353 names of financial institutions and other entities that have completed Foreign Account Tax Compliance Act (FATCA) registration with the IRS and obtained a global intermediary identification number (GIIN).  At least another 70,000 – 100,000 FFIs remain to register and/or are waiting to receive a GIIN, although the IRS has stated in the FFI List FAQs the total number could reach as high as 500,000.

From July 1st a withholding of 30% will apply to FATCA withholdable payments to the 140 countries and jurisdictions without an IGA.  68 countries and jurisdictions have a an IGA with the USA and thus a FATCA registration extension until the end of the year.  See yesterday’s article about the IGAs and other deadlines.

20% of the FATCA compliant financial firms hailed from Cayman Islands at 14,836 registered whereas BVI had 1,837.  2.053 Netherlands financial firms registered thus far, whereas nearly twice as many Swiss firms had GIINs at 4,040.  Liechtenstein only had 239 register.  Of the BRIC countries, only 211 China firms were registered to date, 246 Indian ones, and 514 Russian ones, compared to 2,258 for Brazil.

The most obscure GIIN registration is perhaps AK BARS Investments Corporation which listed BRITISH INDIAN OCEAN TERRITORY.  Falkland Islands even had a registration, albeit a branch, as did Wallis and Futuna (French Pacific territory).  The most contentious GIIN registrations will be the 23 from “the State of Palestine” (I must have missed the State Department press release recognizing its statehood).

The FFI List Search and Download Tool contains a link to a Search and Download Tool that allows the FFI List to be searched and downloaded to ensure ease of use.  A User Guide for the list search-and-download tools is posted online to explain the convenient features provided.

A cumulative updated FFI list will be posted monthly that will contain the names of all financial institutions and other entities that have completed FATCA registration with the IRS and obtained a GIIN up to 5 business days before the end of the previous month. The first updated list will be posted by the IRS on July 1.

<iframe width=”560″ height=”315″ src=”//www.youtube.com/embed/klTK_LsrwV0″ frameborder=”0″ allowfullscreen>


book cover
Practical Compliance Aspects of FATCA and GATCA

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.   A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf


If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”

Posted in FATCA | Tagged: , , , , | 4 Comments »

IRS releases 4 new FATCA FAQs three days before registration deadline

Posted by William Byrnes on May 2, 2014


On May 1, the IRS released 4 new FATCA Frequently Asked Questions (FAQs) and Answers.  The 4 new FAQs address the topics of Responsible Officers,  Branches/Disregarded Entities and Registration Update.  2 of the new FAQs, on Responsible Officer and on Branches, are further divided into multiple sub-questions.  The new Q&A are posted below.

The IRS answered important questions such as: How does a branch in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements?  How does a branch or a disregarded entity (DE) in a jurisdiction that does not have an IGA, or that is in a Model 2 IGA jurisdiction, satisfy its FATCA registration requirements?

FATCA IRS Q&A has to date been provided on the following topics: (previous FAQ update is available at https://profwilliambyrnes.com/2014/04/24/irs-releases-new-fatca-faqs/)

Responsible Officers and Points of Contact

# Questions Answers
Q5. For each of the following FATCA classifications (i.e. Participating Foreign Financial Institution “PFFI”, PFFI that elects to be part of a consolidated compliance program, Registered Deemed-Compliant Foreign Financial Institution “RDCFFI”, Reporting Model 1 FFI, Limited FFI and US Financial Institution “USFI”) what type of individual may serve as a Responsible Officer for purposes of Part 1, Question 10 of the FATCA Registration?

With respect to a PFFI, an RO is an officer of the FFI (or an officer of any Member FI that is a PFFI, Reporting Model 1 FFI or Reporting Model 2 FFI) with sufficient authority to fulfill the duties of a Responsible Officer described in a FFI Agreement. 

With respect to a PFFI that elects to be part of a consolidated compliance program, an RO is an officer of the Compliance FI with sufficient authority to fulfill the duties of a Responsible Officer described in the FFI Agreement on behalf of each FFI in the compliance group (regardless of whether the FFI is a Limited FFI or treated as a Reporting Model 1 FFI or Reporting Model 2 FFI).

With respect to a RDCFFI, other than a RDCFFI that is a Reporting Model 1 FFI, an RO is an officer of the FI (or an officer of any Member FFI that is a PFFI, Reporting Model 1 FFI, or Reporting Model 2 FFI) with sufficient authority to ensure that the FFI meets the applicable requirements to be treated as a RDCFFI. 

With respect to a Reporting Model 1 FFI, an RO is any individual specified under local law to register and obtain a GIIN on behalf of the FFI.  If, however, the Reporting Model 1 FFI operates any branches outside of a Model 1 IGA jurisdiction, then the RO identified must be an individual who can satisfy the requirements under the laws of the Model 1 IGA jurisdiction and the requirements relevant to the registration type selected for each of its non-Model 1 IGA branches. 

With respect to a Limited FFI, an RO is an officer of the Limited FFI (or an officer of any Member FI that is a PFFI, Reporting Model 1 FFI, or Reporting Model 2 FFI) with sufficient authority to ensure that the FI meets the applicable requirements to be treated as a Limited FFI. 

With respect to a USFI that is registering as a “Lead FI”, an RO is any officer of the FI (or an officer of any Member FI) with sufficient authority to register its Member FIs and to manage the online FATCA accounts for such members.

Q6.

Part 4 of the online registration system* states:

By checking this box, I, _________, [(the responsible officer or delegate thereof (herein collectively referred to as the “RO”)], certify that, to the best of my knowledge, the information submitted above is accurate and complete and I am authorized to agree that the Financial Institution (including its branches, if any) will comply with its FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the Financial Institution based on its status in each jurisdiction in which it operates.

*Note: Part 4 of Form 8957 contains a substantially similar certification.

Can this statement be broken down into two declarations of the RO, as follows? 

(i) The RO certifies that, to the best of its knowledge, the information submitted above is accurate and complete. 

(ii) The RO agrees that the FI (including its branches, if any) will comply with its FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the FI based on its status in each jurisdiction in which it operates.

Yes.

 

 

 

 

 

 

 

 

 

Does the first declaration above mean that the RO certifies that, to the best of its knowledge, the FI meets the requirements of its claimed status?

Yes.

 

Does the second declaration above apply to an FI treated as a reporting Model 2 FFI?

Yes.

 

Does the second declaration above (relating to a Participating FFI) require the signing party to ensure that the FFI and its member FFIs (including its branches, if any) comply with its respective obligations under the terms of its FFI Agreement or any applicable intergovernmental agreement and any such applicable local law? 

The second declaration requires the signing party to be able to certify that, to the best of the signing party’s knowledge at the time the FATCA registration is signed, the FI and its member FFIs intend to comply with their respective FATCA obligations. 

A Participating FFI will have its certifying responsible officer (as defined in Treasury Regulation §1.1471-1(b)(116)) periodically certify to the IRS regarding the FFI’s compliance with its FFI agreement.  As noted in FAQ 1, the RO identified in Part 4 will normally be an individual with sufficient authority to be eligible for RO status under Treas. Reg. § 1.1471-1(b)(116).  (See, however, above regarding “Delegation of RO Duties.”)

 

How do the certifications in Part 4 apply to FIs treated as reporting Model 1 FFIs?

