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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).


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).


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)


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.

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Second Edition of Lexis’ International Withholding Tax Treaty Guide released

Posted by William Byrnes on August 26, 2013

Associate Dean William Byrnes is also pleased to announce the publication of International Withholding Tax Treaty Guide, Second Edition by LexisNexis.

The second edition of International Withholding Tax Treaty Guide, authored by Professor William H. Byrnes and Dr. Robert J. Munro, includes new binders with new chapter structures of completely rewritten tax information and analysis. The second edition of Foreign Tax & Trade Briefs includes a new structure for all 110 country chapters to reflect the evolution of national tax systems since 1948. The International Withholding Tax Treaty Guide has been expanded to include many new countries to match the robust list of Foreign Tax & Trade Briefs, and its footnote numbering has been amended for brevity and modern coherence.

Moreover, International Withholding Tax Treaty Guide subscribers will receive new chapters of analysis and planning based on the OECD Model DTA articles and major trading country jurisprudence that are most relevant to corporate tax counsel, addressing topics such as capital gains, dividends, interest, rents, leasing income, royalties, and permanent establishment, as well as developing topics such as new standards of information exchange. Corporate counsel may combine these publications with the LexisNexis Matthew Bender publication Tax Havens of the World to form a complete international tax planning and risk management library.

Associate Dean William Byrnes said “The Second Edition completes my re-write process of this book to re-structure the citation architecture for a modern approach to tax treaty analysis,”  Over the next two years I will author an in-depth, comparative analysis of tax treaty articles, to provide practitioners and arbitrators a go-to treatise for global corporate planning.”

William Byrnes continued “In 1974, Matthew Bender added a third binder to Foreign Tax & Trade Briefs, the International Withholding Tax Treaty Guide, to specifically address the important role of tax treaties in tax risk management that had developed in the sixties. By 1975, nearly one thousand tax treaties had been signed between countries based on the OECD’s Model with an additional 200 treaties in force based on the League of Nations Models. Moreover, many (former) territories had become independent, developing countries with the ability to establish their own tax treaties. There are now more than 3,200 tax treaties, of which 2,900 are signed and in effect with the remaining 300 yet to become effective by official legislative approval.”

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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

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“Wage” War: Round One

Posted by William Byrnes on February 24, 2011

The topic Self-Employment Tax on wages versus distributions has reared its head again – as shown by the recent Federal District Court case involving David E. Watson.

The C.P.A. recently disputed and lost to the Government’s position which recharacterized dividend and loan payments from David E. Watson, P.C. (a Subchapter S corporation) to its sole shareholder and employee, David E. Watson.  The IRS assessed additional employment taxes, interest and penalties against Watson for each of tax years in which Watson’s salary was significantly lower than his total distributions.

Read the analysis at AdvisorFYI (sign up for a 2 week online free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Brazilian Taxation and Investment (in-depth video-conference course) February 1st – April 7th

Posted by William Byrnes on January 10, 2011

This 10 week live online video-conference course on Brazil will be taught in English (but all attendants may use Portuguese to ask and respond to questions) by several renown Brazilian specialists who have extensive out-of-country experience, working as international counsel for large multinational companies, big 4 firms, and government.

Please contact Associate Dean Prof. William Byrnes if you are interested in enrolling in this executive education course.  wbyrnes@tjsl.edu or skype: professorbyrnes  All lectures are recorded for playback during the ten weeks.  Lexis access is included.

Tax System:

  1. Overview – Main taxes;
  2. Corporate Taxation: Corporate Income tax and Social Contribution;
  3. Simplified tax regime;
  4. Accounting Rules (IFRS and SPED);
  5. Investment incentives;
  6. Developing a Tax Strategy in Brazil;
  7. Tax avoidance versus Tax Evasion

General Overview of Brazilian Indirect Taxes

  1. VAT;
  2. Other Indirect Taxes;

Foreign Investments:

  1. Brazilian Central Bank (Regulations, Registrations and forms);
  2. Dividends, Royalties, Loans, etc;
  3. Capital Gains;
  4. Foreign Trade Rules (Import and Export transactions);

Mergers & Acquisitions;

  1. Corporate aspects;
  2. Tax implications;

Financial System:

  1. Organization,
  2. Newcomers,
  3. Competition,

Foreign Companies:

  1. Tax credit
  2. Withholding Tax;
  3. Financing issues;
  4. Permanent Establishment;
  5. Low-tax Jurisdictions (Tax Haven Countries);
  6. Tax treaties

Transfer Pricing

Industrial Property Rights

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