The first declaration above applies to FIs treated as reporting Model 1 FFIs and, as such, the RO of an FI treated as a reporting Model 1 FFI certifies that, to the best of the RO’s knowledge, the information submitted as part of the FATCA Registration process is accurate and complete.  The second declaration, however, has limited applicability to FIs treated as reporting Model 1 FFIs because the FI does not have ongoing FATCA compliance obligations directly with the IRS.  Instead, the compliance and reporting obligations of an FI treated as a reporting Model 1 FFI are to its local authority.  However, a reporting Model 1 FFI that has branches (as identified in Part 1, line 9 of Form 8957) that are located outside of a Model 1 IGA jurisdiction will also agree to the terms applicable to the statuses of such branches.  Additionally, an FI (including an FI in a Model 1 IGA jurisdiction) that is also registering to renew its QI, WP, or WT Agreement will agree to the terms of such renewed QI, WP, or WT Agreements by making the second declaration.

 

Registration Update

# Questions Answers
Q2.

For each of the following FATCA classifications (i.e. Participating Foreign Financial Institution “PFFI” for Reporting Model 2 FFI, Registered Deemed Compliant Foreign Financial Institutions “RDCFFI” (for both Model 1 and non-Model 1 FFIs), Sponsoring Entity, Limited FFI or Limited Branch, Renewing QI/WP/WT, US Financial Institution “USFI” treated as a Lead FI and Direct Reporting NFFE) what is the impact of completing Part IV of the FATCA Registration?

 

PFFI Status for Reporting Model 2 FFI

Reporting Model 2 FFIs are registering to obtain a GIIN, provide authorization for individuals named in Part 1, Line 11 of the FATCA Registration to receive information related to FATCA registration, and to confirm that they will comply with the terms of an FFI Agreement in accordance with the FFI agreement, as modified by any applicable Model 2 IGA.

Notwithstanding the paragraph above, Reporting Model 2 FFIs operating branches outside of Model 1 or 2 IGA jurisdictions are agreeing to the terms of an FFI Agreement for such branches, unless the branches are treated as Limited Branches or are U.S. branches that are treated as U.S. persons.  Additionally, Reporting Model 2 FFIs requesting renewal of a QI, WP or WT Agreement are entering into the renewed Model QI, WP, or WT Agreements, as applicable. 

RDCFFI Status for Reporting Model 1 FFI

Reporting Model 1 FFIs are not entering into FFI Agreements via the FATCA registration process.  Reporting Model 1 FFIs are registering to obtain a GIIN and to provide authorization for individuals named in Part 1, Line 11 of the FATCA Registration to receive information related to FATCA registration.  Notwithstanding the preceding sentence, Reporting Model 1 FFIs operating branches outside of Model 1 or 2 IGA jurisdictions are agreeing to the terms of an FFI Agreement for such branches, unless the branches are treated as Limited Branches.  Additionally, Reporting Model 1FFIs requesting renewal of a QI, WP or WT Agreement are entering into such renewed Model QI, WP, or WT Agreements, as applicable. 

RDCFFI Status for FFI (other than a Reporting Model 1 FFI)

An FFI that is registering as an RDCFFI, other than a Reporting Model 1 FFI, is agreeing that it meets the requirements to be treated as an RDCFFI under relevant Treasury Regulations or is agreeing that it meets the requirements to be treated as a RDCFFI pursuant to an applicable Model 2 IGA.

Sponsoring Entity Status

An entity that is registering as a Sponsoring Entity is agreeing that it will perform the due diligence, reporting and withholding responsibilities of one or more Sponsored FFIs or Sponsored Direct Reporting NFFEs.

Limited FFI or Limited Branch Status

An FFI that is registering as a Limited FFI is confirming that it will comply with the terms applicable to a Limited FFI.  A branch of a PFFI that is registering as a Limited Branch is confirming that it will comply with the terms applicable to a Limited Branch.  GIINs will not be issued to a Limited FFI or Limited Branch.

Renewing QI/WP/WT 

An FFI, including a foreign branch of a USFI, requesting renewal of a QI Agreement is agreeing to comply with the relevant terms of the renewed Model QI Agreement with respect to its branches that are identified as operating as a QI.  The obligations under the renewed Model QI Agreement are in addition to any obligations imposed on the FFI to be treated as a PFFI, Reporting Model 2 FFI, RDCFFI, or Reporting Model 1 FFI. 

 

An FFI that is applying to renew its WP or WT Agreement is agreeing to comply with the relevant terms of the renewed Model WP or WT Agreement.  The obligations under the renewed Model WP or WT Agreement are in addition to any obligations imposed on the FFI to be treated as PFFI, Reporting Model 2 FFI, RDCFFI, or Reporting Model 1 FFI.  Additionally, a QI, WP, or WT is also certifying that it has in place and has implemented written policies, procedures, and processes for documenting, withholding, reporting and depositing tax with respect to its chapters 3 and 61 withholding responsibilities under its QI, WP, or WT Agreement. 

USFI treated as a Lead FI

A USFI that is part of an EAG and registering its Members FIs is agreeing to manage the online FATCA account for each such Member FI.

Direct Reporting NFFE

A direct reporting NFFE is agreeing to comply with the terms and obligations described under Treas. Reg. § 1.1472-1(c)(3). 

 

Branch/Disregarded Entity

# Questions Answers

Q1.

How does a disregarded entity (DE) in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements?

A DE in a Model 1 IGA jurisdiction must register as an entity separate from its owner in order to be treated as a reporting Model 1 FFI, provided that the DE is treated as a separate entity for purposes of its reporting to the applicable Model 1 jurisdiction.  Select either a “Single” FFI or “Member” FFI in Part 1, Question 1 of the FATCA Registration (as appropriate).  Select “Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA)” in Part 1, Question 4.  When the owner of the DE registers on its own behalf, it should not report the DE as a branch.

 

How does a branch in a Model 1 IGA jurisdiction satisfy its FATCA registration requirements?

In general, a branch (as defined in Treas. Reg. § 1.1471-4(e)(2)(ii)) should be registered as a branch of its owner and not as a separate entity.  Thus, the branch will be registered by the FI of which the branch is a part (including an appropriate Lead FI or Sponsoring Entity) when that FI completes Part 1 of its own FATCA registration.  The online registration user guide provides further instructions on how to register branches.  In general, a branch is a unit, business, or office of an FFI that is treated as a branch under the regulatory regime of a country or is otherwise regulated under the laws of such country as separate from other offices, units, or branches of the FI.

 

How does a branch or a disregarded entity (DE) in a jurisdiction that does not have an IGA, or that is in a Model 2 IGA jurisdiction, satisfy its FATCA registration requirements?

A branch (including a DE) that is in a Model 2 IGA jurisdiction, or a jurisdiction without an IGA, should be registered as a branch of its owner (rather than as a separate entity).  As such, the branch will be registered by the FI of which the branch is a part (including an appropriate Lead FI or Sponsoring Entity) when that FI completes Part 1 of its own FATCA registration.  The branch will not have a separate registration account, but will be assigned a separate GIIN, if eligible.  When the FI completes its FATCA registration and registers its branches by answering Questions 7, 8, and 9, GIINs will be assigned with respect to the registered branches, where appropriate.  The online registration user guide provides further instructions on how to register branches.   A separate GIIN will be issued to the FI to identify each jurisdiction where it maintains a branch that is participating or registered deemed-compliant. 

All branches (and, except in Model 1 IGA jurisdictions, disregarded entities) of an FI located in a single jurisdiction are treated as one branch and, as a result, will share a single GIIN.  U.S. branches and limited branches are not eligible to receive their own GIINs.  A branch of an FFI located in the FFI’s home country will use the GIIN of the FFI.  For example, suppose FI W (located in Country X) has one branch in Country X, two branches in Country Y and owns a DE in Country Z.  Country Z is a Model 1 IGA jurisdiction.  FI W will receive a Country X GIIN.  FI W’s Country X branch will use W’s GIIN.  The two branches in Country Y will be treated as a single branch, and so FI W will be issued a single Country Y GIIN for these two branches to share.  The Country Z DE will register as an entity separate from its owner, in order to be treated as a reporting Model 1 FFI, and will receive its own GIIN. 

book coverOperational Compliance Guide for FATCA .. a Lexis solution for compliance officers

The LexisNexis® Guide to FATCA Compliance (2nd 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 challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic 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.

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/

Posted in FATCA | Tagged: , , , , , | 1 Comment »

Analysis of the new FATCA W-8IMY released today

Posted by William Byrnes on April 30, 2014


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

On April 30, 2014 the IRS released the new Form W-8IMY (“Form W-8IMY”), formally replacing its 2006 predecessor W-8IMY. This new Form W-8IMY has 28 parts whereas the previous August 2013 FATCA draft W-8IMY only contained 26.  The new 2014 Form W-8IMY is vastly different from the seven-part 2006 predecessor form.  (Analysis of the New W-8BEN-E released April 2 is available at https://profwilliambyrnes.com/2014/04/02/irs-releases-final-fatca-form-w-8ben-e/)

Below is a summary for the W-8IMY.  For a full compliance analysis of the new form W-8IMY and the other potentially required withholding forms drafted by the > Lexis FATCA experts <, see >LexisNexis® Guide to FATCA Compliance< Chapter 11 Withholding And Qualified Intermediary, § 11.08 Applicable Withholding Forms, [5] Analysis of Form W-8IMY.

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Form W-8IMY requires a tax identification number.

Part I of the Form adds FATCA classification.   Part I of the form requires general information, the Chapter 3 QI status, and the Chapter 4 FATCA classification of the filer.

Question 4 of Part I requests the QI status:

If the filer is a Qualified Intermediary, then the filer must complete Part III Qualified Intermediary.  If the filer is a Nonqualified Intermediary, then the filer must complete Part IV Nonqualified Intermediary.

Territory Financial Institutions complete Part V. U.S. Branches complete Part VI.

Withholding Foreign Partnership or Withholding Foreign Trusts complete Part VII.

Nonwithholding Foreign Partnership, Nonwithholding Foreign Simple Trust, and Nonwithholding foreign grantor trusts must complete Part VIII.

Question 5 requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IX through XXVII must be completed.

Part II of this form is to be completed if the entity is a disregarded entity or a branch receiving payment as an intermediary. Part II only applies to branches of an FFI outside the FFI’s country of residence.

Chapter 3 Status Certifications  Parts III – VIII

Parts III – VIII of this form address the QI Status of the entity. Part III is to be completed if the entity is a QI, and requires the entity to certify that it is a QI and has provided appropriate documentation. Part IV is to be completed if the entity is a Nonqualified Intermediary (NQI), and requires the entity to certify that it is a NQI not acting for its own account.

Part V is to be completed if the entity is a Territory Financial Institution. Part VI is to be completed by a U.S. branch only if the branch certifies on the form that it is the U.S. branch of a U.S. bank or insurance company, and that the payments made are not effectively connected to a U.S. trade or business. Part VII is to be completed if the entity is a Foreign Withholding Partnership (WP) or a Withholding Foreign Trust (WT). Part VIII is to be completed if the entity is either a Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust.

Chapter 4 Status Certifications Parts IX – XXVI

Parts IX – XXVI of this form address the FATCA Status of the entity. These classifications include the new classification of a Restricted Distributor (Part XVI), but do not include the new classification of a Reporting NFFE.

Statement of Certification

Part XXVIII requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. Finally, the form contains the following language: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Structure of New Form Form W-8IMY

  • Part I Identification of Entity
  • Part II Disregarded Entity or Branch Receiving Payment.

Chapter 3 Status Certifications

  • Part III Qualified Intermediary
  • Part IV Nonqualified Intermediary
  • Part V Territory Financial Institution
  • Part VI Certain U.S. Branches
  • Part VII Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)
  • Part VIII Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust

Chapter 4 Status Certifications

  • Part IX Nonparticipating FFI with Exempt Beneficial Owners
  • Part X Sponsored FFI That Has Not Obtained a GIIN
  • Part XI Owner-Documented FFI
  • Part XII Certified Deemed-Compliant Nonregistering Local Bank
  • Part XIII Certified Deemed-Compliant FFI with Only Low-Value Accounts
  • Part XIV Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
  • Part XV Certified Deemed-Compliant Limited Life Debt Investment Entity
  • Part XVI Restricted Distributor
  • Part XVII Foreign Central Bank of Issue
  • Part XVIII Nonreporting IGA FFI
  • Part XIX Exempt Retirement Plans
  • Part XX Excepted Nonfinancial Group Entity
  • Part XXI Excepted Nonfinancial Start-Up Company
  • Part XXII Excepted Nonfinancial Entity in Liquidation or Bankruptcy
  • Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
  • Part XXIV Excepted Territory NFFE
  • Part XXV Active NFFE
  • Part XXVI Passive NFFE
  • Part XXVII Sponsored Direct Reporting NFFE

Sworn Certification

  • Part XXVIII Certification

book coverPractical Compliance Aspects of FATCA and GATCA

For in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA), see Lexis Guide to FATCA Compliance, 2nd Edition just published!

The LexisNexis® Guide to FATCA Compliance (2nd 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/

Posted in FATCA | Tagged: , , , , , | 3 Comments »

IRS Releases Final FATCA Form W-8BEN-E & Instructions – Analysis

Posted by William Byrnes on April 2, 2014


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

The Form W-8BEN has been split into two forms.  The new 2014 Form W-8BEN (revision date 2014) is for use solely by foreign individuals, whereas the new Form W-8BEN-E is for use by entities for 2014 (revision date 2014) to provide US withholding agents.  The newest version of Form W-8BEN-E must be used by all entities that are beneficial owners of a payment, or of another entity that is the beneficial owner.

The IRS released the new 2014 Form W-8BEN-E (2-2014) that coincides with FATCA and QI entity classification reporting requirements, and on April 30, 2014 the IRS followed up with the new Form W-8IMY (read my analysis at “Form W-8IMY”), formally replacing its 2006 predecessor W-8IMY.

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Form W-8IMY requires a tax identification number.  The new Form W-8IMY has 28 parts whereas the previous August 2013 FATCA draft W-8IMY only contained 26.  The new 2014 Form W-8IMY is vastly different from the seven-part 2006 predecessor form.

Below is an analysis of how to fill out the 2014 W-8BENW-8BEN-E  and of W-8IMY.  The Form W8BEN instructions >link is here< and the Form W-8BEN-E Instructions link is here. My 600 page  Lexis FATCA compliance manual link is here.  Free download link is here.

Analysis of the W-8BEN

Foreign individuals (non-resident aliens – NRAs) must use Form W-8BEN to document their foreign status and claim any applicable treaty benefits for chapter 3 purposes, including a foreign individual that is the single member of an entity that is disregarded for U.S. tax purposes.

The NRA must give the Form W-8BEN to the withholding agent or payer if he/she is the beneficial owner of an amount subject to withholding, or if he/she an account holder of an FFI then to the FFI to document his/her status as a nonresident alien.  Note that a sole member of a “disregarded” entity is considered the beneficial owner of income received by the disregarded entity, and thus the sole member must provide a W-8BEN.

If the income or account is jointly owned by more than one persons, the income or account will be treated by the withholding agent as owned by a foreign person that is a beneficial owner of a payment only if Forms W-8BEN or W-8BEN-E are provided by EVERY owner of the account.  If the withholding agent or financial institution receives a Form W-9 from any of the joint owners, then the payment must be treated as made to a U.S. person and the account treated as a U.S. account.

If any information on the Form W-8BEN becomes incorrect because of a change in circumstances, then the NRA must provide within 30 days of the change of circumstances the withholding agent, payer, or FFI with a new W-8BEN.   By example, if an NRA has a change of address to an address in the United States, then this change is a change in circumstances that requires contacting the withholding agent or FFI within 30 days.  Generally, a change of address within the same foreign country or to another foreign country is not a change in circumstances.   However, if Form W-8BEN is used to claim treaty benefits of a country based on a residence in that country and the NRA changes address to outside that country, then it is a change in circumstances requiring notification within 30 days to the withholding agent or FFI.

A NRA (nonresident alien individual) is any individual who is not a citizen or resident alien of the United States.  An foreign person (‘alien”) meeting either the “green card test” or the “substantial presence test” for the calendar year is a resident alien. Any person not meeting either of these two tests is a nonresident alien individual.   Additionally, an alien individual who is a bona fide resident of Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa is a nonresident alien individual.

Taxpayer Identification Numbers

Line 5 requires a taxpayer identification number, which is the US social security number (SSN), or if not eligible to receive a SSN, then an individual taxpayer identification number (ITIN).  The SSN may be applied for www.socialsecurity.gov/online/ss-5.html.  An ITIN may be applied for by filing Form W-7 with the  IRS.  To claim  certain treaty benefits, either line 5 must be completed with an SSN or ITIN, or line 6 must include a foreign  tax identification number (foreign TIN).

US Exchange of Tax Information with Foreign Countries

Line 6 of Form W-8BEN requires a foreign tax identifying number ( foreign TIN) issued by a foreign jurisdiction of residence when an NRA documents him or herself with respect to a financial account held at a U.S. office of a financial institution.  However, if the foreign jurisdiction does not issue TINs or has not provided the NRA a TIN yet, then the NRA must enter a date of birth in line 8.

Analysis of the W-8BEN-E 

The W-8BEN-E form has thirty parts, that can be catalogued into four sections.  The filer’s primary focus will be on Part I.  By the way, the draft W-8BEN-E form only had twenty-seven, and the former W8BEN in use since 2006 has just four parts.

Identifying Information and Choice of Classification Part: All filers of the new W-8BEN-E must complete Parts I (Identifying Information and FATCA Classification).  Part I of the W-8BEN-E 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, and also is claiming benefits under a U.S. tax treaty, then the filer must complete Part III.  Part I, Question 5 requests the FATCA classification of the filer, of which the form list thirty-one choices (see analysis below).  The classification indicated determines which one of the Parts IV through XXVIII must be completed.

General Certification Part: All filers must complete Part XXIX (General Certification).  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.”

FATCA Classification Certification Parts: Completion of the other parts of the form W-8BEN-E will depend upon the Part I, Question 5 FATCA classification of the filer (see list below). The classifications on the newest version Form W-8BEN-E maintain the classification of a Restricted Distributor (previously Part X of the draft form, but in the final form Part XI) (see the Rev. 2013 version of the W-8BEN-E).

Substantial US Owner Part: 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.

Who Must Provide W-8BEN-E?

A foreign entity must submit a Form W-8BEN-E to the withholding agent if it will receive a FATCA withholdable payment, receive a payment subject to chapter 3 withholding, or if it maintains an account with an FFI.

All Beneficial Owners

Form W-8 BEN-E must be provided by ALL the entities that are beneficial owners of a payment, or of another entity that is the beneficial owner.  If the income or account is jointly owned by more than one person, then the income or account will be treated by the withholding agent as owned by a foreign beneficial owner only if Forms W-8BEN or W-8BEN-E are provided by EVERY owner of the account.

Treatment as US Account

If the withholding agent or financial institution receives a Form W-9 from any of the joint owners, then the payment must be treated as made to a U.S. person and the account treated as a U.S. account.  An account will be treated as a U.S. account for FATCA by an FFI if any of the account holders is a specified U.S. person or a U.S.-owned foreign entity (unless the account is otherwise excepted from U.S. account status for FATCA purposes).

Hybrids

Hybrid Entity: A hybrid entity should give Form W-8BEN-E on its own behalf to a withholding agent only for income for which it is claiming a reduced rate of withholding under an income tax treaty or to document its chapter 4 status for purposes of maintaining an account with an FFI requesting this form (when it is not receiving withholdable payments or payments subject to chapter 3 withholding).

Reverse Hybrid: A reverse hybrid entity should give Form W-8BEN-E on its own behalf to a withholding agent only for income for which no treaty benefit is being claimed or to establish its status for chapter 4 purposes (when required).

Who Should Not Use Form W-8BEN-E?

US Person: If the filer is a US person (including US citizens, resident aliens, and entities treated as US persons, such as a corporation organized under the law of a state), then submit Form W-9, Request for Taxpayer Identification Number and Certification.

Foreign Insurance Company: A foreign insurance company that has made an election under section 953(d) to be treated as a U.S. person should submit Form W-9 to certify its “U.S. status” even if it is an FFI for FATCA purposes.  Certain foreign insurance companies issuing annuities or cash value insurance contracts that elect to be treated as a U.S. person for federal tax purposes but are not licensed to do business in the United States are treated as FFIs for purposes of chapter 4. For purposes of providing a withholding agent with documentation for both chapter 3 and chapter 4 purposes, however, such an insurance company is permitted to use Form W-9 to certify its status as a U.S. person.

NRA: A nonresident alien individual must submit Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).

Disregarded: A U.S. person that is a single owner of a disregarded entity, and that is not also a hybrid entity claiming treaty benefits, should provide Form W-9.  A foreign branch of a U.S. financial institution (other than a branch that operates as a qualified intermediary) that is treated as an FFI under an applicable IGA is permitted to use Form W-9 to certify its status as a U.S. person for chapter 3 and chapter 4 purposes.

But if the single owner is not a U.S. person,is not a branch of an FFI claiming FATCA status, and is not a hybrid entity claiming treaty benefits, it should provide either Form W-8BEN or Form W-8BEN-E as appropriate.

Intermediary: Form W-8IMY is submitted generally by a payment recipient with non-beneficial owner status, i.e. an intermediary.  Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust.  Read my analysis of W-8IMY and its instructions in my June 24th article.  An entity treated as a flow-through entity should generally provide Form W-8IMY for chapter 3 or chapter 4 purposes.

Expiration of Form W-8BEN-E.

Generally, a Form W-8BEN-E will remain valid for purposes of both chapters 3 and 4 for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect.  For example, a Form W-8BEN signed on September 30, 2014 remains valid through December 31, 2017.  However, under certain conditions a Form W-8BEN-E will remain in effect indefinitely until a change of circumstances occurs.

Change in circumstances.

If a change in circumstances makes any information on the Form W-8BEN-E incorrect for purposes of either chapter 3 or chapter 4, then the submitting person must notify the withholding agent or financial institution maintaining the account within 30 days of the change in circumstances and you must file a new Form W-8BEN-E (or other appropriate form as applicable).

Certification

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.”

Analysis of Part I – Identification of Beneficial Owner

Part I of the W-8BEN-E requires general information, the QI status, and the FATCA classification of the filer.

Question 1A disregarded entity or branch enters the legal name of the entity that owns the disregarded entity (looking through multiple disregarded entities if applicable) or maintains the branch.

Question 2A corporation must enter its country of incorporation.  Any other type of entity must instead enter the country under whose laws it is created, organized, or governed.

Question 3A disregarded entity receiving a payment should only enter its name on line 3 if it is receiving a withholdable payment or hold an account with an FFI and

  1. has registered with the IRS and been assigned a GIIN associated with the legal name of the disregarded entity;
  2. is a reporting Model 1 FFI or reporting Model 2 FFI; and
  3. is not a hybrid entity using this form to claim treaty benefits.

If not required to provide the legal name, then a disregarded entity receiving a payment or maintaining an account may instead enter its name on line 10.

Question 4 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.  See new 2014 QI agreement here.

Question 5 requests the FATCA classification of the entity.  W-8BEN-E currently lists 31 FATCA classifications of which the entity must check only one box unless otherwise indicated. Completion of the W-8BEN-E other parts depend upon the selection of the FATCA classification.

  1. Nonparticipating FFI (including a limited FFI or an FFI related to a Reporting IGA FFI other than a registered deemed-compliant FFI or participating FFI).
  2. Participating FFI.
  3. Reporting Model 1 FFI.
  4. Reporting Model 2 FFI.
  5. Registered deemed-compliant FFI (other than a reporting Model 1 FFI or sponsored FFI that has not obtained a GIIN).
  6. Sponsored FFI that has not obtained a GIIN. Complete Part IV.
  7. Certified deemed-compliant nonregistering local bank. Complete Part V.
  8. Certified deemed-compliant FFI with only low-value accounts. Complete Part VI.
  9. Certified deemed-compliant sponsored, closely held investment vehicle. Complete Part VII.
  10. Certified deemed-compliant limited life debt investment entity. Complete Part VIII.
  11. Certified deemed-compliant investment advisors and investment managers. Complete Part IX.
  12. Owner-documented FFI. Complete Part X.
  13. Restricted distributor. Complete Part XI.
  14. Nonreporting IGA FFI (including an FFI treated as a registered deemed-compliant FFI under an applicable Model 2 IGA). Complete Part XII.
  15. Foreign government, government of a U.S. possession, or foreign central bank of issue. Complete Part XIII.
  16. International organization. Complete Part XIV.
  17. Exempt retirement plans. Complete Part XV.
  18. Entity wholly owned by exempt beneficial owners. Complete Part XVI.
  19. Territory financial institution. Complete Part XVII.
  20. Nonfinancial group entity. Complete Part XVIII.
  21. Excepted nonfinancial start-up company. Complete Part XIX.
  22. Excepted nonfinancial entity in liquidation or bankruptcy. Complete Part XX.
  23. 501(c) organization. Complete Part XXI.
  24. Nonprofit organization. Complete Part XXII.
  25. Publicly traded NFFE or NFFE affiliate of a publicly traded corporation. Complete Part XXIII.
  26. Excepted territory NFFE. Complete Part XXIV.
  27. Active NFFE. Complete Part XXV.
  28. Passive NFFE. Complete Part XXVI as well as Part XXX if substantial U.S. owners*.
  29. Excepted inter-affiliate FFI. Complete Part XXVII.
  30. Direct reporting NFFE.
  31. Sponsored direct reporting NFFE. Complete Part XXVIII

*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.

FFIs Covered by an IGA and Related Entities

A reporting IGA FFI resident in, or established under the laws of, a jurisdiction covered by a Model 1 IGA should check “Reporting Model 1 FFI.” A reporting FFI resident in, or established under the laws of, a jurisdiction covered by a Model 2 IGA should check “Reporting Model 2 FFI.”

If the FFI is treated as a registered deemed-compliant FFI under an applicable IGA, it should check “Nonreporting IGA FFI” rather than “registered deemed-compliant FFI” and provide its GIIN in Part XII, line 26.

An FFI that is related to a reporting IGA FFI and that is treated as a nonparticipating FFI in its country of residence should check nonparticipating FFI in line 5. An FFI that is related to a reporting IGA FFI and that is a participating FFI, deemed-compliant FFI, or exempt beneficial owner under the U.S. Treasury regulations or an applicable IGA should check the appropriate box for its chapter 4 status.

Requirement to Provide a GIIN

If the entity is in the process of registering with the IRS as a participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI, reporting Model 2 FFI, direct reporting NFFE, or sponsored direct reporting NFFE, but has not received a GIIN, it may complete this line by writing “applied for.” However, the person requesting this form must receive and verify the GIIN within 90 days.

For payments made prior to January 1, 2015, a Form W-8BEN-E provided by a reporting Model 1 FFI need not contain a GIIN. For payments made prior to January 1, 2016, a sponsored direct reporting NFFE or sponsored FFI that has not obtained a GIIN must provide the GIIN of its sponsoring entity.

Part X – Owner-Documented FFI

Line 24a. An owner-documented FFI must check the box to certify that it meets all of the requirements for this status and is providing this form to a U.S. financial institution, participating FFI, reporting Model 1 FFI, or reporting Model 2 FFI that agrees to act as a designated withholding agent with respect to the FFI identified on line 1. Then select either 24b or 24c.

Line 24b. Check this box to certify that the documentation set forth in the certifications has been provided (or will be provided), including the owner reporting statement described in this line 24b, or

Line 24c. Check this box to certify that the auditor’s letter has been provided (or will be provided).

Part XXI – 501(c) Organization

Only foreign entities that are tax-exempt under section 501 should check the 501(c) organization “Tax-exempt organization” box. Such organizations should use Form W-8BEN-E only if they are claiming a reduced rate of withholding under an income tax treaty or a code exception other than section 501. If claiming an exemption from withholding under code section 501, then it must submit Form W-8EXP to document the exemption and chapter 4 status.

Part XXII – Non-Profit Organizations Covered by an IGA

A non-profit entity that is established and maintained in a jurisdiction that is treated as having in effect a Model 1 IGA or Model 2 IGA, and that meets the definition of Active NFFE under Annex I of the applicable IGA, should not check a box for its status on line 5.

Entities Providing Certifications Under an Applicable IGA

In lieu of the certifications contained in Parts IV through XXVIII of Form W-8BEN-E, a reporting Model 1 FFI or reporting Model 2 FFI in certain cases may request alternate certifications to document its account holders pursuant to an applicable IGA or it may otherwise provide an alternate certification to a withholding agent.

A withholding agent that is an FFI may provide a chapter 4 status certification other than as shown in Parts IX through XXVIII in order to satisfy its due diligence requirements under an applicable IGA. In such a case, attach that alternative certification to this Form W-8BEN-E in lieu of completing a certification otherwise required in Parts IV through XXVIII provided that

1) the certification accurately reflects the chapter 4 status or under an applicable IGA; and

2) the withholding agent provides a written statement that it has provided the certification to meet its due diligence requirements as a participating FFI or registered deemed-compliant FFI under an applicable IGA.

An applicable IGA certification may be provided with the W-8BEN-E if determining chapter 4 status under the definitions provided in an applicable IGA and that certification identifies the jurisdiction that is treated as having an IGA in effect and describes the status as an NFFE or FFI in accordance with the applicable IGA.

However, if under an applicable IGA the entity’s status is determined to be an NFFE, it must still determine if it is an excepted NFFE under the FATCA Regulations. Additionally, the entity must comply with the conditions of its status under the law of the IGA jurisdiction.

W-8BEN-E’s 30 Parts

Part I Identification of Beneficial Owner
Part II Disregarded Entity or Branch Receiving Payment.
Part III Claim of Tax Treaty Benefits (if applicable). (For chapter 3 purposes only)
Part IV Sponsored FFI That Has Not Obtained a GIIN
Part V Certified Deemed-Compliant Nonregistering Local Bank
Part VI Certified Deemed-Compliant FFI with Only Low-Value Accounts
Part VII Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
Part VIII Certified Deemed-Compliant Limited Life Debt Investment Entity
Part IX Certified Deemed-Compliant Investment Advisors and Investment Managers
Part X Owner-Documented FFI
Part XI Restricted Distributor
Part XII Nonreporting IGA FFI
Part XIII Foreign Government, Government of a U.S. Possession, or Foreign Central Bank of Issue
Part XIV International Organization
Part XV Exempt Retirement Plans
Part XVI Entity Wholly Owned by Exempt Beneficial Owners
Part XVII Territory Financial Institution
Part XVIII Excepted Nonfinancial Group Entity
Part XIX Excepted Nonfinancial Start-Up Company
Part XX Excepted Nonfinancial Entity in Liquidation or Bankruptcy
Part XXI 501(c) Organization
Part XXII Non-Profit Organization
Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
Part XXIV Excepted Territory NFFE
Part XXV Active NFFE
Part XXVI Passive NFFE
Part XXVII Excepted Inter-Affiliate FFI
Part XXVIII Sponsored Direct Reporting NFFE
Part XXIX Certification
Part XXX Substantial U.S. Owners of Passive NFFE

Analysis of the Form W-8IMY

Part I of the W8-IMY Form adds FATCA classification.   Part I of the form requires general information, the Chapter 3 QI status, and the Chapter 4 FATCA classification of the filer.

Question 4 of Part I requests the QI status:

  • If the filer is a Qualified Intermediary, then the filer must complete Part III Qualified Intermediary.  If the filer is a Nonqualified Intermediary, then the filer must complete Part IV Nonqualified Intermediary.
  • Territory Financial Institutions complete Part V. U.S. Branches complete Part VI.
  • Withholding Foreign Partnership or Withholding Foreign Trusts complete Part VII.
  • Nonwithholding Foreign Partnership, Nonwithholding Foreign Simple Trust, and Nonwithholding foreign grantor trusts must complete Part VIII.

Question 5 requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IX through XXVII must be completed.

Part II of this form is to be completed if the entity is a disregarded entity or a branch receiving payment as an intermediary. Part II only applies to branches of an FFI outside the FFI’s country of residence.

Statement of General Certification

Part XXVIII requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. Finally, the form contains the following language: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Who Must File W-8IMY?

An entity should provide Form W-8IMY when receiving a reportable amount or withholdable payment on behalf of another person or as a flow-through entity.

  •  A foreign person, or a foreign branch of a U.S. personto establish that it is a qualified intermediary that is not acting for its own account, to represent that it has provided or will provide a withholding statement, as required, or, if applicable, to represent that it has assumed primary withholding responsibility under chapters 3 and 4 of the Code and/or primary Form 1099 reporting and backup withholding responsibility.
  •  A foreign person to establish that it is a nonqualified intermediary that is not acting for its own account, to certify its chapter 4 status (if required), to certify whether it reports U.S. accounts under chapter 4 (if required), and to indicate, if applicable, that it is using the form to transmit withholding certificates and/or other documentary evidence and has provided, or will provide, a withholding statement, as required.  A U.S. person cannot be a nonqualified intermediary.
  •  A U.S. branch that is acting as an intermediary to represent that the income it receives is not effectively connected with the conduct of a trade or business within the United Statesand either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify to its chapter 4 status and to transmit the documentation of the persons for whom it receives a payment and has provided, or will provide, a withholding statement, as required.
  •  A financial institution incorporated or organized under the laws of a U.S. territory that is acting as an intermediary or is a flow-through entity to represent that it is a financial institution (other than an investment entity that is not also a depository institution, custodial institution, or specified insurance company) and either that it is using the form (a) to evidence it is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A) with respect to any payments associated with the Form W-8IMY, or (b) to certify that it is transmitting documentation of the persons for whom it receives a payment and has provided, withholding statement, as required.
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a withholding foreign partnership or withholding foreign trust under the regulations for sections 1441 and 1442 and to certify its chapter 4 status (if required).
  •  A foreign partnership or a foreign simple or grantor trust to establish that it is a nonwithholding foreign partnership or nonwithholding foreign simple or grantor trust for purposes of sections 1441 and 1442, to certify to its chapter 4 status (if required), and to represent that the income is not effectively connected with a U.S. trade or business, that the form is being used to transmit withholding certificates and/or documentary evidence, and that it has provided or will provide a withholding statement as required.
  •  A foreign partnership or foreign grantor trust to establish that it is an upper-tier foreign partnership or foreign grantor trust for purposes of section 1446 and to represent that the form is being used to transmit withholding certificates and/or documentary evidence and that it has provided, or will provide, a withholding statement, as required.
  •  A flow-through entity (including a foreign reverse hybrid entity) transmitting withholding certificates and/or other documentary evidence to claim treaty benefits on behalf of its owners, to certify its chapter 4 status (if required), and to certify that it has provided, or will provide, a withholding statement, as required.
  •  A nonparticipating FFI acting as an intermediary or that is a flow-through entity using this form to transmit a withholding statement and withholding certificates or other documentation for exempt beneficial owners described in Regulations section 1.1471-6.
  •  A QSL certifying to a withholding agent that it is acting as a QSL with respect to U.S. source substitute dividends received from the withholding agent pursuant to a securities lending transaction (as described in Notice 2010-46).
  •  A foreign intermediary or flow-through entity not receiving withholdable payments or reportable amounts that is holding an account with a participating FFI or registered deemed-compliant FFI providing this form for purposes of documenting the chapter 4 status of the account holder.  However, no withholding statement is required to be provided along with Form W-8IMY if it is being provided by an FFI solely to document such an account when no withholdable payments or reportable amounts are made to the account. Also note that the entity may instead provide Form W-8BEN-E when it is not receiving withholdable payments or reportable amounts to document its status as an account holder.

Partnership allocations

Form W-8IMY may be submitted and accepted to satisfy documentation requirements for purposes of withholding on certain partnership allocations to foreign partners under section 1446. Section 1446 generally requires withholding when a partnership is conducting a trade or business in the United States and allocates income effectively connected with that trade or business (ECI) to foreign persons that are partners in the partnership. Section 1446 can also apply when certain income is treated as effectively connected income of the partnership and is so allocated.

Chapter 3 and Chapter 4 status Certification by Filer required with Applicable Documentation 

In general, intermediaries and flow-through entities receiving reportable amounts will be required to provide both their chapter 3 status and the chapter 3 status of persons for whom they receive such payments.

An intermediary or flow-through entity receiving a withholdable payment will also be required to provide its chapter 4 status and the chapter 4 status of persons for whom it receives a withholdable payment when required for chapter 4 purposes.

Parts III – VIII: Chapter 3 Status Certifications

Parts III – VIII of this form address the QI Status of the entity. Part III is to be completed if the entity is a QI, and requires the entity to certify that it is a QI and has provided appropriate documentation. Part IV is to be completed if the entity is a Nonqualified Intermediary (NQI), and requires the entity to certify that it is a NQI not acting for its own account.

Part V is to be completed if the entity is a Territory Financial Institution. Part VI is to be completed by a U.S. branch only if the branch certifies on the form that it is the U.S. branch of a U.S. bank or insurance company, and that the payments made are not effectively connected to a U.S. trade or business. Part VII is to be completed if the entity is a Foreign Withholding Partnership (WP) or a Withholding Foreign Trust (WT). Part VIII is to be completed if the entity is either a Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust.

Parts III – VIII of this form address the QI Status of the entity.

  • Part III Qualified Intermediary
  • Part IV Nonqualified Intermediary
  • Part V Territory Financial Institution
  • Part VI Certain U.S. Branches
  • Part VII Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)
  • Part VIII Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust

Part III is to be completed if the entity is a QI, and requires the entity to certify that it is a QI and has provided appropriate documentation.  Part IV is to be completed if the entity is a Nonqualified Intermediary (NQI), and requires the entity to certify that it is a NQI not acting for its own account.  Part V is to be completed if the entity is a Territory Financial Institution.  Part VI is to be completed by a U.S. branch only if the branch certifies on the form that it is the U.S. branch of a U.S. bank or insurance company, and that the payments made are not effectively connected to a U.S. trade or business.  Part VII is to be completed if the entity is a Foreign Withholding Partnership (WP) or a Withholding Foreign Trust (WT).  Part VIII is to be completed if the entity is either a Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust.

Parts IX – XXVI: Chapter 4 Status Certifications

Parts IX – XXVI of this form address the filer certifying the FATCA Status of the entity. These classifications include the new classification of a Restricted Distributor (Part XVI), but do not include the new classification of a Reporting NFFE.  Each of these parts begins with a check the box selection of “I certify that …”, followed by the definition components of each classification.  These classifications include the new classification of a Restricted Distributor (Part XVI), but do not include the new classification of a Reporting NFFE.

  • Part IX Nonparticipating FFI with Exempt Beneficial Owners
  • Part X Sponsored FFI That Has Not Obtained a GIIN
  • Part XI Owner-Documented FFI
  • Part XII Certified Deemed-Compliant Nonregistering Local Bank
  • Part XIII Certified Deemed-Compliant FFI with Only Low-Value Accounts
  • Part XIV Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
  • Part XV Certified Deemed-Compliant Limited Life Debt Investment Entity
  • Part XVI Restricted Distributor
  • Part XVII Foreign Central Bank of Issue
  • Part XVIII Nonreporting IGA FFI
  • Part XIX Exempt Retirement Plans
  • Part XX Excepted Nonfinancial Group Entity
  • Part XXI Excepted Nonfinancial Start-Up Company
  • Part XXII Excepted Nonfinancial Entity in Liquidation or Bankruptcy
  • Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
  • Part XXIV Excepted Territory NFFE
  • Part XXV Active NFFE
  • Part XXVI Passive NFFE
  • Part XXVII Sponsored Direct Reporting NFFE

Part IX is not required to be completed unless the filer is a nonparticipating FFI providing documentation on behalf of an exempt beneficial owner (by example, a local qualifying retirement fund).

Part XI – An owner-documented FFI should only complete Form W-8IMY if it is a flow-through entity receiving income allocable to its partners, owners, or beneficiaries. An owner-documented FFI is not permitted to act as an intermediary with respect to a withholdable payment.

Part XVIII – A nonreporting FFI pursuant to an IGA must indicate that it is to be treated as such under an applicable IGA, including an entity treated as a registered deemed-compliant FFI under an applicable IGA.  The nonreporting IGA FFI must identify the applicable IGA by entering the name of the jurisdiction that has the applicable IGA in effect with the United States. It must also provide the withholding agent with the class of entity described in Annex II of the IGA applicable to its nonreporting FFI IGA status.  If the nonreporting FFI IGA is claimed pursuant to a Model 2 IGA, then the FFI treated as a registered deemed-compliant FFI under that applicable Model 2 IGA must provide a GIIN in the space provided.

If the filer is a sponsored FFI in a Model 1 IGA jurisdiction or other nonreporting FFI in a Model 1 IGA jurisdiction that is required to report an account, it is not currently required to provide a GIIN in this Part. However, a future version of this form may require it to provide a GIIN.

Entities Providing Certifications Under an Applicable IGA

A withholding agent that is an FFI may provide a chapter 4 status certification other than as shown in Parts IX through XXVII in order to satisfy its due diligence requirements under an applicable IGA. In such a case, attach the alternative certifications to this Form W-8IMY in lieu of completing a certification otherwise required in Parts IX through XXVII provided that the withholding agent:

  1. determine that the certification accurately reflects the status for chapter 4 purposes or under an applicable IGA; and
  2. the withholding agent provides a written statement that it has provided the certification to meet its due diligence requirements as a participating FFI or registered deemed-compliant FFI under an applicable IGA.

The filer may also provide with this form an applicable IGA certification if it determines its chapter 4 status under the definitions provided in an applicable IGA and that certification identifies the jurisdiction that is treated as having an IGA in effect and describes the filer status as an NFFE or FFI in accordance with the applicable IGA.  However, if the filer determines its status under an applicable IGA as an NFFE, it must still determine if it is an excepted NFFE under the regulations in order to complete this form.  Additionally, it is required to comply with the conditions of its chapter 4 status under the law of the IGA jurisdiction if it determines its status under an applicable IGA.

Entities Providing Alternate Certifications Under Regulations

If the filer qualifies for a chapter 4 status that is not shown in Part I, line 5, of this form, it may attach applicable certifications for such status from any other Form W-8 on which the relevant certifications appear.

For example, if the filer is a certified deemed-compliant investment advisor or investment manager described in Regulations section 1.1471-5(f)(2)(v)
that is a flow-through entity, it may instead attach the certifications found in Part IX of Form W-8BEN-E.

If the applicable certifications do not appear on any Form W-8 (if, for example, new regulations provide for an additional chapter 4 status and this form has not been updated) then the filer may provide an attachment certifying that it qualifies for the applicable status described in a particular Regulations section in lieu of checking a box in Part I, line 5. The filer must also include a citation to the applicable provision in the Regulations.

Final Statement of Certification

Part XXVIII requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. Finally, the form contains the following language: “I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect.”

Expiration of Form W-8IMY 

Generally, a Form W-8IMY remains valid until the status of the person whose name is on the certificate is changed in a way relevant to the certificate or there is a change in circumstances that makes the information on the certificate no longer correct. The indefinite validity period does not extend, however, to any other withholding certificates, documentary evidence, or withholding statements associated with the certificate.

Change in circumstances. 

If a change in circumstances makes any information on the Form W-8IMY (or any documentation or a withholding statement associated with the Form W-8IMY) have submitted incorrect for purposes of chapter 3 or chapter 4 (when relevant), the intermediary must notify the withholding agent within 30 days and file a new Form W-8IMY or provide new documentation or a new withholding statement (as applicable).

The information associated with Form W-8IMY must be updated as often as is necessary to enable the withholding agent to withhold at the appropriate rate on each payment and to report such income.

(See Regulations sections 1.1441-1(e)(4)(ii)(D) for the definition of a change in circumstances for purposes of chapter 3. See Regulations section 1.1471-3(c)(6)(ii)(E) for the definition of a change in circumstances for purposes of chapter 4.)

Structure of New Form Form W-8IMY

  • Part I Identification of Entity
  • Part II Disregarded Entity or Branch Receiving Payment.

Chapter 3 Status Certifications

  • Part III Qualified Intermediary
  • Part IV Nonqualified Intermediary
  • Part V Territory Financial Institution
  • Part VI Certain U.S. Branches
  • Part VII Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)
  • Part VIII Nonwithholding Foreign Partnership, Simple Trust, or Grantor Trust

Chapter 4 Status Certifications

  • Part IX Nonparticipating FFI with Exempt Beneficial Owners
  • Part X Sponsored FFI That Has Not Obtained a GIIN
  • Part XI Owner-Documented FFI
  • Part XII Certified Deemed-Compliant Nonregistering Local Bank
  • Part XIII Certified Deemed-Compliant FFI with Only Low-Value Accounts
  • Part XIV Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
  • Part XV Certified Deemed-Compliant Limited Life Debt Investment Entity
  • Part XVI Restricted Distributor
  • Part XVII Foreign Central Bank of Issue
  • Part XVIII Nonreporting IGA FFI
  • Part XIX Exempt Retirement Plans
  • Part XX Excepted Nonfinancial Group Entity
  • Part XXI Excepted Nonfinancial Start-Up Company
  • Part XXII Excepted Nonfinancial Entity in Liquidation or Bankruptcy
  • Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
  • Part XXIV Excepted Territory NFFE
  • Part XXV Active NFFE
  • Part XXVI Passive NFFE
  • Part XXVII Sponsored Direct Reporting NFFE

book coverLexis Guide to FATCA Compliance – 2015 Edition 

1,200 pages of analysis of the compliance challenges, over 54 chapters by 70 FATCA contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2015 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2015 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

A free download of the first of the 34 chapters is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

<— Subscribe by email on the left menu to the FATCA Updates on this blog:  https://profwilliambyrnes.com/category/fatca/

If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour” 

  • Chapter 1 Background and Current Status of FATCA
  • Chapter 1A The International Financial System and FATCA
  • Chapter 2 Practical Considerations for Developing a FATCA Compliance Program
  • Chapter 2A FATCA Internal Policy
  • Chapter 3 FATCA Compliance and Integration of Information Technology
  • Chapter 4 Financial Institution Account Remediation
  • Chapter 4A FATCA Customer Outreach
  • Chapter 5 FBAR and Form 8938 Reporting and List of International Taxpayer IRS Forms
  • Chapter 6 Determining U.S. Ownership of Foreign Entities
  • Chapter 7 Foreign Financial Institutions
  • Chapter 7A Account reporting under FATCA
  • Chapter 8 Non-Financial Foreign Entities
  • Chapter 9 FATCA and the Offshore Trust Industry
  • Chapter 10 FATCA and the Insurance Industry
  • Chapter 11 Withholding and Qualified Intermediary
  • Chapter 12 FATCA Withholding Compliance
  • Chapter 13 “Withholdable” Payments
  • Chapter 13A Reporting Payments
  • Chapter 14 Determining and Documenting the Payee
  • Chapter 14A W8 Equivalents
  • Chapter 15 Framework of Intergovernmental Agreements
  • Chapter 16 Analysis of Current Intergovernmental Agreements
  • Chapter 17 European Union Cross Border Information Reporting
  • Chapter 18 The OECD Role in Exchange of Information: The Trace Project, FATCA, and Beyond
  • Chapter 19 Germany
  • Chapter 20 Ireland
  • Chapter 21 Japan
  • Chapter 22 Mexico
  • Chapter 23 Switzerland
  • Chapter 24 United Kingdom
  • Chapter 25 Brazil
  • Chapter 26 British Virgin Islands
  • Chapter 27 Canada
  • Chapter 28 Spain
  • Chapter 29 China
  • Chapter 30 Netherlands
  • Chapter 31 Luxembourg
  • Chapter 32 Russia
  • Chapter 33 Turkey
  • Chapter 34 India
  • Chapter 35 Argentina
  • Chapter 36 Aruba
  • Chapter 37 Australia
  • Chapter 38 Bermuda
  • Chapter 39 Colombia
  • Chapter 40 Cyprus
  • Chapter 41 Hong Kong
  • Chapter 42 Macau
  • Chapter 43 Portugal
  • Chapter 44 South Africa
  • Chapter 45 France
  • Chapter 46 Gibraltar
  • Chapter 47 Guernsey
  • Chapter 48 Italy

Posted in FATCA | Tagged: , , , , , , , , | 16 Comments »

FATCA Registration Portal Finally Opens

Posted by William Byrnes on August 21, 2013


Update for subscribers of LexisNexis® Guide to FATCA Compliance[1]

FATCA requires that FFIs, through a responsible officer (a.k.a. “FATCA compliance officer”), make regular certifications to the IRS via the FATCA Portal, as well as annually disclose taxpayer and account information for U.S. persons, unless an intergovernmental agreement allows for indirect reporting to the IRS via a foreign government.   On Monday, August 19 the IRS opened its new online FATCA registration system for financial institutions that need to register for compliance with the Foreign Account Tax Compliance Act.[2]  This critical FATCA milestone was supposed to open July 15; however only on July 12 the IRS issued a postponement, as well as a push back of all corresponding impacted milestones and deadlines.

The full text of this article is available on the LexisNexis FATCA http://www.lexisnexis.com/legalnewsroom/tax-law/b/fatcacentral/archive/2013/08/21/the-race-to-register-with-the-irs-online-fatca-system-has-begun.aspx

Posted in Compliance, FATCA, Taxation | Tagged: , , , , , , , | Leave a Comment »

 
%d bloggers like this: