Contents Web viewA certificate or other documentation becomes invalid on the date that the withholding agent holding the ... a retirement or pension account that

DEFINED TERMS:FATCA, CRS & CDOT

Haydon Perryman

Version 1.0November 4, 2015

WITHHOLDING

DUE DILIGENCE(Remediation)

Pre-existingCustomers

DUE DILIGENCE(Onboarding)

New Customers

Certifications

CONTENTS

CONTENTS.................................................................................................................................................................................. 2501(C) ORGANIZATIONS............................................................................................................................................................................ 7ACCOUNT......................................................................................................................................................................................................... 7ACCOUNT HOLDER....................................................................................................................................................................................... 8ACCOUNT NUMBER.......................................................................................................................................................................................... 9ACTIVE NFE/ ACTIVE NFFE....................................................................................................................................................................9AES................................................................................................................................................................................................................. 10AML DUE DILIGENCE............................................................................................................................................................................... 10AML/KYC PROCEDURES....................................................................................................................................................................... 10ANNUITY CONTRACT................................................................................................................................................................................. 10ASSUMES PRIMARY WITHHOLDING RESPONSIBILITY.....................................................................................................................11BACKUP WITHOLDING.............................................................................................................................................................................. 11BENEFICIAL OWNER................................................................................................................................................................................... 11BLOCKED ACCOUNT.................................................................................................................................................................................. 14BRANCH......................................................................................................................................................................................................... 14BROAD PARTICIPATION RETIREMENT FUND....................................................................................................................................14BROKER......................................................................................................................................................................................................... 15CA.................................................................................................................................................................................................................... 15CASH VALUE................................................................................................................................................................................................ 16CASH VALUE INSURANCE CONTRACT................................................................................................................................................17CENTRAL BANK........................................................................................................................................................................................... 18CENTRAL SECURITIES DEPOSITORY (CSD)..............................................................................................................................................19CERTIFIED DEEMED-COMPLIANT FFI..................................................................................................................................................19CERTIFIED DEEMED-COMPLIANT FFI WITH ONLY LOW-VALUE ACCOUNTS...........................................................................19CERTIFIED DEEMED-COMPLIANT INVESTMENT ADVISORS AND INVESTMENT MANAGERS...............................................19CERTIFIED DEEMED-COMPLIANT LIMITED LIFE DEBT INVESTMENT ENTITY...........................................................................19CERTIFIED DEEMED-COMPLIANT NON-REGISTERING LOCAL BANK..........................................................................................19CERTIFIED DEEMED-COMPLIANT SPONSORED, CLOSELY HELD INVESTMENT VEHICLE...................................................20CHANGE IN CIRCUMSTANCES................................................................................................................................................................ 20CHAPTER 3................................................................................................................................................................................................... 22CHAPTER 4................................................................................................................................................................................................... 22CHAPTER 4 REPORTABLE AMOUNT.....................................................................................................................................................23CHAPTER 4 STATUS.................................................................................................................................................................................. 23CHAPTER 4 WITHHOLDING RATE POOL.............................................................................................................................................23CLEARING ORGANIZATION.......................................................................................................................................................................23CLOSED ACCOUNT.................................................................................................................................................................................... 23COMPLEX TRUST........................................................................................................................................................................................ 24COLLATERAL ACCOUNTS........................................................................................................................................................................ 24COMPLIANCE FI.......................................................................................................................................................................................... 24CONSOLIDATED OBLIGATIONS.............................................................................................................................................................. 24CONTROLLING PERSONS........................................................................................................................................................................ 24CRL................................................................................................................................................................................................................. 25CUSTODIAL ACCOUNT.............................................................................................................................................................................. 25CUSTODIAL INSTITUTION......................................................................................................................................................................... 25CUSTOMER MASTER FILE.......................................................................................................................................................................26DEEMED-COMPLIANT FFI....................................................................................................................................................................... 26DEFERRED ANNUITY CONTRACT......................................................................................................................................................... 26DEPOSITORY ACCOUNT........................................................................................................................................................................... 26DEPOSITORY INSTITUTION...................................................................................................................................................................... 27DIRECT REPORTING NFFE (DR-NFFE)..........................................................................................................................................28DOCUMENTARY EVIDENCE..................................................................................................................................................................... 28

DOCUMENTATION....................................................................................................................................................................................... 29DORMANT ACCOUNT................................................................................................................................................................................. 29EFFECTIVE DATE OF THE FFI AGREEMENT.....................................................................................................................................30ELECTION TO BE WITHHELD UPON.....................................................................................................................................................30ELECTRONICALLY SEARCHABLE INFORMATION..............................................................................................................................30EMPLOYER IDENTIFICATION NUMBER (EIN)....................................................................................................................................30ENTITY............................................................................................................................................................................................................ 30ENTITY ACCOUNT....................................................................................................................................................................................... 30ENTITY WHOLLY OWNED BY EXEMPT BENEFICIAL OWNERS...................................................................................................30EQUITY INTEREST...................................................................................................................................................................................... 30ESCROW ACCOUNT................................................................................................................................................................................... 31EXCEPTED INTER-AFFILIATE FFI..........................................................................................................................................................31EXCEPTED NFFE....................................................................................................................................................................................... 31EXCEPTED NON-FINANCIAL ENTITY IN LIQUIDATION OR BANKRUPTCY...............................................................................34EXCEPTED NON-FINANCIAL START-UP COMPANY.......................................................................................................................34EXCEPTED TERRITORY NFFE.............................................................................................................................................................. 35EXCLUDED ACCOUNT............................................................................................................................................................................... 35EXECUTION ONLY BROKER....................................................................................................................................................................37EXEMPT BENEFICIAL OWNER................................................................................................................................................................37EXEMPT COLLECTIVE INVESTMENT VEHICLE..................................................................................................................................40EXEMPT RECIPIENT................................................................................................................................................................................... 40EXEMPT RETIREMENT PLANS............................................................................................................................................................... 41EXPANDED AFFILIATED GROUP............................................................................................................................................................41(EAG)............................................................................................................................................................................................................. 41EXPANDED AFFILIATED GROUP (EAG) OR FFIS..........................................................................................................................41FATCA ID.................................................................................................................................................................................................... 42FATF.............................................................................................................................................................................................................. 42FATF-COMPLIANT JURISDICTION.........................................................................................................................................................42FCPA............................................................................................................................................................................................................. 42FFI................................................................................................................................................................................................................... 42FFI AGREEMENT........................................................................................................................................................................................ 42FINANCIAL ACCOUNT................................................................................................................................................................................ 42FINANCIAL ASSET....................................................................................................................................................................................... 43FINANCIAL INSTITUTION (FI) [ALSO SEE FOREIGN FINANCIAL INSTITUTION]......................................................................43FLOW-THROUGH ENTITY.......................................................................................................................................................................... 44FLOW-THROUGH WITHHOLDING CERTIFICATE.................................................................................................................................44FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)...............................................................................................................44FOREIGN ENTITY............................................................................................................................................................................................ 44FOREIGN GOVERNMENT, GOVERNMENT OF A US POSSESSION, OR FOREIGN CENTRAL BANK OF ISSUE..........................................44FOREIGN PASSTHRU PAYMENT............................................................................................................................................................. 44FOREIGN PAYEE.......................................................................................................................................................................................... 44FOREIGN PERSON...................................................................................................................................................................................... 44FORM 8957.................................................................................................................................................................................................. 44FTP................................................................................................................................................................................................................. 44GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN).........................................................................................................44GOVERNMENTAL ENTITY......................................................................................................................................................................... 44GRANDFATHERED OBLIGATION............................................................................................................................................................. 45GRANTOR TRUST........................................................................................................................................................................................ 47GROSS PROCEEDS.................................................................................................................................................................................... 47GROUP ANNUITY CONTRACT..................................................................................................................................................................49GROUP INSURANCE CONTRACT............................................................................................................................................................49HCTA............................................................................................................................................................................................................. 49HIGH VALUE ACCOUNT............................................................................................................................................................................ 49HOLLOWAY CONTRACT............................................................................................................................................................................ 49HTTPS.......................................................................................................................................................................................................... 49

Defined Terms Page 3

IDES............................................................................................................................................................................................................... 49INTERGOVERNMENTAL AGREEMENT (IGA)......................................................................................................................................49IMMEDIATE ANNUITY.................................................................................................................................................................................. 49INDICIA............................................................................................................................................................................................................ 49INDIVIDUAL ACCOUNT................................................................................................................................................................................ 50INSURANCE COMPANY.............................................................................................................................................................................. 50INSURANCE CONTRACT............................................................................................................................................................................ 50INTERMEDIARY............................................................................................................................................................................................. 50INTERMEDIARY WITHHOLDING CERTIFICATE....................................................................................................................................51INTERNATIONAL ORGANIZATION........................................................................................................................................................... 51INVESTMENT ENTITY................................................................................................................................................................................. 51INVESTMENT-LINKED ANNUITY CONTRACT........................................................................................................................................53INVESTMENT-LINKED INSURANCE CONTRACT..................................................................................................................................53IRS.................................................................................................................................................................................................................. 53IRS FFI LIST................................................................................................................................................................................................ 53LEAD (LEAD FI)........................................................................................................................................................................................... 53LIFE ANNUITY CONTRACT........................................................................................................................................................................ 53LIFE INSURANCE CONTRACT.................................................................................................................................................................. 53LIMITED BRANCH........................................................................................................................................................................................ 54LIMITED FFI.................................................................................................................................................................................................. 54LOCAL FOREIGN FINANCIAL INSTITUTION.........................................................................................................................................54LOWER VALUE ACCOUNT....................................................................................................................................................................... 54MEMBER FI (MEMBER)............................................................................................................................................................................ 54MODEL 1 IGA.............................................................................................................................................................................................. 54MODEL 2 IGA.............................................................................................................................................................................................. 54NARROW PARTICIPATION RETIREMENT FUND................................................................................................................................54NEW ACCOUNT........................................................................................................................................................................................... 55NEW ENTITY ACCOUNT........................................................................................................................................................................... 55NEW INDIVIDUAL ACCOUNT....................................................................................................................................................................55NFE (ALSO SEE NFFE).......................................................................................................................................................................... 55NFFE (ALSO SEE NFE).......................................................................................................................................................................... 55NON-EXEMPT RECIPIENT........................................................................................................................................................................ 55NON-REPORTING FINANCIAL INSTITUTION.......................................................................................................................................55NON-U.S. ACCOUNT................................................................................................................................................................................. 56NON-FINANCIAL GROUP ENTITY............................................................................................................................................................ 56NON-PARTICIPATING FFI......................................................................................................................................................................... 56NON-PROFIT ORGANIZATION.................................................................................................................................................................. 57NON-REPORTING FI................................................................................................................................................................................... 58NON-REPORTING IGA FFI......................................................................................................................................................................58NON-REPORTING IGA FFI (INCLUDING A FFI TREATED AS A REGISTERED DEEMED-COMPLIANT FFI UNDER AN APPLICABLE MODEL 2 IGA)................................................................................................................................................................... 58NQI.................................................................................................................................................................................................................. 59NWP............................................................................................................................................................................................................... 59NWT............................................................................................................................................................................................................... 59OCSP............................................................................................................................................................................................................. 59OFFSHORE ACCOUNT............................................................................................................................................................................... 59OFFSHORE OBLIGATION........................................................................................................................................................................... 59OWNER........................................................................................................................................................................................................... 60OWNER-DOCUMENTED FFI.................................................................................................................................................................... 60PARTICIPATING FFI................................................................................................................................................................................... 61PARTICIPATING FFI GROUP................................................................................................................................................................... 61PARTICIPATING JURISDICTION...............................................................................................................................................................61PARTNERSHIP.............................................................................................................................................................................................. 61PASSIVE INCOME........................................................................................................................................................................................ 62PASSIVE INCOME –EXCEPTIONS..........................................................................................................................................................62


PASSIVE NFE / PASSIVE NFFE.......................................................................................................................................................... 62PASSTHRU PAYMENT................................................................................................................................................................................ 63PAYEE............................................................................................................................................................................................................. 63PAYMENT WITH RESPECT TO AN OFFSHORE OBLIGATION..........................................................................................................65PAYOR............................................................................................................................................................................................................ 65PENSION FUND OF A GOVERNMENTAL ENTITY, INTERNATIONAL ORGANISATION OR CENTRAL BANK...................66PERMANENT RESIDENCE ADDRESS.....................................................................................................................................................66PERSON......................................................................................................................................................................................................... 66PKI................................................................................................................................................................................................................... 66PMO............................................................................................................................................................................................................... 66PLACE OF BIRTH........................................................................................................................................................................................ 66POINT OF CONTACT (POC)................................................................................................................................................................... 67PRE-FATCA FORM W-8........................................................................................................................................................................ 67PRE-EXISTING ACCOUNT.........................................................................................................................................................................67PRE-EXISTING ENTITY ACCOUNT.........................................................................................................................................................68PRE-EXISTING INDIVIDUAL ACCOUNT.................................................................................................................................................68PRE-EXISTING OBLIGATION.....................................................................................................................................................................68PRIMA FACIE FFI........................................................................................................................................................................................ 69PRIVATE ARRANGEMENT INTERMEDIARY (PAI).............................................................................................................................69PROFESSIONALLY MANAGED.................................................................................................................................................................69PUBLICLY TRADED NFFE OR NFFE AFFILIATE OF A PUBLICLY TRADED CORPORATION..............................................69QUALIFIED INTERMEDIARY (QI)............................................................................................................................................................ 69QI AGREEMENT........................................................................................................................................................................................... 70QI BRANCH OF A U.S. FINANCIAL INSTITUTION..............................................................................................................................71QUALIFIED COLLECTIVE INVESTMENT VEHICLE.............................................................................................................................71QUALIFIED CREDIT CARD ISSUER....................................................................................................................................................... 71QUALIFYING RELATIONSHIP................................................................................................................................................................... 71REASON TO KNOW.................................................................................................................................................................................... 71RECALCITRANT ACCOUNT HOLDER..................................................................................................................................................... 72REGISTERED DEEMED-COMPLIANT FFI (RDCFFI).....................................................................................................................73REGULARLY TRADED................................................................................................................................................................................ 73RELATED ENTITY........................................................................................................................................................................................ 74RELATIONSHIP MANAGER........................................................................................................................................................................ 74RELEVANT HOLDING COMPANY........................................................................................................................................................... 75REPORTABLE ACCOUNT.......................................................................................................................................................................... 75REPORTABLE JURISDICTION.................................................................................................................................................................. 76REPORTABLE JURISDICTION PERSON................................................................................................................................................76REPORTABLE PAYMENT...........................................................................................................................................................................76REPORTABLE PERSON............................................................................................................................................................................. 76REPORTING FINANCIAL INSTITUTION..................................................................................................................................................76REPORTING MODEL 1 FFI......................................................................................................................................................................76REPORTING MODEL 2 FFI......................................................................................................................................................................76RESIDENCE ADDRESS (ALSO SEE PERMANENT RESIDENCE ADDRESS).............................................................................77RESIDENT ALIEN......................................................................................................................................................................................... 77RESPONSIBLE OFFICER (RO)................................................................................................................................................................77RESPONSIBLE PARTY............................................................................................................................................................................... 78RESTRICTED DISTRIBUTOR..................................................................................................................................................................... 78RESTRICTED FUND.................................................................................................................................................................................... 78RSA................................................................................................................................................................................................................ 79SECURITISATION STRUCTURE................................................................................................................................................................79SFTP.............................................................................................................................................................................................................. 79SIMPLE TRUST............................................................................................................................................................................................. 79SINGLE FI (SINGLE).................................................................................................................................................................................. 79SPECIFIED INSURANCE COMPANY.......................................................................................................................................................79SPECIFIED U.S. PERSON........................................................................................................................................................................ 80


SPONSORED DIRECT REPORTING NFFE.........................................................................................................................................80SPONSORED FFI........................................................................................................................................................................................ 80SPONSORED FFI GROUP........................................................................................................................................................................ 80SPONSORING ENTITY............................................................................................................................................................................... 80SSH................................................................................................................................................................................................................ 81STANDARDIZED INDUSTRY CODE......................................................................................................................................................... 81STANDING INSTRUCTIONS TO PAY AMOUNTS..................................................................................................................................81SUBJECT TO WITHHOLDING.................................................................................................................................................................... 81SUBSTANTIAL U.S. OWNER.................................................................................................................................................................... 81TERRITORY ENTITY................................................................................................................................................................................... 84TERRITORY FINANCIAL INSTITUTION...................................................................................................................................................84TERRITORY FINANCIAL INSTITUTION TREATED AS A U.S. PERSON.........................................................................................84TERRITORY NFFE..................................................................................................................................................................................... 84TIEA................................................................................................................................................................................................................ 84TIN................................................................................................................................................................................................................... 84TLS.................................................................................................................................................................................................................. 84TREASURY CENTER.................................................................................................................................................................................. 84TREASURY COMPANY............................................................................................................................................................................... 84TRUST.............................................................................................................................................................................................................. 85TRUSTEE DOCUMENTED TRUST...........................................................................................................................................................86UNIQUE IDENTIFIER................................................................................................................................................................................... 86U.S. ACCOUNT............................................................................................................................................................................................ 86U.S. BRANCH TREATED AS A U.S. PERSON....................................................................................................................................88U.S. FINANCIAL INSTITUTION (USFI).................................................................................................................................................88U.S. OWNED FOREIGN ENTITY.............................................................................................................................................................. 89U.S. PAYEE................................................................................................................................................................................................... 89U.S. PAYOR.................................................................................................................................................................................................. 89U.S. PERSON............................................................................................................................................................................................... 89U.S. SOURCE FDAP INCOME............................................................................................................................................................... 89U.S. TERRITORY........................................................................................................................................................................................ 91U.S. WITHHOLDING AGENT..................................................................................................................................................................... 91UNITED STATES.......................................................................................................................................................................................... 91UTC................................................................................................................................................................................................................ 91WITHHOLDABLE PAYMENT...................................................................................................................................................................... 91WITHHOLDING.............................................................................................................................................................................................. 91WITHHOLDING AGENT............................................................................................................................................................................... 91WITHHOLDING CERTIFICATE...................................................................................................................................................................92WITHHOLDING FOREIGN PARTNERSHIP (WP)................................................................................................................................93WITHHOLDING FOREIGN TRUST (WT)...............................................................................................................................................93WRITTEN STATEMENT............................................................................................................................................................................... 93


501(c) Organizations§1.1471-5(e)5)(v) [Page Error: Reference source not found] and IRS Publication 557

Section 501 (c) entities are entities tax-exempt nonprofit organizations in the United States that obtained a 501(c) organization status from the IRS.Some of the entities included in Section 501(c) include:Corporations Organized Under Act of Congress (including Federal CreditUnions)Religious, Educational, Charitable, Scientific, or Literary OrganizationsCivic Leagues, Social Welfare Organizations, and Local Associations ofEmployeesLabor, Agricultural and Horticultural OrganizationsBusiness Leagues, Chambers of Commerce, Real Estate Boards, etc.Social and Recreational ClubsFor a complete list of Section 501(c) entities, please see IRS Publication 557

AccountFATCA: In general [§1.1471-5(b) (1) ]Except as otherwise provided in this paragraph (b), the term financial account means-(1)(i) Depository account [§1.1471-5(b)(1)(i)]Any depository account (as defined in paragraph (b)(3)(i) of this section) maintained by a financial institution;(1)(ii) Custodial account [§1.1471-5(b)(1)(ii)]Any custodial account (as defined in paragraph (b)(3)(ii) of this section) maintained by a financial institution;(1)(iii) Equity or debt interest [§1.1471-5(b)(1)(iii)](iii)(A) Equity or debt interests in an investment entity [§1.1471-5(b)(1)(iii)(A)]Any equity or debt interest (other than interests regularly traded on an established securities market under paragraph (b)(3)(iv) of this section) in an investment entity described in paragraph (e)(4)(i)(B) or (C) of this section (including an entity that is also a depository institution, custodial institution, insurance company, or investment entity described in paragraph (e)(4)(i)(A) of this section);(iii)(B) Certain equity or debt interests in a holding company or treasury center [§1.1471-5(b)(1)(iii)(B)]Any equity or debt interest (other than interests regularly traded on an established securities market under paragraph (b)(3)(iv) of this section) in a holding company or treasury center described in paragraph (e)(1)(v) of this section if-(1) The expanded affiliated group of which the entity is a member includes one or more investment entities described in paragraph (e)(4)(i)(B) or (C) of this section or passive NFFEs and the income derived by such investment entities or passive NFFEs is 50 percent or more of the aggregate income earned by the expanded affiliated group; [§1.1471-5(b)(1)(iii)(B)(1)](2) [Reserved]. For further guidance, see §1.1471-5T(b)(1)(iii)(B)(2). [§1.1471-5(b)(1)(iii)(B)(2)]The return earned on the interest is determined, directly or indirectly, primarily by reference to one or more investment entities described in paragraph (e)(4)(i)(B) or (C) of this section or one or more passive NFFEs that are members of the entity’s expanded affiliated group (as determined under paragraph (b)(3)(vi) of this section);(3) The value of the interest is determined, directly or indirectly, primarily by reference to assets that give rise (or could give rise) to withholdable payments (as determined under paragraph (b)(3)(v)) of this section); or [§1.1471-5(b)(1)(iii)(B)(3)](4) The interest is issued with a principal purpose of avoiding the reporting or withholding requirements of chapter 4; [§1.1471-5(b)(1)(iii)(B)(4)](iii)(C) Equity or debt interests in other financial institutions [§1.1471-5(b)(1)(iii)(C)]Any equity or debt interest (other than interests regularly traded on an established securities market under paragraph (b)(3)(iv) of this section) in an entity that is a depository institution, custodial institution, investment entity described in paragraph (e)(4)(i)(A) of this section, or insurance company if-(1) The value of the interest is determined, directly or indirectly, primarily by reference to assets that give rise (or could give rise) to withholdable payments (as determined under paragraph (b)(3)(v) of this section); or [§1.1471-5(b)(1)(iii)(C)(1)](2) The interest is issued with a principal purpose of avoiding the reporting or withholding requirements of chapter 4. [§1.1471-5(b)(1)(iii)(C)(2)](1)(iv) Insurance and annuity contracts [§1.1471-5(b)(1)(iv)]A contract issued or maintained by an insurance company, a holding company (as described in paragraph (e)(5)(i)(C) of this section) of an insurance company, or a


http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_iii_C

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_iii_B

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_iii_B

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_iii_A

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_iii

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_3_ii


http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1_i

http://www.law.cornell.edu/cfr/text/26/1.1471-5#b_1

financial institution described in paragraphs (e)(1)(i), (ii), (iii), or (v) of this section, if the contract is a cash value insurance contract (as defined in paragraph (b)(3)(vii) of this section) or an annuity contract.


Account HolderCRS: The term “Account Holder” means the person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. A person, other than a Financial Institution, holding a Financial Account for the benefit or account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account for purposes of the Common Reporting Standard, and such other person is treated as holding the account. In the case of a Cash Value Insurance Contract or an Annuity Contract, the Account Holder is any person entitled to access the Cash Value or change the beneficiary of the contract. If no person can access the Cash Value or change the beneficiary, the Account Holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment under the contract is treated as an Account Holder.FATCA: Except as otherwise provided in this paragraph (a)(3), the account holder is the person listed or identified as the holder or owner of the account with the FFI that maintains the account, regardless of whether such person is a flow-through entity. Thus, for example, except as otherwise provided in paragraph (a)(3)(ii) of this section, if a trust (including a simple or grantor trust) or an estate is listed as the holder or owner of a financial account, the trust or estate is the account holder, rather than its owners or beneficiaries.Similarly, except as otherwise provided in this paragraph (a)(3), if a partnership is listed as the holder or owner of a financial account, the partnership is the account holder, rather than the partners in the partnership. In the case of an account held by an entity that is disregarded for U.S. federal tax purposes under §301.7701-2(c)(2)(i),1 the account shall be treated as held by the person owning such entity.With respect to an account held by an exempt beneficial owner, such account is treated as held by an exempt beneficial owner only when all payments made to such account would be treated as made to an exempt beneficial owner. See §1.1471-6(h) for when a payment derived from certain commercial activities is not treated as made to an exempt beneficial owner.

Account Number

UK Guidance: AEIM 102080: The account number to be reported is the unique identifying number or code that the reporting financial institution has assigned to the Reportable Account. This will include identifiers such as bank account numbers and policy numbers for insurance contracts as well as other non-traditional unique identifiers. The unique identifier should be sufficient to enable the financial institution to identify the Reportable Account in future. Where there is not a unique identifying number or code the financial institution should report any functional equivalent that they use to identify the account. This may include non-unique identifiers that relate to a class of interests, which, along with the name of the Account Holder, enable the account to be identified. Exceptionally, if the Reportable Account does not have any form of identifying number or code the financial institution should report a description of the account sufficient to identify the account held by the named Account Holder in future.

Active NFE/ Active NFFE

FATCA: The entity is not a financial institution;• Less than 50% of such entity’s gross income for the preceding calendar year is passive income; and • Less than 50% of the assets held by such entity are assets that produce or are held for the production of passive income (calculated as a weighted average of the percentage of passive assets measured quarterly). [The term active NFFE has the meaning set forth in §1.1472-1(c)(1)(iv).]

Category 1: Non-financial foreign entities engaged in an active trade of business

1) Is more than 50% of the entity's gross income from passive income for its previous reporting period or calendar year?

a) If yes, move to Category 2.b) If no, move to the next question.

2) Do more than 50% of the assets held during the previous reporting period or calendar year produce passive income, or are otherwise held for the production of passive income?

1 http://www.law.cornell.edu/cfr/text/26/301.7701-2#c_2_i


http://www.law.cornell.edu/cfr/text/26/1.1472-1#c_1


http://www.law.cornell.edu/cfr/text/26/1.1471-6#h

http://www.law.cornell.edu/cfr/text/26/301.7701-2#c_2_i

a) If yes, move to Category 2.b) If no, you may qualify as an Active NFFE. Please review the tables below to

determine the relevant FATCA documentation. You are not required to proceed further in these guidelines. However, if you would like to evaluate the other classification options, please move to Category 2.

Note: There might be further entity types meeting the active NFFE definition according to an applicable IGA (see Annex I, Section VI(B)(4) of the applicable IGA).

The following examples are provided as a representative sample of the types of entities that may be engaged in an active business and is in no way intended to be a


comprehensive list of all entities that could be classified as an Active NFFE.

Examples: Business that may qualify as Active NFFEsFarmsManufacturing CompaniesManagement Consulting CompaniesArchitect OfficesSports, religious, educational, charitable, scientific, or literary organizations, associations, or clubs (see Annex I, Section VI(B)(4) of the applicable IGA)

Example: Foreign entity engaged in an active businessThe daily business of Bakery ABC consists of baking goods (cakes, pies, breads, etc.) and selling these products to customers. Bakery ABC has been very successful over the last five years and has been able to invest its profits into securities. Therefore, in addition to income received from the sale of baked goods, Bakery ABC also earns passive income (i.e., interest and dividends) on its investments. In the prior year, Bakery ABC earned gross income of USD 2 million from the sale of baked goods and USD 70k of interest and dividends on its investments. On December 31 of the prior year, Bakery ABC had assets of USD 10 million of which USD 1 million is invested into securities and the remaining USD 9 million consists of equipment, inventory and other assets that are used in the daily production of the baked goods. Bakery ABC qualifies as an Active NFFE because more than 50% (2mil / 2.07mil = 96.6%) of the gross income in the prior year is attributable to their active business of selling baked goods and more than 50% (9mil / 10mil = 90%) of the assets held by Bakery ABC are used in the production of such active income.

Category 2: Publicly traded non-financial foreign entities and their affiliates

1) Is the stock of the corporate entity listed on and regularly traded on an established securities market for the previousreporting period or that calendar year?a) If yes, please review the tables below to determine the relevant FATCA documentation.b) If no, move to the next question.

Note: This category only applies to non-financial entities. Publicly traded financial institutions should review the classification options for financial institutions contained in Part 3.

2) Is the entity an affiliate (i.e., related by ownership greater than 50%) of a corporation whose stock is listed on and regularlytraded on an established securities market for a previous reporting period or that calendar year?

If yes, you may qualify as a publicly traded NFFE or affiliate.


AES Advanced Encryption Standard

AML Due Diligence

FATCA: The term AML due diligence means the customer due diligence procedures of a financial institution pursuant to the anti-money laundering or similar requirements to which the financial institution, or branch thereof, is subject. This includes identifying the customer (including the owners of the customer), understanding the nature and purpose of the account, and on-going monitoring.

AML/KYC Procedures

CRS: The term “AML/KYC Procedures” means the customer due diligence procedures of a Reporting Financial Institution pursuant to the anti-money laundering or similar requirements to which such Reporting Financial Institution is subject.

Annuity ContractThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Annuity Contract” means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals. The term also includes a contract that is considered to be an Annuity Contract in accordance with the law, regulation, or practice of the Jurisdiction in which the contract was issued, and under which the issuer agrees to make payments for a term of years.UK Guidance AEI 101680: An Annuity Contract is a contract under which the issuer agrees to make payments for a period of time, determined in whole or in part by reference to the life expectancy of one or more individuals. For UK purposes this covers all annuities as outlined in the Insurance Policyholder Taxation Manual at [IPTM4000]. The following are not considered to be reportable Annuity Contracts for automatic exchange of information purposes: Pension annuities – these are excluded products, see, Immediate needs annuities as described at IPTM6205 – these are excluded products, see Periodic payment orders. Reinsurance of Annuity Contracts between insurance companies are not annuities.

Assumes primary withholding responsibility

FATCA: The term assumes primary withholding responsibility means that a Ql, territory financial institution, or U.S. branch of a participating FFI or registered deemed-compliant FFI that assumes responsibility for withholding on a payment for purposes of chapters 3 and 4 as if it were a U.S. person. A Ql may only assume primary withholding responsibility if it does not make an election to be withheld upon with respect to the payment.

Backup Witholding

FATCA: The term backup withholding means the withholding required under section 3406.

Beneficial ownerFATCA: Rules for determining payee and beneficial owner [§1.1472-1(d)]2-1(d)(1) In general [§1.1472-1(d)(1)][Reserved]. For further guidance, see §1.1472-1T(d)(1).For purposes of this section, except in the case of a payee that is a QI, WP, or WT, a withholding agent may treat a withholdable payment as beneficially owned by the payee as determined under §1.1471-3. Thus, a withholding agent may treat a withholdable payment as beneficially owned by an excepted NFFE (other than a QI, WP, or WT) if the withholding agent can reliably associate the payment with valid documentation to determine the payee’s status as an excepted NFFE under the rules of §1.1471-3(d).2-1(d)(2) Payments made to an NFFE that is a WP or WT [§1.1472-1(d)(2)][Reserved]. For further guidance, see §1.1472-1T(d)(2).A withholding agent may treat the payee of a withholdable payment as a NFFE that is a QI, WP, or WT if the withholding agent can reliably associate the payment with valid documentation to determine the payee’s status as such under the rules of §1.1471-3(b)(3) and (d).2-1(d)(3) Payments made to a partner or beneficiary of an NFFE that is an NWP or NWT [§1.1472-1(d)(3)]A withholding agent may treat a partner or beneficiary of an NFFE that is an NWP or NWT, respectively, as the payee of a withholdable payment under this section if the withholding agent can reliably associate the payment with a valid Form W-8 or written notification that the NFFE is a flow-through entity as described in §1.1471-3(c) (2) , including valid documentation sufficient to establish the chapter 4 status of each payee of the payment that is a partner or beneficiary, respectively, by applying the rules described in §1.1471-3(d).


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2-1(d)(4) Payments made to a beneficial owner that is an NFFE [§1.1472-1(d)(4)]A withholding agent may treat the beneficial owner of a withholdable payment as an NFFE that does not have any substantial U.S. owners or that has identified all of its substantial U.S. owners if it can reliably associate the payment with valid documentation identifying the beneficial owner as an NFFE that does not have any substantial U.S. owners or that has identified all of its substantial U.S. owners by applying the rules described in §1.1471-3(d).2-1(d)(5) Absence of valid documentation [§1.1472-1(d)(5)]A withholding agent that cannot reliably associate the payment with documentation as described in any of paragraphs (d)(2) through (4) of this section must treat the payment as made to a payee in accordance with the presumption rules under §1.1471-3(f) .Income on certain collateral [§1.1471-6(d)(4)][Reserved]. For further guidance, see §1.1471-6T(d)(4).Solely for purposes of determining whether an entity is an exempt beneficial owner of a payment under this paragraph (d), a foreign central bank of issue is a beneficial owner with respect to income earned on cash and securities, including cash and securities held as collateral or securities held in connection with a securities lending transaction, held by the foreign central bank of issue in the ordinary course of its operations as a central bank of issue.Certain retirement funds [§1.1471-6(f)]A fund is described in this paragraph (f) if it is described in paragraphs (f)(1) through (6) of this section. In addition, if a withholding agent may treat a withholdable payment as made to a payee that is a retirement fund in accordance with §1.1471-3, then the withholding agent may also treat such retirement fund as the beneficial owner of the payment. See §1.1471-3(d)(9)(ii).1-6(f)(1) Treaty-qualified retirement fund [§1.1471-6(f)(1)]A fund established in a country with which the United States has an income tax treaty in force, provided that the fund is entitled to benefits under such treaty on income that it derives from sources within the United States (or would be entitled to such benefits if it derived any such income) as a resident of the other country that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or provide pension or retirement benefits;1-6(f)(2) Broad participation retirement fund [§1.1471-6(f)(2)]A fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund-(2)(i) Does not have a single beneficiary with a right to more than five percent of the fund’s assets; [§1.1471-6(f)(2)(i)](2)(ii) Is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in the country in which the fund is established or operates; and [§1.1471-6(f)(2)(ii)](2)(iii) Satisfies one or more of the following requirements-[§1.1471-6(f)(2)(iii)](iii)(A) The fund is generally exempt from tax on investment income under the laws of the country in which it is established or operates due to its status as a retirement or pension plan; [§1.1471-6(f)(2)(iii)(A)](iii)(B) [Reserved]. For further guidance, see §1.1471-6T(f)(2)(iii)(B). [§1.1471-6(f)(2)(iii)(B)]The fund receives at least 50 percent of its total contributions (other than transfers of assets from accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), from retirement and pension accounts described in an applicable Model 1 or Model 2 IGA, or from other retirement funds described in this paragraph (f) or in an applicable Model 1 or Model 2 IGA) from the sponsoring employers; iii)(C) [Reserved]. For further guidance, see §1.1471-6T(f)(2)(iii)(C). [§1.1471-6(f)(2)(iii)(C)]Distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), to retirement and pension accounts described in an applicable Model 1 or Model 2 IGA, or to other retirement funds described in this paragraph (f) or in an applicable Model 1 or Model 2 IGA), or penalties apply to distributions or withdrawals made before such specified events;


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(iii)(D) Contributions (other than certain permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed $50,000 annually. [§1.1471-6(f)(2)(iii)(D)]1-6(f)(3) Narrow participation retirement funds [§1.1471-6(f)(3)]A fund established to provide retirement, disability, or death benefits to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for prior services rendered, provided that-(3)(i) The fund has fewer than 50 participants; [§1.1471-6(f)(3)(i)](3)(ii) [Reserved]. For further guidance, see §1.1471-6T(f)(3)(ii).[§1.1471-6(f)(3)(ii)]The fund is sponsored by one or more employers and each of these employers are not investment entities or passive NFFEs;(3)(iii) [Reserved]. For further guidance, see §1.1471-6T(f)(3)(iii).[§1.1471-6(f)(3)(iii)]Employee and employer contributions to the fund (other than transfers of assets from other retirement plans described in paragraph (f)(1) of this section, from accounts


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described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), or retirement and pension accounts described in an applicable Model 1 or Model 2 IGA) are limited by reference to earned income and compensation of the employee, respectively;(3)(iv) Participants that are not residents of the country in which the fund is established or operated are not entitled to more than 20 percent of the fund’s assets; and [§1.1471-6(f)(3)(iv)](3)(v) The fund is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in the country in which the fund is established or operates. [§1.1471-6(f)(3)(v)]1-6(f)(4) Fund formed pursuant to a plan similar to a section 401(a) plan [§1.1471-6(f)(4)]A fund formed pursuant to a pension plan that would meet the requirements of section




401(a), other than the requirement that the plan be funded by a trust created or organized in the United States.1-6(f)(5) Investment vehicles exclusively for retirement funds [§1.1471-6(f)(5)][Reserved]. For further guidance, see §1.1471-6T(f)(5).A fund established exclusively to earn income for the benefit of one or more retirement funds described in paragraphs (f)(1) through (5) of this section or in an applicable Model 1 or Model 2 IGA, accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), or retirement and pension accounts described in an applicable Model 1 or Model 2 IGA.1-6(f)(6) [Reserved]. For further guidance, see §1.1471-6T(f)(5). Pension fund of an exempt beneficial owner [§1.1471-6(f)(6)][Reserved]. For further guidance, see §1.1471-6T(f)(6). A fund established and sponsored by an exempt beneficial owner described in paragraph (b), (c), (d), or (e) of this section or an exempt beneficial owner (other than a fund that qualifies as an








exempt beneficial owner) described in an applicable Model 1 or Model 2 IGA to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or former employees, but the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the exempt beneficial owner.1-6(f)(7) [Reserved]. For further guidance, see §1.1471-6T(f)(6). Example [§1.1471-6(f)(7)]FP, a foreign pension fund established in Country X, is generally exempt from income taxation in Country X, and is operated principally to provide retirement benefits in such country. The U.S.-Country X income tax treaty is identical in all material respects to the 2006 U.S. model income tax convention. FP is a resident of Country X under Article 4(2)(a) and a qualified person under Article 22(2)(d) of the U.S.-Country X income tax treaty. Therefore, FP is a pension fund described in paragraph (f)(1) of this section.


Beneficial owner [§1.1441-1(c)(6)](6)(i) General rule [§1.1441-1(c)(6)(i)]This paragraph (c)(6) defines the term beneficial owner for payments of income other than a payment for which a reduced rate of withholding is claimed under an income tax treaty. The term beneficial owner means the person who is the owner of the income for tax purposes and who beneficially owns that income. A person shall be treated as the owner of the income to the extent that it is required under U.S. tax principles to include the amount paid in gross income under section 61 (determined without regard to an exclusion or exemption from gross income under the Internal Revenue Code). Beneficial ownership of income is determined under the provisions of section 7701(l) and the regulations under that section and any other applicable general U.S. tax principles, including principles governing the determination of whether a transaction is a conduit transaction. Thus, a person receiving income in a capacity as a nominee,



agent, or custodian for another person is not the beneficial owner of the income. In the case of a scholarship, the student receiving the scholarship is the beneficial owner of that scholarship. In the case of a payment of an amount that is not income, the beneficial owner determination shall be made under this paragraph (c)(6) as if the amount were income. (6)(ii) Special rules [§1.1441-1(c)(6)(ii)](ii)(A) General rule [§1.1441-1(c)(6)(ii)(A)]The beneficial owners of income paid to an entity described in this paragraph (c)(6)(ii) are those persons described in paragraphs (c)(6)(ii)(B) through (D) of this section.(ii)(B) Foreign partnerships [§1.1441-1(c)(6)(ii)(B)]The beneficial owners of income paid to a foreign partnership (whether a non-withholding or a withholding foreign partnership) are the partners in the partnership, unless they themselves are not the beneficial owners of the income under this paragraph (c)(6). For example, a partnership (first tier) that is a partner in another partnership (second tier) is not the beneficial owner of income paid to the second tier


partnership since the first tier partnership is not the owner of the income under U.S. tax principles. Rather, the partners of the first tier partnership are the beneficial owners (to the extent they are not themselves persons that are not beneficial owners under this paragraph (c)(6)). See §1.1441-5(b)2 for applicable withholding procedures for payments to a domestic partnership. See also §1.1441-5(c)(3)(ii) for applicable withholding procedures for payments to a foreign partnership where one of the partners (at any level in the chain of tiers) is a domestic partnership.(ii)(C) Foreign simple trusts and foreign grantor trusts [§1.1441-1(c)(6)(ii)(C)]The beneficial owners of income paid to a foreign simple trust, as described in paragraph (c)(23) of this section, are the beneficiaries of the trust, unless they themselves are not the beneficial owners of the income under this paragraph (c)(6). The beneficial owners of income paid to a foreign grantor trust, as described in paragraph (c)(26) of this section, are the persons treated as the owners of the trust,

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unless they themselves are not the beneficial owners of the income under this paragraph (c)(6).(ii)(D) Other foreign trusts and foreign estates [§1.1441-1(c)(6)(ii)(D)]The beneficial owner of income paid to a foreign complex trust as defined in paragraph (c)(25) of this section or to a foreign estate is the foreign complex trust or estate itself.



Blocked accountFATCA: §1.1471-4(e) (2) (iii)(B) With respect to recalcitrant account holders and accounts held by non-participating FFIs, withhold with respect to each such account as required under paragraph (b) of this section, block each such account (as defined in this paragraph), close each such account within a reasonable period of time, or transfer each such account to a U.S. financial institution, a branch of the FFI that will so report, a participating FFI, or a reporting Model 1 FFI. For purposes of this paragraph (e)(2)(iii)(B), an account is a blocked account if the FFI prohibits the account holder from effecting any transactions with respect to an account until such time as the account is closed, transferred, or the account holder provides the documentation described in paragraph (c) of this section for the FFI to determine the U.S. or non-U.S. status of the account and report the account if required under paragraph (d) of this section.


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BranchFATCA: A branch is a unit, business, or office of a Financial Institution 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 Fl.

Broad Participation Retirement Fund

CRS: The term “Broad Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund:a) does not have a single beneficiary with a right to more than five per cent of the fund’s assets;b) is subject to government regulation and provides information reporting to the tax authorities; and


c) satisfies at least one of the following requirements:i) the fund is generally exempt from tax on investment income, or taxation of such income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan;ii) the fund receives at least 50% of its total contributions (other than transfers of assets from other plans described in subparagraphs B(5) through (7) or from retirement and pension accounts described in subparagraph C(17)(a)) from the sponsoring employers;Hi) distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to other retirement funds described in subparagraphs B(5) through (7) or retirement and pension accounts described in subparagraph C(17)(a)), or penalties apply to distributions or withdrawals made before such specified events; oriv) contributions (other than certain permitted make-up contributions) by employees to


the fund are limited by reference to earned income of the employee or may not exceed USD 50,000 annually, applying the rules set forth in paragraph C of Section VII for account aggregation and currency translation.


BrokerFATCA: The term broker means any person, U.S. or foreign, that, in the ordinary course of a trade or business during the calendar year, stands ready to effect sales to be made by others. Examples of a broker include an obligor that regularly issues and retires its own debt obligations, a corporation that regularly redeems its own stock, and a clearing organization that effects sales of securities for its members. A broker does not include an international organization described in §1.1471-6(c) that redeems or retires an obligation of which it is the issuer, a stock transfer agent that records transfers of stock for a corporation if the nature of the activities of the agent is such that the agent ordinarily would not know the gross proceeds from sales, an escrow agent that effects no sales other than transactions incidental to the purpose of the escrow (such as sales to collect on collateral), or a corporation that issues and retires long-term debt on an irregular basis.§1.1471-6(c) Any international organization or any wholly owned agency or instrumentality thereof [§1.1471-6(c)]Except as provided in paragraph (h) of this section, the term any international organization or any wholly owned agency or instrumentality thereof means any entity described in section 7701(a)(18). The term also includes any intergovernmental or supranational organization-1-6(c)(1) That is comprised primarily of foreign governments; [§1.1471-6(c)(1)]1-6(c)(2) That is recognized as an intergovernmental or supranational organization under a foreign law similar to 22 U.S.C. 288-288f 3 or that has in effect a headquarters agreement with a foreign government; and [§1.1471-6(c)(2)]1-6(c)(3) Whose income does not inure to the benefit of private persons under the principles of paragraph (b)(3)(ii) of this section, as applied to the intergovernmental or supranational organization in place of the government or governmental entity. [§1.1471-6(c)(3)]

CA Certificate Authority

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Cash ValueCRS: The term “Cash Value” means the greater of (i) the amountthat the policyholder is entitled to receive upon surrender ortermination of the contract (determined without reduction forany surrender charge or policy loan), and (ii) the amount thepolicyholder can borrow under or with regard to the contract.Notwithstanding the foregoing, the term “Cash Value” does notinclude an amount payable under an Insurance Contract:a) solely by reason of the death of an individual insured under a life insurance contract;b) as a personal injury or sickness benefit or other benefitproviding indemnification of an economic loss incurred upon the occurrence of the event insured against;c) as a refund of a previously paid premium (less cost of insurance charges whether or not actually imposed) under an Insurance Contract (other than an investment-linked life insurance or annuity contract) due to cancellation or termination of the contract, decrease in risk exposure during the effective period of the contract, or arising from the correction of a posting or similar error with regard to the premium for the contract;d) as a policyholder dividend (other than a termination dividend) provided that the dividend relates to an InsuranceContract under which the only benefits payable are described in subparagraph C(8)(b); ore) as a return of an advance premium or premium deposit for anInsurance Contract for which the premium is payable at leastannually if the amount of the advance premium or premiumdeposit does not exceed the next annual premium that will bepayable under the contract.FATCA: The term cash value has the meaning set forth in §1.1471-5(b) (3) (vii)(B). Cash value [§1.1471-5(b)(3)(vii)(B)]Except as otherwise provided in paragraph (b)(3)(vii)(C) of this section, the term cash value means any amount (determined without reduction for any charge or policy loan) that-(1) Is payable under the contract to any person upon surrender, termination, cancellation, or withdrawal; or [§1.1471-5(b)(3)(vii)(B)(1)](2) Any person can borrow under or with regard to (for example, by pledging as collateral) the contract. [§1.1471-5(b)(3)(vii)(B)(2)]

Cash Value Insurance Contract

CRS: The term “Cash Value Insurance Contract” means an Insurance Contract (other than an indemnity reinsurance contract between two insurance companies) that has a Cash Value.FATCA: (3)(vii) Cash value insurance contract [§1.1471-5(b) (3) (vii)](vii)(A) In general [§1.1471-5(b)(3)(vii)(A)]The term cash value insurance contract means an insurance contract (other than an indemnity reinsurance contract between two insurance companies and a term life insurance contract described in paragraph (b)(2)(ii) of this section) that has an aggregate cash value greater than $50,000 at any time during the calendar year, applying the rules set forth in paragraph (b)(4)(iii) of this section. A participating FFI may elect to disregard the $50,000 threshold in the preceding sentence by reporting all contracts with a cash value greater than zero (vii)(B) Cash value [§1.1471-5(b)(3)(vii)(B)]Except as otherwise provided in paragraph (b)(3)(vii)(C) of this section, the term cash value means any amount (determined without reduction for any charge or policy loan) that-(1) Is payable under the contract to any person upon surrender, termination, cancellation, or withdrawal; or [§1.1471-5(b)(3)(vii)(B)(1)](2) Any person can borrow under or with regard to (for example, by pledging as collateral) the contract. [§1.1471-5(b)(3)(vii)(B)(2)](vii)(C) Amounts excluded from cash value [§1.1471-5(b)(3)(vii)(C)]Cash value does not include an amount payable-(1) Solely by reason of the death of an individual insured under a life insurance contract; [§1.1471-5(b)(3)(vii)(C)(1)](2) As a personal injury or sickness benefit or a benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against; [§1.1471-




5(b)(3)(vii)(C)(2)](3) As a refund of a previously paid premium (less cost of insurance charges whether or not actually imposed) under an insurance contract (other than a life insurance or annuity contract) due to cancellation or termination of the contract, decrease in risk exposure during the effective period of the contract, or arising from the correction of a posting or similar error with regard to the premium for the contract; or [§1.1471-5(b)(3)(vii)(C)(3)](4) As a policyholder dividend (other than a termination dividend) provided that the dividend relates to an insurance contract under which the only benefits payable are described in paragraph (b)(3)(vii)(C)(2) of this section. [§1.1471-5(b)(3)(vii)(C)(4)](5) As a return of an advance premium or premium deposit for an insurance contract for which the premium is payable at least annually if the amount of the advance premium or premium deposit does not exceed the next annual premium that will be payable under the contract. [§1.1471-5(b)(3)(vii)(C)(5)](vii)(D) Policyholder dividend [§1.1471-5(b)(3)(vii)(D)](1) For purposes of paragraph (b)(3)(vii)(C)(4) of this section and except as otherwise provided in this paragraph, a policyholder dividend means any dividend or similar distribution to policyholders in their capacity as such, including[§1.1471-5(b)(3)(vii)(D)(1)](i) An amount paid or credited (including as an increase in benefits) if the amount is not fixed in the contract but rather depends on the experience of the insurance company or the discretion of management; [§1.1471-5(b)(3)(vii)(D)(1)(i)](ii) A reduction in the premium that, but for the reduction, would have been required to be paid; and [§1.1471-5(b)(3)(vii)(D)(1)(ii)](iii) An experience rated refund or credit based solely upon the claims experience of the contract or group involved. [§1.1471-5(b)(3)(vii)(D)(1)(iii] (2) A policyholder dividend cannot exceed the premiums previously paid for the contract, less the sum of the cost of insurance and expense charges (whether or not actually imposed) during the contract’s existence and the aggregate amount of any prior dividends paid or credited with regard to the contract. [§1.1471-5(b)(3)(vii)(D)(2)](3) A policyholder dividend does not include any amount that is in the nature of interest that is paid or credited to a contract holder to the extent that such amount exceeds the minimum rate of interest required to be credited with respect to contract values under local law. [§1.1471-5(b)(3)(vii)(D)(3)]UK Guidance: AEIM 101640: A Cash Value Insurance Contract is an investment product that has an element of life insurance attached to it. The life insurance element is often small compared to the investment element of the contract. General insurance products, such as term life insurance, property or motor insurance, that do not carry any investment element are not financial accounts. A Cash Value Insurance Contract is an insurance contract where the policyholder is entitled to receive payment on surrender or termination of the contract. Examples of the type of insurance product that will be cash value insurance products and those that will not can be found at AEIM101660. The cash value of such a contract is the greater of: i. The amount that the policyholder is entitled to receive on the surrender or termination of the contract without reduction for any surrender charge or loans outstanding against the policy, for example, where the policyholder receives an annual statement of the value of the policy that will be the cash value in that year, and ii. The amount the policyholder can borrow against or with regard to the policy. Note that the policyholder does not need to have pledged the account as collateral for borrowing for this second test to apply. It is the amount that the policyholder could expect to borrow against the Cash Value Insurance Contract should they choose to use it as collateral for a loan. The cash value does not include any amount payable under an insurance contract: a) Solely by reason of the death of an individual insured under a life insurance contract; b) As a personal injury, sickness or other benefit providing indemnification of an economic loss arising from an event that has been insured against; c) As a refund of premium due to the cancellation or termination of an insurance contract, a reduction in the amount insured or a correction of a posting or similar error in relation to the premium d) As a policyholder dividend, other than a termination dividend, provided that the insurance contract pays only the benefits in b) above. A policyholder dividend is the return of premium, under the terms of the policy, resulting from an excess of income over losses and expenses. e) As a return of an advance premium or premium deposit for an


insurance contract where the premium is payable at least annually. In this case the advance premium or premium deposit must not exceed the amount due as the next annual premium payable under the contract.UK Guidance: AEIM 101660: The type of UK insurance products that are most likely to be cash value insurance products are: * Investment bonds – investment products with an underlying life insurance element in which the policyholder invests either a lump sum or makes regular payments which go into a variety of investment funds with the aim of delivering an investment return. * Capital redemption bonds – policies under which one or more fixed sums are paid to an insurer under a contract pursuant to which one or more specified amounts are paid out at a later time based on an actuarial computation. * Deferred annuities in the accumulation phase – a deferred annuity delays distribution of payments until some point in the future after the accumulation phase has passed. The accumulation phase begins when the contract is entered into and ends after a specified period of time during which premiums are payable. Pension annuities that fall within the excluded products list are not reportable. * Maximum Investment Plans and savings back life assurance policies – regular premium life assurance policies generally carrying a relatively small amount of life cover. The premiums are pooled by the insurer to enable investment through a fund manager with a view to generating a return on the investment. * Insurance “wrapper” products – insurance contracts where assets are held in an account maintained by a financial institution and managed in accordance with a personalised investment strategy or under the control or influence of the policyholder, owner or beneficiary of the contract. Cash Value Insurance Contracts do not include: * Indemnity insurance contracts between insurance companies. * Term life insurance contracts. * Policies indemnifying against economic loss arising from specified circumstances, for example personal injury, theft, etc. * Micro insurance contracts that do not have a cash value.


Central BankCRS: The term “Central Bank” means an institution that is by law or government sanction the principal authority, other than the government of the Jurisdiction itself, issuing instruments intended to circulate as currency. Such an institution may include an instrumentality that is separate from the government of the Jurisdiction, whether or not owned in whole or in part by the Jurisdiction.

Examples of Central Banksthe Swiss National Bank and any of its wholly owned subsidiariesDeutsche Bundesbank (German Federal Bank)Bank for International Settlementsthe Bank of England and any of its wholly owned subsidiaries.

Central Securities Depository (CSD)

UK AEIM 100680: In the UK a Central Securities Depository (CSD) will not be treated as maintaining financial accounts. The participants of UK securities settlement systems that hold interests recorded in the CSD are either Financial Institutions in their own right, or they access the system through a Financial Institution (a sponsor). It is these Financial Institutions that maintain the accounts and it is these participants and/or sponsors that are responsible for undertaking any reporting obligations. For example, members of the CREST securities settlement system operated by Euroclear UK & Ireland Limited (EUI), or the Financial Institution that accesses EUI on their behalf, are responsible for any reporting required in respect of securities held by means of EUI. EUI acting as the CSD is not required to undertake any reporting in respect of such securities. This treatment will also apply to a UK entity which is a direct or indirect subsidiary used solely to provide services ancillary to the business operated by that CSD (CSD Related Entity). The relationship between the securities settlement system and its participants is not a financial account and accordingly the CSD and any CSD Related Entity is not required to undertake any reporting required in connection with interests held by, or on behalf of, participants. Notwithstanding the foregoing, the CSD may act as a third party service provider and report on behalf of such participants in respect of reportable interests.

Certified deemed-compliant FFI

FATCA: 1.1471-5(f) (2) . A certified deemed-compliant FFI means a FFI described in any of paragraphs (f)(2)(i) through (v) of this section that has certified as to its status as a deemed-compliant FFI by providing a withholding agent with the documentation described in §1.1471-3(d) (6) applicable to the relevant deemed-compliant category.A certified deemed-compliant FFI also includes a non-reporting FFI under a Model 1 IGA and a non-reporting FFI treated as a certified deemed-compliant FFI under a Model 2 IGA. A certified deemed-compliant FFI is not required to register with the IRS.

Certified deemed-compliant FFI with only low-value accounts

FATCA: Is not engaged primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, notional principal contracts, insurance orannuity contracts, or any interest (including a futures or forward contract or option) in such security, partnership interest, commodity, notional principal contract,insurance contract or annuity contract;• No financial account maintained by the FFI or any member of its expanded affiliated group, if any, has a balance or value in excess of $50,000 (as determined afterapplying applicable account aggregation rules); and• Neither the FFI nor the entire expanded affiliated group, if any, of the FFI, have more than $50 million in assets on its consolidated or combined balance sheet as ofthe end of its most recent accounting year.

Certified deemed-compliant investment advisors and investment managers

FATCA: • Is a financial institution solely because it is an investment entity described in §1.1471-5(e) (4) (i)(A); and• Does not maintain financial accounts.

Certified deemed-compliant limited life debt investment entity

FATCA: Was in existence as of January 17, 2013;• Issued all classes of its debt or equity interests to investors on or before January 17, 2013, pursuant to a trust indenture or similar agreement; and• Is certified deemed-compliant because it satisfies the requirements to be treated as a limited life debt investment entity (such as the restrictions with respect to its assets and other requirements under §1.1471-5(f) (2) (iv)).




http://haydonperryman.com/terms-and-definitions/investment-entity/



Certified deemed-compliant non-registering local bank

FATCA: • Operates and is licensed solely as a bank or credit union (or similar cooperative credit organization operated without profit) in its country of incorporation ororganization;• Engages primarily in the business of receiving deposits from and making loans to, with respect to a bank, retail customers unrelated to such bank and, with respectto a credit union or similar cooperative credit organization, members, provided that no member has a greater than five percent interest in such credit union orcooperative credit organization;• Does not solicit account holders outside its country of organization;• Has no fixed place of business outside such country (for this purpose, a fixed place of business does not include a location that is not advertised to the public andfrom which the FFI performs solely administrative support functions);• Has no more than $175 million in assets on its balance sheet and, if it is a member of


an expanded affiliated group, the group has no more than $500 million in totalassets on its consolidated or combined balance sheets; and• Does not have any member of its expanded affiliated group that is a foreign financial institution, other than a foreign financial institution that is incorporated or organized in the same country as the FFI identified.


Certified deemed-compliant sponsored, closely held investment vehicle

FATCA: • Is a FFI solely because it is an investment entity described in §1.1471-5(e) (4);• Is not a QI, WP, or WT;• Has a contractual relationship with the above identified sponsoring entity that agrees to fulfil all due diligence, withholding, and reporting responsibilities of aparticipating FFI on behalf of this entity; and• Twenty or fewer individuals own all of the debt and equity interests in the entity (disregarding debt interests owned by U.S. financial institutions, participating FFIs,registered deemed-compliant FFIs, and certified deemed-compliant FFIs and equity interests owned by an entity if that entity owns 100 percent of the equity interests in the FFI and is itself a sponsored FFI).




Change in circumstances

The term change in circumstances has the meaning set forth in § 1.1471-3(c) (6)(ii)(E) for withholding agents and, in the case of a participating FFI, has the meaning set forth in § 1.1471-4(c) (2)(iii) .Change in circumstances [§1.1471-3(c) (6) (ii)(E)](E) Change in circumstances— (1) Defined. For purposes of this chapter, a person is considered to have a change in circumstances only if such change would affect the chapter 4 status of the person. A change in circumstances includes any change that results in the addition of information described in paragraph (e)(4) relevant to a person's claim of foreign status (that is, U.S. indicia that is not otherwise cured by documentation on file and that is relevant to the chapter 4 status claimed) or otherwise conflicts with such person's claim of chapter 4 status. Unless stated otherwise, a change of address or telephone number is a change in circumstances for purposes of this paragraph (c)(6)(ii)(E) only if it changes to an address or telephone number in the



United States. A change in circumstances affecting the withholding information provided to the withholding agent, including allocation information or withholding pools contained in a withholding statement or owner reporting statement, will terminate the validity of the withholding certificate with respect to the information that is no longer reliable, until the information is updated.(2) Obligation to notify withholding agent of a change in circumstances. If a change in circumstances makes any information on a certificate or other documentation incorrect, then the person whose name is on the certificate or other documentation must inform the withholding agent within 30 days of the change and furnish a new certificate, a new written statement, or new documentary evidence. If an intermediary or a flow-through entity becomes aware that a certificate or other appropriate documentation it has furnished to the person from whom it collects a payment is no longer valid because of a change in the circumstances of the person who issued the certificate or furnished the


other appropriate documentation, then the intermediary or flow-through entity must notify the person from whom it collects the payment of the change in circumstances within 30 days of the date that it knows or has reason to know of the change in circumstances. It must also obtain a new withholding certificate or new appropriate documentation to replace the existing certificate or documentation the validity of which has expired due to the change in circumstances.(3) Withholding agent's obligation with respect to a change in circumstances. A certificate or other documentation becomes invalid on the date that the withholding agent holding the certificate or documentation knows or has reason to know that circumstances affecting the correctness of the certificate or documentation have changed. However, a withholding agent may choose to treat a person as having the same chapter 4 status that it had prior to the change in circumstances until the earlier of 90 days from the date that the certificate or documentation became invalid due to the change in circumstances or the date that a new certificate or new documentation is obtained. See, however, § 1.1441-1(e)(4)(ii)(D) for requirements, including the requirement to withhold under chapters 3 or 61, applicable when a change in circumstances occurs for purposes of chapter 3 and the related grace period allowed under § 1.1441-1(b)(3)(iv). A withholding agent may rely on a certificate without having to inquire into possible changes of circumstances that may affect the validity of the statement, unless it knows or has reason to know that circumstances have changed. A withholding agent may require a new certificate or additional documentation at any time prior to a payment, regardless of whether the withholding agent knows or has reason to know that any information stated on the certificate or documentation has changed.(iii) through (iii)(B) [Reserved] For further guidance, see § 1.1471-3(c)(6)(iii) through (c)(6)(iii)(B).(iv) Electronic transmission of withholding certificate, written statement, and documentary evidence. A withholding agent may accept a withholding certificate (including an acceptable substitute form), a written statement, or other such form as the IRS may prescribe, electronically in accordance with the requirements set forth in § 1.1441-1(e)(4)(iv)(B).(v) [Reserved] For further guidance, see § 1.1471-3(c)(6)(v).(A) In general. A withholding agent may substitute its own form for an official Form W-8 (or such other official form as the IRS may prescribe). A substitute form will be acceptable if it contains provisions that are substantially similar to those of the official form, it contains the same certifications relevant to the transactions as are contained on the official form and these certifications are clearly set forth, and the substitute form includes a signature-under-penalties-of-perjury statement identical to the one on the official form. The substitute form is acceptable even if it does not contain all of the provisions contained on the official form, so long as it contains those provisions that are relevant to the transaction for which it is furnished. A withholding agent may choose to provide a substitute form that does not include all of the chapter 4 statuses provided on the official version but the substitute form must include any chapter 4 status for which withholding may apply, such as the categories for a non-participating FFI or passive NFFE. A withholding agent that uses a substitute form must furnish instructions relevant to the substitute form only to the extent and in the manner specified in the instructions to the official form. A withholding agent may use a substitute form that is written in a language other than English and may accept a form that is filled out in a language other than English, but the withholding agent must make available an English translation of the form and its contents to the IRS upon request. A withholding agent may refuse to accept a certificate (including the official Form W-8) from a person if the certificate provided is not an acceptable substitute form provided by the withholding agent, but only if the withholding agent furnishes the person with an acceptable substitute form within five business days of receipt of an unacceptable form from the person. In that case, the substitute form is acceptable only if it contains a notice that the withholding agent has refused to accept the form submitted by the person and that the person must submit the acceptable form provided by the withholding agent in order for the person to be treated as having furnished the required withholding certificate.(B) Non-IRS form for individuals. A withholding agent may also substitute its own form for an official Form W-8BEN (for individuals), regardless of whether the substitute


form is titled a Form W-8. However, in addition to the name and address of the individual that is the payee or beneficial owner, the substitute form must provide all countries in which the individual is resident for tax purposes, country of birth, a tax identification number (if any) for each country of residence, the individual's date of birth, and must contain a signed and dated certification made under penalties of perjury that the information provided on the form is accurate and will be updated by the individual within 30 days of a change in circumstances that causes the form to become incorrect. Notwithstanding the previous sentence, the signed certification provided on a form need not be signed under penalties of perjury if the form is accompanied by documentary evidence that supports the individual's claim of foreign status. Such documentary evidence may be the same documentary evidence that is used to support foreign status in the case of a payee whose account has U.S. indicia as described in paragraph (e) of this section or § 1.1471-4(c)(4)(i)(A). The form may also request other information required for purposes of tax or AML due diligence in the United States or in other countries.(vi) through (vii) [Reserved] For further guidance, see § 1.1471-3(c)(6)(vi) through (vii).

……. in the case of a participating FFI, has the meaning set forth in § 1.1471-4(c) (2) (iii).(iii) Change in circumstances—(A) Obligation to identify a change in circumstances. A participating FFI is required to institute procedures to ensure that any change in circumstances, as described in paragraph (c)(2)(iii)(B) of this section, is identified by the participating FFI, including procedures to ensure that a relationship manager identifies any change in circumstances with respect to an account. For example, if a relationship manager is notified that the account holder has a mailing address in the United States when there was no U.S. address previously associated with the account, the participating FFI will be required to treat the new address as a change in circumstances and will be required to retain a record of the appropriate documentation from the account holder as described in paragraph (c)(5)(iv)(B)(2)(iii) of this section.(B) Definition of change in circumstances. For purposes of this section, a change in circumstances (as defined in § 1.1471-3(c) (6)(ii)(E) ) includes any change or addition of information to the account holder's account (including the addition, substitution, or other change of an account holder) or any change or addition of information to any account associated with such account (applying the account aggregation rules described in § 1.1471-5(b) (4)(iii) or by treating the accounts as consolidated obligations) if such change or addition of information affects the chapter 4 status of the account holder. For example, if a holder of an account (including a preexisting account) opens another account that is linked to such account in the participating FFI's computerized system as described under § 1.1471-5(b)(4)(iii) and as part of the participating FFI's account opening procedures the account holder provides a U.S. telephone number for such other account, this is a change in circumstances with respect to the first mentioned account. With respect to a preexisting account that meets a documentation exception described in paragraphs (c)(3)(iii) and (c)(5)(iii) of this section, a change in circumstances also includes a change in account balance or value as of the end of the first subsequent year that causes the account no longer to meet the documentation exception.(C) Requirements following a change in circumstances. With respect to an individual account or an account held by a passive NFFE for which there is a change in circumstances with respect to the information regarding its owners, following a change in circumstances the participating FFI must retain a record of the appropriate documentation described in paragraph (c)(3) or (c)(5)(iv)(B)(2) of this section within the time period provided by § 1.1471-5(g)(3)(iii) or, if unable to do so, must treat such account as held by a recalcitrant account holder. With respect to an account held by an entity other than a passive NFFE described in the preceding sentence, following a change in circumstances, the participating FFI must retain a record of the appropriate documentation described in paragraph (c)(3) of this section by the date that is 90 days after the change in circumstances or, if unable to do so, must treat such account as held by a nonparticipating FFI.


http://www.law.cornell.edu/cfr/text/26/1.1471-5#g_3_iii



http://www.law.cornell.edu/cfr/text/26/1.1471-3#c_6_ii_E

Chapter 3FATCA: For purposes of chapter 4, the term chapter 3 means sections 1441 through 1464 and the regulations thereunder, but does not include sections 1445 and 1446 and the regulations thereunder, unless the context indicates otherwise.

Chapter 4FATCA: The term chapter 4 means sections 1471 through 1474 [of the US Tax Code] and the regulations thereunder.

Chapter 4 reportable amount

FATCA: The term “chapter 4 reportable amount” means each of the amounts reportable on a Form 1042-S 4 for purposes of chapter 4.

Chapter 4 statusFATCA: The term chapter 4 status means a person’s status as a U.S. person, a specified U.S. person, an individual that is a foreign person, a participating FFI, a deemed-compliant FFI, a restricted distributor, an exempt beneficial owner, a non-participating FFI, a territory financial institution, an excepted NFFE, or a passive NFFE. (Also see Appendix 4.)

Chapter 4 Withholding rate pool

The term chapter 4 withholding rate pool means a pool of payees that are nonparticipating FFIs provided on a chapter 4 withholding statement (as described in § 1.1471-3(c)(3)(iii)(B)(3)) to which a withholdable payment is allocated. The term chapter 4 withholding rate pool also means a pool provided on an FFI withholding statement (as described in § 1.1471-3(c)(3)(iii)(B)(2)) to which a withholdable payment is allocated to—

(i) A pool of payees consisting of each class of recalcitrant account holders described in § 1.1471-4(d)(6) (or with respect to an FFI that is a QI, a single pool of recalcitrant account holders without the need to subdivide into each class of recalcitrant account holders described in § 1.1471-4(d)(6)), including a separate pool of account holders to which the escrow procedures for dormant accounts apply; or

(ii) A pool of payees that are U.S. persons as described in § 1.1471-3(c)(3)(iii)(B)(2).

Clearing organization

FATCA: The term clearing organization means an entity that is in the business of holding securities for its member organizations or clearing trades of securities and transferring, or instructing the transfer of, securities by credit or debit to the account of a member without the necessity of physical delivery of the securities.

Closed AccountAn account is regarded as closed according to the normal operating procedures of the reporting financial institution that are consistently applied for all accounts that it maintains. For example, an equity interest in an investment entity would be considered closed when that interest is terminated by the transfer, surrender, redemption or cancellation of the interest or the liquidation of the entity. The information to be reported when an account is closed depends on the regime under which the report is made. An account with a balance or value equal to zero or which is negative will not be a closed account solely by reason of such a balance or value. FATCA & CDOT Reporting The process for closing accounts will differ between institutions and between different products and accounts. The intention is to capture the amount withdrawn from the account in connection with the closure process, as opposed to the account balance at the point of closure given there is an expectation the balance will be reduced prior to point of closure. For these purposes it is acceptable for the Financial Institution to: record the balance or value within five business days of when they receive

instructions from the Account Holder to close the account; or record the most recent available balance or value that is obtainable following

receipt of instructions to close the account, where a Financial Institution is unable to record the balance or value at the time of receiving instructions to close the account. This may include a balance or value that predates the instructions to close the account if this is the balance or value that is the most readily available. For accounts that close as a result of switching to another bank, the balance calculated as the transferable balance as part of the BACs Account Switching

4 http://www.irs.gov/pub/irs-pdf/f1042s.pdf


http://www.irs.gov/pub/irs-pdf/f1042s.pdf

service. DAC Reporting When an account is closed the reporting financial institution must report the fact of the closure but is not required to report the balance or value of the account at closure. Any reportable amounts paid or credited to the account in the reporting period up to the date of closure remain reportable.


Complex Trust FATCA: A complex trust is a trust that is not a simple trust or a grantor trust.

Collateral Accounts

Collateral accounts are accounts which are maintained for the benefit of another, or arrangements pursuant to which an obligation exists to return cash or assets to another. Transactions which include the collection of margin or collateral on behalf of a counterparty may fall within the definition of Custodial Account. The exact terms of the contractual arrangements will be relevant in applying this interpretation. However, if collateral is provided on a full title transfer basis, so that the collateral holder becomes the full legal and beneficial owner of the collateral during the term of the contract, this will not constitute a Custodial Account for the purposes of the automatic exchange agreements.

Compliance FIFATCA: 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.

Consolidated Obligations

The term consolidated obligations means multiple obligations that a withholding agent (including a withholding agent that is a FFI) has chosen to treat as a single obligation in order to treat the obligations as pre-existing obligations pursuant to paragraph (b)(98)(ii) of this section or in order to share documentation between the obligations pursuant to §1.1471-3(c) (8) . A withholding agent that has opted to treat multiple obligations as consolidated obligations pursuant to the previous sentence must also treat the obligations as a single obligation for purposes of satisfying the standards of knowledge requirements set forth in §§1.1471-3(e) and 1.1471-4(c) (2) (ii), and for purposes of determining the balance or value of any of the obligations when applying any of the account thresholds applicable to due diligence or reporting as set forth in §1.1471-3(c)(6)(ii), 1.1471-3(d) , 1.1471-4(c), 1.1471-5(a) (4) , and 1.1471-5(b) (3) (vii). For example, with respect to consolidated obligations, if a withholding agent has reason to know that the chapter 4 status assigned to the account holder or payee of one of the consolidated obligations is inaccurate, then it has reason to know that the chapter 4 status assigned for all other consolidated obligations of the account holder or payee is inaccurate. Similarly, to the extent that an account balance or value is relevant for purposes of applying any account threshold to one or more of the consolidated obligations, the withholding agent must aggregate the balance or value of all such consolidated obligations.



http://www.law.cornell.edu/cfr/text/26/1.1471-5#a_4






http://www.law.cornell.edu/cfr/text/26/1.1471-3#e


Controlling Persons

The term “Controlling Persons” means the natural persons who exercise control over an Entity. In the case of a trust, such term means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term “Controlling Persons” must be interpreted in a manner consistent with the Financial Action Task Force Recommendations.CRS Hanbook:The term Controlling Persons corresponds to the term ‘beneficialowner’ as described in the Financial Action Task Force (FATF)Recommendations. For an Entity that is a legal person, the term ControllingPersons means the natural person(s) who exercises control over the Entity,generally natural person(s) with a controlling ownership interest in the Entity.Determining a controlling ownership interest will depend on the ownershipstructure of the Entity and control over the Entity may be exercised by directownership (or shareholding) or through indirect ownership (or shareholding)of one or more intermediate Entities. For example, Controlling Personsinclude any natural person that holds directly or indirectly more than 25percent of the shares or voting rights of an Entity as a beneficial owner. If nosuch person exists, then any natural person that otherwise exercises controlover the management of the Entity (e.g., the senior managing official of thecompany). For example, an Individual A may own 20 percent interest inEntity B and, although held in the name of Individual C, pursuant to acontractual agreement, Individual A also controls 10 percent of the votingshares in Entity B. In such instance, Individual A should meet the definitionof Controlling Person.

CRL Certificate Revocation List

Custodial Account

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Custodial Account” means an account (other than an Insurance Contract or Annuity Contract) that holds one or more Financial Assets for the benefit of another person.FATCA: Custodial account [§1.1471-5(b) (3) (ii)]The term custodial account means an arrangement for holding a financial instrument, contract, or investment (including, but not limited to, a share of stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a non-financial index, a notional principal contract as defined in §1.446-3(c),5 an insurance or annuity contract, and any option or other derivative instrument) for the benefit of another person.

Custodial Institution

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Custodial Institution” means any Entity that holds, as a substantial portion of its business, Financial Assets for the account of others. An Entity holds Financial Assets for the account of others as a substantial portion of its business if the Entity’s gross income attributable to the holding of Financial Assets and related financial services equals or exceeds 20% of the Entity’s gross income during the shorter of: (i) the three-year period that ends on 31 December (or the final day of a non-calendar year accounting period) prior to the year in which the determination is being made; or (ii) the period during which the Entity has been in existence.FATCA: §1.1471-5(e) (1) (ii). Holds, as a substantial portion of its business (as defined in paragraph (e)(3) of this section), financial assets for the benefit of one or more other persons.UK Guidance AIEM 100640: A Custodial Institution is an entity that holds, as a substantial portion of its business, Financial Assets for the account of others. In this context, a substantial portion is taken as being at least 20% of the entity’s gross income that is attributable to holding Financial Assets and providing related financial services in the shorter of: * Its last three accounting periods, or * The period since it

5 http://www.law.cornell.edu/cfr/text/26/1.446-3#c





commenced business. Income attributable to holding Financial Assets and providing related financial services includes the following: * Custody, account maintenance and transfer fees; * Commissions and fees earned from executing and pricing securities transactions; * Income earned from extending credit to customers; * Income earned from contracts for differences and as the bid-ask spread of Financial Assets; * Fees for providing financial advice; * Fees for providing clearance and settlement services. Where an entity has no operating history at the time its status as a Custodial Institutions is being assessed, it will be regarded as a Custodial Institution if it expects to meet the gross income threshold based on its anticipated functions, assets and employees. Consideration must be given to any purpose or function for which the entity is licensed or regulated (included those of any predecessor). There may be circumstances where an entity holds Financial Assets for a customer where the income attributable to holding the Financial Assets or providing related financial services either


belongs or is otherwise paid to a connected party such as another company in the same group of companies. This may be because the entity holds assets for a customer of a connected party, or simply that any consideration is paid to a connected party, either as an identifiable payment or as one element of a consolidated payment. In that case the attributable income should be taken account of when applying the 20% test. Where an entity holds Financial Assets that are the property of a connected person, for example a company may hold the Financial Assets of some or all members of the group to which it belongs, and no or nominal fees are paid for that service, that is fees less than would apply on a commercial basis, consideration should be given to what would have been paid by an arm’s length customer when applying the 20% test.


Customer Master File

FATCA: A customer master file includes the primary files of a participating FFI or deemed-compliant FFI for maintaining account holder information, such as information used for contacting account holders and for satisfying AML due diligence.

Deemed-Compliant FFI

FATCA: The term deemed-compliant FFI means a FFI that is treated, pursuant to section 1471(b)(2) and §1.1471-5(f) , as meeting the requirements of section 1471(b). The term deemed-compliant FFI also includes a Ql branch of a U.S. financial institution that is a reporting Model 1 FFI.

Deferred Annuity Contract

FATCA: The term deferred annuity contract means an annuity contract other than an immediate annuity contract.



Depository Account

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Depository Account” includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the ordinary course of a banking or similar business. A Depository Account also includes an amount held by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon.FATCA: Depository account [§1.1471-5(b) (3) (i)](i)(A) In general [§1.1471-5(b)(3)(i)(A)]Except as otherwise provided in this paragraph (b)(3)(i), the term depository account means any account that is-



(1) A commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, passbook, certificate of indebtedness, or any other instrument for placing money in the custody of an entity engaged in a banking or similar business for which such institution is obligated to give credit (regardless of whether such instrument is interest bearing or non-interest bearing), including, for example, a credit balance with respect to a credit card account issued by a credit card company that is engaged in a banking or similar business; or [§1.1471-5(b)(3)(i)(A)(1)](2) Any amount held by an insurance company under a guaranteed investment contract or under a similar agreement to pay or credit interest thereon or to return the amount held. [§1.1471-5(b)(3)(i)(A)(2)](i)(B) Exceptions [§1.1471-5(b)(3)(i)(B)]A depository account does not include-


(1) A negotiable debt instrument that is traded on a regulated market or over-the-counter market and distributed and held through financial institutions; or [§1.1471-5(b)(3)(i)(B)(1)](2) An advance premium or premium deposit described in paragraph (b)(3)(vii)(C)(5) of this section. [§1.1471-5(b)(3)(i)(B)(2)]


Depository Institution

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Depository Institution” means any Entity that accepts deposits in the ordinary course of a banking or similar business.FATCA: §1.1471-5(e) (1) (i). Accepts deposits in the ordinary course of a banking or similar business.UK Statutory Instrument: “depository institution” means—(a) a person carrying on a regulated activity for the purposes of the Financial Services andMarkets Act 2000(a) by virtue of article 5 of the Financial Services and Markets Act2000 (Regulated Activities) Order 2001(b), or(b) a person who is within paragraphs (a) to (e) or (h) to (j) of the definition of “electronicmoney issuer” in regulation 2(1) of the Electronic Money Regulations 2011(c). [UKSI.2014 No. 1506]6

UK Guidance AEIM 100740: A Depository Institution is an institution that accepts deposits in the ordinary course of a banking or similar business. HMRC will regard a person carrying out an activity in the UK that is a regulated activity for the purposes of the Financial Services and Markets Act 2000 by virtue of Article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (accepting deposits) as a Depository Institution. Entities within this definition will include entities regulated in the UK as a savings or commercial bank, a credit union, industrial and provident societies and building societies. In considering Article 5, HMRC will apply the relevant exclusions contained therein – for example, insurance brokers and solicitors would not be expected to fall within this definition. However in considering whether an entity is conducting banking or similar business, it will be the actual activities that the entity carries out that will be determinative. An entity is considered to engage in a banking or similar business if, in the ordinary course of its business it accepts deposits or other similar investments of funds and regularly engages in one or more of the following activities: a. Makes personal, mortgage, industrial or other loans or provides other extensions of credit; b. Purchases, sells, discounts or negotiates accounts receivable, instalment obligations, notes, drafts, cheques, bills of exchange, acceptances or other evidences of indebtedness; c. Issues letters of credit and negotiates drafts drawn thereunder; d. Provides trust or fiduciary services; e. Finances foreign exchange transactions; or f. Enters into, purchases, or disposes of finance leases or leased assets. Entities that issue payment cards that can be pre-loaded with funds to be spent at a later date, such as a pre-paid credit card or “e-money” may not be Depository Institutions provided certain conditions are met. Pre-paid credit card issuers may meet the conditions to be a Qualified Credit Card Issuer which will make them a Non-reporting Financial Institution or the payment card account may meet the conditions to be an Excluded Account. “E-money” providers that are governed by the provisions of the European Union Electronic Money Directive (2009/110/EC) (EMD) are not deposit takers for the purposes of the Banking Consolidation Directive (2006/48/EC). Recital 13 to the EMD specifically states that “The issuance of electronic money does not constitute a deposit-taking activity pursuant to Directive 2006/48/EC”, consequently such providers will not fall within the definition of Depository Institution that requires deposits to be accepted in the ordinary course of a banking or similar business. Entities that solely provide asset based finance services, such as a factoring or invoice discounting business, or that accept deposits from persons solely as collateral or security pursuant to a sale or lease of property, a loan secured by property or a similar financing arrangement, between such entity and the person making the deposit, will not be Depository Institutions. Entities that facilitate money transfers by instructing agents to transmit funds (but do not finance the transactions) will not be considered to be engaged in banking or similar business as this is not seen as accepting deposits.UK IGA: The term “Depository Institution” means any entity that accepts deposits in the ordinary course of a banking or similar business.

6 http://www.legislation.gov.uk/uksi/2014/1506/pdfs/uksi_20141506_en.pdf


http://www.legislation.gov.uk/uksi/2014/1506/pdfs/uksi_20141506_en.pdf


Direct Reporting NFFE (DR-NFFE)

See page (Error: Reference source not found) A direct reporting NFFE means a NFFE that elects to report information about its direct or indirect substantial U.S. owners to the IRS, registers with the IRS as a Direct Reporting NFFE and meets several other detailed requirements defined by the IRS. Please see §1.1472-1 (c) (3) for a complete list of the requirements of a Direct Reporting NFFE.

Documentary Evidence

CRS: The term “Documentary Evidence” includes any of the following:a) a certificate of residence issued by an authorised government body (for example, a government or agency thereof, or a municipality) of the Jurisdiction in which the payee claims to be a resident.

b) with respect to an individual, any valid identification issued by an authorised government body (for example, a government oragency thereof, or a municipality), that includes the individual’s name and is typically used for identification purposes.

c) with respect to an Entity, any official documentation issued by an authorised government body (for example, a government or agency thereof, or a municipality) that includes the name of the Entity and either the address of its principal office in the Jurisdiction in which it claims to be a resident or the Jurisdiction in which the Entity was incorporated or organised.

d) any audited financial statement, third-party credit report, bankruptcy filing, or securities regulator’s report.

FATCA: The term documentary evidence means documents, other than a withholding certificate or written statement, that a documents, other than a withholding certificate or written statement, that a withholding agent is permitted to rely upon to determine the chapter 4 status of a person in accordance with §1.1471-3(c) (5) . Person in accordance with §1.1471-3(c)(5). Requirements for documentary evidence [§1.1471-3(c)(5)]Documentary evidence with respect to a payee is only reliable if it contains sufficient information to support the payee’s claim of chapter 4 status. (5)(i) Foreign status [§1.1471-3(c)(5)(i)]Acceptable documentary evidence supporting a claim of foreign status includes the following types of documentation if the documentation contains a permanent residence address for the person named on the documentation (or indicates the country in which a person that is an individual is a resident or citizen or the country in which a person that is an entity has a permanent residence or is incorporated or organized, if the withholding agent has otherwise obtained a current permanent residence address for the person)-(i)(A) Certificate of residence [§1.1471-3(c)(5)(i)(A)]A certificate of residence issued by an appropriate tax official of the country in which the payee claims to be a resident that indicates that the payee has filed its most recent income tax return as a resident of that country;(i)(B) Individual government identification [§1.1471-3(c)(5)(i)(B)]With respect to an individual, any valid identification issued by an authorized government body (for example, a government or agency thereof, or a municipality), that is typically used for identification purposes;(i)(C) QI documentation [§1.1471-3(c)(5)(i)(C)]With respect to an account maintained in a Jurisdiction with anti-money laundering rules that have been approved by the IRS in connection with a QI agreement (as referenced in §1.1441-1(e)(5)(iii)), any of the documents other than a Form W-8 or W-9 referenced in the Jurisdiction’s attachment to the QI agreement for identifying individuals or entities;(i)(D) Entity government documentation [§1.1471-3(c)(5)(i)(D)]With respect to an entity, any official documentation issued by an authorized government body (for example, a government or agency thereof, or a municipality); and(i)(E) Third-party credit report [§1.1471-3(c)(5)(i)(E)]For a payment made with respect to an offshore obligation to an individual, a third-party credit report that is obtained pursuant to the conditions described in §1.1471-4(c)




(4)(ii).(5)(ii) Chapter 4 status [§1.1471-3(c)(5)(ii)]Acceptable documentary evidence supporting an entity’s claim of chapter 4 status includes(ii)(A) General documentary evidence [§1.1471-3(c)(5)(ii)(A)]With respect to an entity other than a participating FFI or registered deemed-compliant FFI, any organizational document (such as articles of incorporation or a trust agreement), financial statement, third-party credit report, letter from a government agency, or statement from a government website, agency, or registrar (such as an SEC report) to the extent permitted in paragraphs (d) and (e) of this section;(ii)(B) Pre-existing account documentary evidence [§1.1471-3(c)(5)(ii)(B)][Reserved]. For further guidance, see §1.1471-3T(c)(5)(ii)(B).With respect to a pre-existing obligation of an entity, any classification in the


http://www.law.cornell.edu/cfr/text/26/1.1471-3T#c_5


withholding agent’s records with respect to the payee that was determined based on documentation supplied by the payee (or other person receiving the payment) or a standardized industry coding system and that was recorded by the withholding agent consistent with its normal business practices for AML or another regulatory purpose (other than for tax purposes), to the extent permitted by paragraph (d) of this section and provided there is no U.S. indicia associated with the payee for which appropriate curing documentation has not been obtained as set forth in paragraph (e) of this section; and(ii)(C) Payee-specific documentary evidence [§1.1471-3(c)(5)(ii)(C)]A letter from an auditor or attorney with a location in the United States that is not related to the withholding agent or payee and is subject to the authority of a regulatory body that governs the auditor’s or attorney’s review of the chapter 4 status of the payee, any bankruptcy filing, corporate resolution, copy of a stock market index or


other document to the extent permitted in the specific payee documentation requirements in paragraph (d) and (e) of this section.


DocumentationFATCA: The term documentation means withholding certificates, written statements, documentary evidence, and other documents certificates, written statements, documentary evidence, and other documents that may be relevant in determining a person’s chapter 4 status, including any document containing a determination of the account holder’s citizenship or residency for tax or AML due diligence purposes or an account holder’s claim of citizenship or residency for tax or AML due diligence purposes.

Dormant AccountThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).FATCA: Definition of dormant account [§1.1471-4(d)(6)(ii)]A dormant account is an account (other than a cash value insurance contract or annuity contract) that is a dormant or inactive account under applicable laws or regulations or the normal operating procedures of the participating FFI that are



consistently applied for all accounts maintained by such institution in a particular Jurisdiction. If neither applicable laws or regulations nor the normal operating procedures of the participating FFI maintaining the account address dormant or inactive accounts, an account will be a dormant account if(ii)(A) The account holder has not initiated a transaction with regard to the account or any other account held by the account holder with the FFI in the past three years; and [§1.1471-4(d)(6)(ii)(A)](ii)(B) The account holder has not communicated with the FFI that maintains such account regarding the account or any other account held by the account holder with the FFI in the past six years. [§1.1471-4(d)(6)(ii)(B)]UK Guidance: AEIM: 101900: Dormant Accounts are defined for the purposes of the residence address test for pre-existing lower value individual accounts. A subset of Dormant Accounts is also included in the list of Excluded Accounts meaning that


accounts with less than an amount equivalent toUS$1,000 do not need to be subjected to any due diligence procedures until they are reactivated in some way. The definition there is narrower than the definition for the residence address test in that it only permits Dormant Accounts to be included where there has been no activity on the account for three years and no contact from the customer for six years.


Effective date of the FFI Agreement

FATCA: The term effective date of the FFI agreement with respect to a FFI or a branch of a FFI that is a participating FFI means the date on which the IRS issues a GIIN to the FFI or branch. For participating FFIs that receive a GIIN prior to June 30, 2014, the effective date of the FFI agreement is June 30, 2014.

Election to be Withheld Upon

FATCA: Requirement to withhold if a participating FFI or registered deemed-compliant FFI makes an election to be withheld upon [§1.1471-2(a) (2) (iii)]A person that otherwise would be a payee with respect to a payment but that makes an election to be withheld upon does not agree to accept primary withholding responsibility for the payment under chapter 3 or 4. Accordingly, such person cannot be treated as the payee and the withholding agent must determine whether it must withhold based on the chapter 4 status of the payee on whose behalf the person is receiving the payment. The election to be withheld upon is only available to the extent provided in paragraph (a)(2)(iii)(A) and (B) of this section. The election is not available



to an entity that is required to accept primary withholding responsibility for the payment, such as a WP or WT receiving a payment of U.S. source FDAP income, or an entity that already must be withheld upon because it may not accept primary withholding responsibility for the payment and, as such, already must pass up documentation with respect to the payee to the withholding agent, such as a participating FFI that is an NQI receiving a payment of U.S. source FDAP income.


Electronically Searchable Information

FATCA: The term electronically searchable information means information that a FFI maintains in its tax reporting files, customer master files, or similar files, and that is stored in the form of an electronic database against which standard queries in programming languages, such as Structured Query Language, may be used. Information, data, or files are not electronically searchable merely because they are stored in an image retrieval system (such as portable document format (.pdf) or scanned documents).

Employer Identification Number (EIN)

FATCA: A number used by the US IRS to identify a business entity. It is also known as a Federal Tax Identification Number.

EntityThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Entity” means a legal person or a legal arrangement, such as a corporation, partnership, trust, or foundation.FATCA: The term entity means any person other than an individual.

Entity account FATCA: The term entity account means an account held by one or more entities.

Entity Wholly Owned by Exempt Beneficial Owners

FATCA: • Is a FFI solely because it is an investment entity;• Each direct holder of an equity interest in the investment entity is an exempt beneficial owner described in §1.1471-6 or in an applicable Model 1 or Model 2 IGA;• Each direct holder of a debt interest in the investment entity is either a depository institution (with respect to a loan made to such entity) or an exempt beneficial owner described in §1.1471-6 or an applicable Model 1 or Model 2 IGA.• Has provided an owner reporting statement that contains the name, address, TIN (if any), chapter 4 status, and a description of the type of documentation provided to the withholding agent for every person that owns a debt interest constituting a financial account or direct equity interest in the entity; and• Has provided documentation establishing that every owner of the entity is an entity described in §1.1471-6(b), (c), (d), (e), (f) and/or (g) without regard to whether such owners are beneficial owners.

Equity InterestThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Equity Interest” means, in the case of a partnership that is a Financial Institution, either a capital or profits interest in the partnership. In the case of a trust that is a Financial Institution, an Equity Interest is considered to be held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust. A Reportable Person will be treated as being a beneficiary of a trust if such Reportable Person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.UK Guidance AEIM 100700: Equity and debt interests are financial accounts if they are interests in an investment entity. Where an entity is an investment entity solely because it acts on behalf of a customer by investing, managing or administering Financial Assets in the name of the customer, the debt and equity interest in the investment entity are not Financial Assets provided it renders only investment advice to, or manages portfolios for, the customer. An equity interest may vary depending on the nature of the investment entity. In the case of an investment entity that is a partnership an equity interest is either a capital or profits interest in the partnership. In the case of a trust an equity interest is any interest held by a person who is treated as a settlor or beneficiary of all or any part of the trust, or any other natural person exercising ultimate effective control over the trust. A Reportable Person will be treated as being a beneficiary of a trust if such a person has the right to receive a mandatory distribution from the trust. This distribution can be received either directly or indirectly, for example through a nominee; or Receives a discretionary payment from the trust. Again this receipt can be either directly or indirectly from the trust.

Escrow AccountAn escrow account is an account held by a third party on behalf of the beneficial owner of the money in the account. Such accounts are Excluded Accounts where they are established in connection with any of the following: a. A court order, judgement or other legal matter on which the third party is acting on behalf of the underlying beneficial owner for example, an account held by an individual or an entity appointed by the Court of Protection to look after the affairs of a vulnerable person. b. A sale, exchange,



or lease of real or personal property where it also meets the following conditions: o The account holds only the monies appropriate to secure an obligation of one of the parties directly related to the transaction, or a similar payment, or with a Financial Asset that is deposited in the account in connection with the transaction. o The account is established and used solely to secure the obligation of the parties to the transaction. o The assets of the account, including the income earned thereon, will be paid or otherwise distributed for the benefit of the parties when the transaction is completed. o The account is not a margin or similar account established in connection with a sale or exchange of a Financial Asset; and o The account is not associated with a credit card account. c. An obligation of a financial institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time. d. An obligation of a financial institution solely to facilitate the payment of taxes at a later time. Accounts


provided by a non-financial intermediary acting in that capacity (such as non-legal escrow type accounts) that meet the conditions above will also be Excluded Accounts. Periodic payment orders in connection with an escrow account are not considered to be reportable Annuity Contracts.


Excepted Inter-affiliate FFI

FATCA: The entity is a member of an expanded affiliated group; • Does not maintain financial accounts (other than accounts maintained for members of its expanded affiliated group); • Does not make withholdable payments to any person other than to members of its expanded affiliated group that are not limited FFIs or limited branches; • Does not hold an account (other than a depository account in the country in which the entity is operating to pay for expenses) with or receive payments from any withholding agent other than a member of its expanded affiliated group; and • Has not agreed to report under §1.1471-4(d)(2)(ii)(C) or otherwise act as an agent for chapter 4 purposes on behalf of any financial institution, including a member of its expanded affiliated group.

Excepted NFFEFATCA: A withholding agent is not required to withhold under section 1472 (a) and paragraph (b) of this section on a withholdable payment (or portion thereof) if the withholding agent can treat the payment as made to a payee that is an excepted NFFE. For purposes of this paragraph, the term excepted NFFE means a payee that the withholding agent may treat as a NFFE that is a QI, WP, or WT. Additionally, the term excepted NFFE means, with respect to the payment, a NFFE described in paragraphs (c)(1)(i) through (vii) of this section to the extent the withholding agent may treat the NFFE as the beneficial owner of the payment.(1)(i) Publicly traded corporation [§1.1472-1(c)(1)(i)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(i).A NFFE is described in this paragraph (c)(1)(i) if it is a corporation the stock of which is regularly traded on one or more established securities markets for the calendar year.(i)(A) Regularly traded [§1.1472-1(c)(1)(i)(A)]For purposes of this section, stock of a corporation is regularly traded on one or more established securities markets for a calendar year if-(1) One or more classes of stock of the corporation that, in the aggregate, represent more than 50 percent of the total combined voting power of all classes of stock of such corporation entitled to vote and of the total value of the stock of such corporation are listed on such market or markets during the prior calendar year; and [§1.1472-1(c)(1)(i)(A)(1)](2) With respect to each class relied on to meet the more-than-50-percent listing requirement of paragraph (c)(1)(i)(A)(1) of this section-[§1.1472-1(c)(1)(i)(A)(2)](i) Trades in each such class are effected, other than in de-minimis quantities, on such market or markets on at least 60 days during the prior calendar year; and [§1.1472-1(c)(1)(i)(A)(2)(i)](ii) The aggregate number of shares in each such class that are traded on such market or markets during the prior year are at least 10 percent of the average number of shares outstanding in that class during the prior calendar year. [§1.1472-1(c)(1)(i)(A)(2)(ii)](i)(B) Special rules regarding the regularly traded requirement [§1.1472-1(c)(1)(i)(B)](1) Year of initial public offering [§1.1472-1(c)(1)(i)(B)(1)]For the calendar year in which a corporation initiates a public offering of a class of stock for trading on one or more established securities markets, as defined in paragraph (c)(1)(i)(C) of this section, such class of stock meets the requirements of this paragraph (c)(1)(i) for such year if the stock is regularly traded in more than de-minimis quantities on 1/6 of the days remaining after the date of the offering in the quarter during which the offering occurs, and on at least 15 days during each remaining quarter of the calendar year. If a corporation initiates a public offering of a class of stock in the fourth quarter of the calendar year, such class of stock meets the requirements of this paragraph (c)(1)(i) in the calendar year of the offering if the stock is regularly traded on such established securities market, other than in de-minimis quantities, on the greater of 1/6 of the days remaining after the date of the offering in the quarter during which the offering occurs, or 5 days.(2) Classes of stock treated as meeting the regularly traded requirement [§1.1472-1(c)(1)(i)(B)(2)]A class of stock meets the trading requirements of this paragraph (c)(1)(i) for a calendar year if the stock is traded during such year on an established securities market located in the United States and is regularly quoted by dealers making a market in the stock. A dealer makes a market in a stock only if the dealer regularly and actively offers to, and in fact does, purchase the stock from, and sell the stock to, customers who are not related persons (as defined in section 954(d)(3)) with respect to the dealer





in the ordinary course of a trade or business.(3) Anti-abuse rule [§1.1472-1(c)(1)(i)(B)(3)]Any trade conducted with a principal purpose of meeting the regularly traded requirements of this paragraph (c)(1)(i) shall be disregarded. Further, a class of stock shall not be treated as regularly traded if there is a pattern of trades conducted to meet the requirements of this paragraph (c)(1)(i). Similarly, paragraph (c)(1)(i)(B)(1) of this section shall not apply to a public offering of stock that has as one of its principal purposes qualification of the class of stock as regularly traded under the reduced regularly traded requirements for the calendar year of an initial public offering. For purposes of applying the immediately preceding sentence, consideration will be given to whether the regularly traded requirements of this paragraph (c)(1)(i) are satisfied in the calendar year immediately following the initial public offering.(i)(C) Established securities market [§1.1472-1(c)(1)(i)(C)](1) In general [§1.1472-1(c)(1)(i)(C)(1)]For purposes of this paragraph (c)(1)(i), the term established securities market means, for any calendar year-(i) A foreign securities exchange that is officially recognized, sanctioned, or supervised by a governmental authority of the foreign country in which the market is located, and has an annual value of shares traded on the exchange (or a predecessor exchange) exceeding $1 billion during each of the three calendar years immediately preceding the calendar year in which the determination is being made; [§1.1472-1(c)(1)(i)(C)(1)(i)](ii) A national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 (15 USC 78f) with the Securities and Exchange Commission; [§1.1472-1(c)(1)(i)(C)(1)(ii)](iii) Any exchange designated under a Limitation on Benefits article of an income tax treaty with the United States that is in force; or [§1.1472-1(c)(1)(i)(C)(1)(iii)](iv) Any other exchange that the Secretary may designate in published guidance. [§1.1472-1(c)(1)(i)(C)(1)(iv)] (2) Foreign exchange with multiple tiers [§1.1472-1(c)(1)(i)(C)(2)]If an exchange in a foreign country has more than one tier or market level on which stock may be separately listed or traded, each such tier shall be treated as a separate exchange.(3) Computation of dollar value of stock traded [§1.1472-1(c)(1)(i)(C)(3)]For purposes of paragraph (c)(1)(i)(C)(1)(i) of this section, the value in U.S. dollars of shares traded during a calendar year shall be determined on the basis of the dollar value of such shares traded as reported by the World Federation of Exchanges located in Paris (or a successor institution), or, if not so reported, by converting into U.S. dollars the aggregate value in local currency of the shares traded using an exchange rate equal to the average of the spot rates on the last day of each month of the calendar year.(1)(ii) Certain affiliated entities related to a publicly traded corporation [§1.1472-1(c)(1)(ii)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(ii).A NFFE is described in this paragraph (c)(1)(ii) if it is a corporation that is a member of the same expanded affiliated group (as defined in §1.1471-5(i)) as a corporation described in paragraph (c)(1)(i) of this section (without regard to whether such corporation is a NFFE).(1)(iii) Certain territory entities [§1.1472-1(c)(1)(iii)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(iii).A NFFE is described in this paragraph (c)(1)(iii) if it is a territory entity that is directly or indirectly wholly owned by one or more bona fide residents of the U.S. territory under the laws of which the entity is organized. The term bona fide resident of a U.S. territory means an individual who qualifies as a bona fide resident under section 937(a) and §1.937-1.(1)(iv) Active NFFEs [§1.1472-1(c)(1)(iv)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(iv).A NFFE is described in this paragraph (c)(1)(iv) if it is an entity (an active NFFE) and less than 50 percent of its gross income for the preceding taxable year (i.e., calendar or fiscal) is passive income and less than 50 percent of the weighted average percentage of assets (tested quarterly) held by it are assets that produce or are held for the production of passive income, as determined after the application of paragraph


(c)(1)(iv)(B) of this section (passive assets).(iv)(A) Passive income [§1.1472-1(c)(1)(iv)(A)]Except as provided in paragraph (c)(1)(iv)(B) of this section, the term passive income means the portion of gross income that consists of-(1) Dividends, including substitute dividend amounts; [§1.1472-1(c)(1)(iv)(A)(1)](2) Interest; [§1.1472-1(c)(1)(iv)(A)(2)](3) Income equivalent to interest, including substitute interest and amounts received from or with respect to a pool of insurance contracts if the amounts received depend in whole or part upon the performance of the pool; [§1.1472-1(c)(1)(iv)(A)(3)](4) Rents and royalties, other than rents and royalties derived in the active conduct of a trade or business conducted, at least in part, by employees of the NFFE; [§1.1472-1(c)(1)(iv)(A)(4)] (5) Annuities; [§1.1472-1(c)(1)(iv)(A)(5)](6) The excess of gains over losses from the sale or exchange of property that gives rise to passive income described in paragraphs (c)(1)(iv)(A)(1) through (5) of this section; [§1.1472-1(c)(1)(iv)(A)(6)](7) The excess of gains over losses from transactions (including futures, forwards, and similar transactions) in any commodities, but not including-[§1.1472-1(c)(1)(iv)(A)(7)](i) Any commodity hedging transaction described in section 954(c)(5)(A), determined by treating the entity as a controlled foreign corporation; or [§1.1472-1(c)(1)(iv)(A)(7)(i)](ii) Active business gains or losses from the sale of commodities, but only if substantially all the foreign entity’s commodities are property described in paragraph (1), (2), or (8) of section 1221(a); [§1.1472-1(c)(1)(iv)(A)(7)(ii)](8) The excess of foreign currency gains over foreign currency losses (as defined in section 988(b)) attributable to any section 988 transaction; [§1.1472-1(c)(1)(iv)(A)(8)](9) Net income from notional principal contracts as defined in §1.446-3(c)(1); [§1.1472-1(c)(1)(iv)(A)(9)](10)Amounts received under cash value insurance contracts; or [§1.1472-1(c)(1)(iv)(A)(10)](11) Amounts earned by an insurance company in connection with its reserves for insurance and annuity contracts. [§1.1472-1(c)(1)(iv)(A)(11)](iv)(B) Exceptions from passive income treatment [§1.1472-1(c)(1)(iv)(B)]Notwithstanding paragraph (c)(1)(iv)(A) of this section, the term passive income does not include-(1) Any income from interest, dividends, rents, or royalties that is received or accrued from a related person to the extent such amount is properly allocable to income of such related person that is not passive income. For purposes of this paragraph (c)(1)(iv)(B)(1), the term “related person” has the meaning given such term by section 954(d)(3) determined by substituting “foreign entity” for “controlled foreign corporation” each place it appears in section 954(d)(3); or [§1.1472-1(c)(1)(iv)(B)(1)](2) In the case of a foreign entity that regularly acts as a dealer in property described in paragraph (c)(1)(iv)(A)(6) of this section (referring to the sale or exchange of property that gives rise to passive income), forward contracts, option contracts, or similar financial instruments (including notional principal contracts and all instruments referenced to commodities)[§1.1472-1(c)(1)(iv)(B)(2)](i) Any item of income or gain (other than any dividends or interest) from any transaction (including hedging transactions and transactions involving physical settlement) entered into in the ordinary course of such dealer’s trade or business as such a dealer; and [§1.1472-1(c)(1)(iv)(B)(2)(i)](ii) If such dealer is a dealer in securities (within the meaning of section 475(c)(2)), any income from any transaction entered into in the ordinary course of such trade or business as a dealer in securities. [§1.1472-1(c)(1)(iv)(B)(2)(ii)] (iv)(C) Methods of measuring assets [§1.1472-1(c)(1)(iv)(C)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(iv)(C).For purposes of this paragraph (c)(1)(iv), the value of a NFFE’s assets is determined based on the fair market value or book value of the assets that is reflected on the NFFE’s balance sheet (as determined under either a U.S. or an international financial accounting standard).(1)(v) Excepted non-financial entities [§1.1472-1(c)(1)(v)][Reserved]. For further guidance, see §1.1472-1T(c)(1)(v).A NFFE is described in this paragraph (c)(1)(v) if it is an entity described in §1.1471-5(e)(5) (referring to holding companies, treasury centres, and captive finance


companies that are members of a non-financial group; start-up companies; entities that are liquidating or emerging from bankruptcy; and non-profit organizations).(1)(vi) [Reserved]. For further guidance, see §1.1472-1T(c)(1)(vi). [§1.1472-1(c)(1)(vi)]A NFFE is described in this paragraph (c)(1)(vi) if it meets the requirements described in §1.1472-1(c)(3) to be treated as a direct reporting NFFE.(1)(vii) [Reserved]. For further guidance, see §1.1472-1T(c)(1)(vii). [§1.1472-1(c)(1)(vii)]A NFFE is described in this paragraph (c)(1)(vii) if it meets the requirements described in §1.1472-1(c)(5) to be treated as a sponsored direct reporting NFFE.


Excepted Non-Financial Entity in Liquidation or Bankruptcy

FATCA: • Has filed a plan of liquidation, filed a plan of reorganization, or filed for bankruptcy;• During the past 5 years has not been engaged in business as a financial institution or acted as a passive NFFE;• Is either liquidating or emerging from a reorganization or bankruptcy with the intent to continue or recommence operations as a non-financial entity; and• Has, or will provide, documentary evidence such as a bankruptcy filing or other public documentation that supports its claim if it remains in bankruptcy or liquidation for more than three years.

Excepted Non-Financial Start-Up Company

FATCA: • Was formed no earlier than 24 months ago;• Is not yet operating a business and has no prior operating history or is investing capital in assets with the intent to operate a new line of business other than that of a financial institution or passive NFFE;• Is investing capital into assets with the intent to operate a business other than that of a financial institution; and• Does not function (or hold itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes.

Excepted Territory NFFE

FATCA: • The entity is organized in a possession of the United States; • The entity:• Does not accept deposits in the ordinary course of a banking or similar business,• Does not hold, as a substantial portion of its business, financial assets for the account of others, or• Is not an insurance company (or the holding company of an insurance company) that issues or is obligated to make payments with respect to a financial account; and • All of the owners of the entity are bona fide residents of the possession in which the NFFE is organized or incorporated.

Excluded AccountCRS: The term “Excluded Account” means any of the following accounts:a) a retirement or pension account that satisfies the following requirements:i) the account is subject to regulation as a personal retirement account or is part of a registered or regulated retirement or pension plan for the provision of retirementor pension benefits (including disability or death benefits);ii) the account is tax-favoured (i.e. contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate);iii)information reporting is required to the tax authorities with respect to the accountiv) withdrawals are conditioned on reaching a specified retirement age, disability, or death, or penalties apply to withdrawals made before such specified events; andv) either (i) annual contributions are limited to USD 50,000 or less, or (ii) there is a maximum lifetime contribution limit to the account of USD 1,000,000 or less, in each case applying the rules set forth in paragraph C of Section VII for account aggregation and currency translation.A Financial Account that otherwise satisfies the requirement of subparagraph C(17)(a)(v) will not fail tosatisfy such requirement solely because such Financial Account may receive assets or funds transferred from one or more Financial Accounts that meet the requirements of subparagraph C(17)(a) or (b) or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7).b) an account that satisfies the following requirements:i) the account is subject to regulation as an investment vehicle for purposes other than for retirement and is regularly traded on an established securities market, or the account is subject to regulation as a savings vehicle for purposes other than for retirement;ii) the account is tax-favoured (i.e. contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate);iii) withdrawals are conditioned on meeting specific criteria related to the purpose of the investment or savings account (for example, the provision of educational or medical benefits), or penalties apply to withdrawals made before such criteria are met; and


iv) annual contributions are limited to USD 50,000 or less, applying the rules set forth in paragraph C of Section VII for account aggregation and currency translation.A Financial Account that otherwise satisfies the requirement of subparagraph C(17)(b)(iv) will not fail to satisfy such requirement solely because such Financial Account may receive assets or funds transferred from one or more Financial Accounts that meet the requirements of subparagraph C(17)(a) or (b) or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7).c) a life insurance contract with a coverage period that will endbefore the insured individual attains age 90, provided that the contract satisfies the following requirements:i) periodic premiums, which do not decrease over time, are payable at least annually during the period the contract is in existence or until the insured attains age 90, whichever is shorter;ii) the contract has no contract value that any person can access (by withdrawal, loan, or otherwise) without terminating the contract;Hi) the amount (other than a death benefit) payable upon cancellation or termination of the contract cannot exceed the aggregate premiums paid for the contract, less the sum of mortality, morbidity, and expense charges (whether or not actually imposed) for the period or periods of the contract’s existence and any amounts paid prior to the cancellation or termination of the contract; andiv) the contract is not held by a transferee for value.d) an account that is held solely by an estate if the documentation for such account includes a copy of the deceased’s will or death certificate.e) an account established in connection with any of the following:i) a court order or judgment.ii) a sale, exchange, or lease of real or personal property, provided that the account satisfies the following requirements:i) the account is funded solely with a down payment, earnest money, deposit in an amount appropriate to secure an obligation directly related to the transaction, or a similar payment, or is funded with a Financial Asset that is deposited in the account in connection with the sale, exchange, or lease of the property;ii) the account is established and used solely to secure the obligation of the purchaser to pay the purchase price for the property, the seller to pay any contingentliability, or the lessor or lessee to pay for any damages relating to the leased property as agreed under the lease;iii) the assets of the account, including the income earned thereon, will be paid or otherwise distributed for the benefit of the purchaser, seller, lessor, or lessee(including to satisfy such person’s obligation) whenthe property is sold, exchanged, or surrendered, or the lease terminates;iv) the account is not a margin or similar account established in connection with a sale or exchange of a Financial Asset; andv) the account is not associated with an account described in subparagraph C(17)(f).vi) an obligation of a Financial Institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time.iv) an obligation of a Financial Institution solely to facilitate the payment of taxes at a later time.f) a Depository Account that satisfies the following requirements:i) the account exists solely because a customer makes a payment in excess of a balance due with respect to a credit card or other revolving credit facility and the overpayment is not immediately returned to the customer; andii) beginning on or before [xx/xx/xxxx], the Financial Institution implements policies and procedures either to prevent a customer from making an overpayment in excess of USD 50,000, or to ensure that any customer overpayment in excess of USD 50,000 is refunded to the customer within 60 days, in each case applying the rules set forth in paragraph C of Section VII for currency translation. For this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns.g) any other account that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the accounts described in subparagraphs C(17)(a) through (f), and is defined in domestic law as an Excluded Account, provided


that the status of such account as an Excluded Account does not frustrate the purposes of the Common Reporting Standard.UK Guidance: AEIM 101720: All three regimes for automatic exchange of information allow for various categories of account to be excluded from being reportable financial accounts. These are excluded because they have been identified as carrying a low risk of use for tax evasion, generally because of the regulatory regimes under which they function. In the intergovernmental agreements between the UK and the USA, Crown Dependencies and Overseas Territories, the Excluded Accounts are listed in Annex II of each agreement. For reporting under the DAC, the only products that are specifically excluded by UK domestic legislation are those UK specific products specified in Schedule 2 of the International Tax Compliance Regulations 2015 (SI/2015/878). The agreements for automatic exchange provide for the list of Excluded Accounts to be updated, either to allow for other low risk products to be added or to remove products


that are no longer regarded as low risk.


Execution Only Broker

UK AEIM 100660: An execution only broker that simply executes trading instructions or receives and transmits such instructions to another executing broker will not hold Financial Assets for the account of others so will not be a Custodial Institution. However, such a broker may be a financial institution if it falls with the definition of an investment entity.

Exempt Beneficial Owner

W8 BEN Definition: An entity that is described in Treas. Reg. §1.1471-6 as: (1) a foreign government, a political subdivision of a foreign government, or a wholly owned agency or instrumentality of any one or more of the foregoing; (2) an international organization or a wholly owned agency or instrumentality thereof; (3) a foreign central bank of issue; (4) a government of a U.S. Territory; (5) a treaty-qualified retirement fund; (6) a broad participation retirement fund; (7) a narrow participation retirement fund; (8) a fund formed pursuant to a plan similar to a section 401(a) plan; (9) an investment vehicle used exclusively for retirement funds; (10) a pension fund of an



exempt beneficial owner; or (11) an entity wholly owned by exempt beneficial owners. The term “exempt beneficial owner” also includes any entity treated as an exempt beneficial owner pursuant to a Model 1 or 2 IGA. TD9610 Definition: Any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing [§1.1471-6(b)]Solely for purposes of this section and except as provided in paragraph (h) of this section, the term any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing means only the integral parts, controlled entities, and political subdivisions of a foreign sovereign.1-6(b)(1) Integral part [§1.1471-6(b)(1)]Solely for purposes of this paragraph (b), an integral part of a foreign sovereign is any person, body of persons, organization, agency, bureau, fund, instrumentality, or other


body, however designated, that constitutes a governing authority of a foreign country. The net earnings of the governing authority must be credited to its own account or to other accounts of the foreign sovereign, with no portion inuring to the benefit of any private person as defined in paragraph (b)(3) of this section. An integral part does not include any individual who is a sovereign, official, or administrator acting in a private or personal capacity. All the facts and circumstances will be taken into account in determining whether an individual is acting in a private or personal capacity.1-6(b)(2) Controlled entity [§1.1471-6(b)(2)]Solely for purposes of this paragraph (b), a controlled entity means an entity that is separate in form from a foreign sovereign or that otherwise constitutes a separate juridical entity, provided that-(2)(i) The entity is wholly owned and controlled by one or more foreign sovereigns directly or indirectly through one or more controlled entities; [§1.1471-6(b)(2)(i)]


(2)(ii) The entity’s net earnings are credited to its own account or to other accounts of one or more foreign sovereigns, with no portion of its income inuring to the benefit of any private person as defined in paragraph (b)(3) of this section; and [§1.1471-6(b)(2)(ii)](2)(iii) The entity’s assets vest in one or more foreign sovereigns upon dissolution. [§1.1471-6(b)(2)(iii)] 1-6(b)(3) Inurement to the benefit of private persons [§1.1471-6(b)(3)]Solely for purposes of this paragraph (b)-(3)(i) Income does not inure to the benefit of private persons if such persons (within the meaning of section 7701(a)(1)) are the intended beneficiaries of a governmental program carried on by a foreign sovereign, and the program activities constitute governmental functions under the regulations under section 892. [§1.1471-6(b)(3)(i)](3)(ii) Income is considered to inure to the benefit of private persons if such income


benefits-[§1.1471-6(b)(3)(ii)](ii)(A) Private persons through the use of a governmental entity as a conduit for personal investment; [§1.1471-6(b)(3)(ii)(A)](ii)(B) Private persons through the use of a governmental entity to conduct a commercial business, such as a commercial banking business, that provides financial services to private persons; or [§1.1471-6(b)(3)(ii)(B)](ii)(C) Private persons who divert such income from its intended use by exerting influence or control through means explicitly or implicitly approved of by the foreign sovereign. [§1.1471-6(b)(3)(ii)(C)]1-6(c) Any international organization or any wholly owned agency or instrumentality thereof [§1.1471-6(c)]Except as provided in paragraph (h) of this section, the term any international organization or any wholly owned agency or instrumentality thereof means any entity


described in section 7701(a)(18). The term also includes any intergovernmental or supranational organization-1-6(c)(1) That is comprised primarily of foreign governments; [§1.1471-6(c)(1)]1-6(c)(2) That is recognized as an intergovernmental or supranational organization under a foreign law similar to 22 U.S.C. 288-288f or that has in effect a headquarters agreement with a foreign government; and [§1.1471-6(c)(2)]1-6(c)(3) Whose income does not inure to the benefit of private persons under the principles of paragraph (b)(3)(ii) of this section, as applied to the intergovernmental or supranational organization in place of the government or governmental entity. [§1.1471-6(c)(3)]1-6(d) Foreign central bank of issue [§1.1471-6(d)]1-6(d)(1) In general [§1.1471-6(d)(1)][Reserved]. For further guidance, see §1.1471-6T(d)(1).


https://www.law.cornell.edu/cfr/text/26/1.1471-6T#d_1

Solely for purposes of this section and except as provided in paragraph (h) of this section, the term foreign central bank of issue means an institution that is by law or government sanction the principal authority, other than the government itself, issuing instruments intended to circulate as currency. Such an institution is generally the custodian of the banking reserves of the country under whose law it is organized.1-6(d)(2) Separate instrumentality [§1.1471-6(d)(2)]A foreign central bank of issue may include an instrumentality that is separate from a foreign government, whether or not owned in whole or in part by a foreign government. For example, foreign banks organized along the lines of, and performing functions similar to, the Federal Reserve System qualify as foreign central banks of issue for purposes of this section.1-6(d)(3) Bank for International Settlements [§1.1471-6(d)(3)]The Bank for International Settlements is a foreign central bank of issue for purposes


of this section. 1-6(d)(4) Income on certain collateral [§1.1471-6(d)(4)][Reserved]. For further guidance, see §1.1471-6T(d)(4).Solely for purposes of determining whether an entity is an exempt beneficial owner of a payment under this paragraph (d), a foreign central bank of issue is a beneficial owner with respect to income earned on cash and securities, including cash and securities held as collateral or securities held in connection with a securities lending transaction, held by the foreign central bank of issue in the ordinary course of its operations as a central bank of issue.1-6(e) Governments of U.S. territories [§1.1471-6(e)]Except as provided in paragraph (h) of this section, whether a person or entity constitutes a government of a U.S. territory for purposes of this section is determined by applying principles analogous to those set forth in paragraph (b) of this section.1-6(f) Certain retirement funds [§1.1471-6(f)]


A fund is described in this paragraph (f) if it is described in paragraphs (f)(1) through (6) of this section. In addition, if a withholding agent may treat a withholdable payment as made to a payee that is a retirement fund in accordance with §1.1471-3, then the withholding agent may also treat such retirement fund as the beneficial owner of the payment. See §1.1471-3(d)(9)(ii).1-6(f)(1) Treaty-qualified retirement fund [§1.1471-6(f)(1)]A fund established in a country with which the United States has an income tax treaty in force, provided that the fund is entitled to benefits under such treaty on income that it derives from sources within the United States (or would be entitled to such benefits if it derived any such income) as a resident of the other country that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or provide pension or retirement benefits;1-6(f)(2) Broad participation retirement fund [§1.1471-6(f)(2)]


A fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund-(2)(i) Does not have a single beneficiary with a right to more than five percent of the fund’s assets; [§1.1471-6(f)(2)(i)](2)(ii) Is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in the country in which the fund is established or operates; and [§1.1471-6(f)(2)(ii)](2)(iii) Satisfies one or more of the following requirements-[§1.1471-6(f)(2)(iii)](iii)(A) The fund is generally exempt from tax on investment income under the laws of the country in which it is established or operates due to its status as a retirement or pension plan; [§1.1471-6(f)(2)(iii)(A)]


(iii)(B) [Reserved]. For further guidance, see §1.1471-6T(f)(2)(iii)(B). [§1.1471-6(f)(2)(iii)(B)]The fund receives at least 50 percent of its total contributions (other than transfers of assets from accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), from retirement and pension accounts described in an applicable Model 1 or Model 2 IGA, or from other retirement funds described in this paragraph (f) or in an applicable Model 1 or Model 2 IGA) from the sponsoring employers; (iii)(C) [Reserved]. For further guidance, see §1.1471-6T(f)(2)(iii)(C). [§1.1471-6(f)(2)(iii)(C)]Distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), to retirement and pension accounts described in an applicable Model 1 or Model 2 IGA, or to other retirement funds described in this paragraph (f) or in an


applicable Model 1 or Model 2 IGA), or penalties apply to distributions or withdrawals made before such specified events;(iii)(D) Contributions (other than certain permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed $50,000 annually. [§1.1471-6(f)(2)(iii)(D)]1-6(f)(3) Narrow participation retirement funds [§1.1471-6(f)(3)]A fund established to provide retirement, disability, or death benefits to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for prior services rendered, provided that-(3)(i) The fund has fewer than 50 participants; [§1.1471-6(f)(3)(i)](3)(ii) [Reserved]. For further guidance, see §1.1471-6T(f)(3)(ii).[§1.1471-6(f)(3)(ii)]The fund is sponsored by one or more employers and each of these employers are not investment entities or passive NFFEs;


(3)(iii) [Reserved]. For further guidance, see §1.1471-6T(f)(3)(iii).[§1.1471-6(f)(3)(iii)]Employee and employer contributions to the fund (other than transfers of assets from other retirement plans described in paragraph (f)(1) of this section, from accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), or retirement and pension accounts described in an applicable Model 1 or Model 2 IGA) are limited by reference to earned income and compensation of the employee, respectively;(3)(iv) Participants that are not residents of the country in which the fund is established or operated are not entitled to more than 20 percent of the fund’s assets; and [§1.1471-6(f)(3)(iv)](3)(v) The fund is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in the country in which the fund is established or operates. [§1.1471-6(f)(3)(v)]


https://www.law.cornell.edu/cfr/text/26/1.1471-6T#f_3

1-6(f)(4) Fund formed pursuant to a plan similar to a section 401(a) plan [§1.1471-6(f)(4)]A fund formed pursuant to a pension plan that would meet the requirements of section 401(a), other than the requirement that the plan be funded by a trust created or organized in the United States.1-6(f)(5) Investment vehicles exclusively for retirement funds [§1.1471-6(f)(5)][Reserved]. For further guidance, see §1.1471-6T(f)(5).A fund established exclusively to earn income for the benefit of one or more retirement funds described in paragraphs (f)(1) through (5) of this section or in an applicable Model 1 or Model 2 IGA, accounts described in §1.1471-5(b)(2)(i)(A) (referring to retirement and pension accounts), or retirement and pension accounts described in an applicable Model 1 or Model 2 IGA.1-6(f)(6) [Reserved]. For further guidance, see §1.1471-6T(f)(5). Pension fund of an


exempt beneficial owner [§1.1471-6(f)(6)][Reserved]. For further guidance, see §1.1471-6T(f)(6). A fund established and sponsored by an exempt beneficial owner described in paragraph (b), (c), (d), or (e) of this section or an exempt beneficial owner (other than a fund that qualifies as an exempt beneficial owner) described in an applicable Model 1 or Model 2 IGA to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or former employees, but the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the exempt beneficial owner.1-6(f)(7) [Reserved]. For further guidance, see §1.1471-6T(f)(6). Example [§1.1471-6(f)(7)]FP, a foreign pension fund established in Country X, is generally exempt from income


taxation in Country X, and is operated principally to provide retirement benefits in such country. The U.S.-Country X income tax treaty is identical in all material respects to the 2006 U.S. model income tax convention. FP is a resident of Country X under Article 4(2)(a) and a qualified person under Article 22(2)(d) of the U.S.-Country X income tax treaty. Therefore, FP is a pension fund described in paragraph (f)(1) of this section.1-6(g) Entities wholly owned by exempt beneficial owners [§1.1471-6(g)][Reserved]. For further guidance, see §1.1471-6T(g).A person is described in this paragraph (g) if it is a FFI solely because it is an investment entity, each direct holder of an equity interest in the investment entity is an exempt beneficial owner described in paragraph (b), (c), (d), (e), (f), or (g) of this section or an exempt beneficial owner described in an applicable Model 1 or Model 2 IGA, and each direct holder of a debt interest in the investment entity is either a depository institution (with respect to a loan made to such entity), an exempt beneficial


owner described in paragraph (b), (c), (d), (e), (f), or (g) of this section, or an exempt beneficial owner described in an applicable Model 1 or Model 2 IGA.


Exempt Collective Investment Vehicle

CRS: The term “Exempt Collective Investment Vehicle” means anInvestment Entity that is regulated as a collective investmentvehicle, provided that all of the interests in the collectiveinvestment vehicle are held by or through individuals or Entitiesthat are not Reportable Persons, except a Passive NFE withControlling Persons who are Reportable Persons.An Investment Entity that is regulated as a collective investment vehicle does not fail to qualify under subparagraph B(9) as an Exempt Collective Investment Vehicle, solely because the collective investment vehicle has issued physical shares in bearer form, provided that:a) the collective investment vehicle has not issued, and does not issue, any physical shares in bearer form after [xx/xx/xxxx];b) the collective investment vehicle retires all such shares upon surrender;


c) the collective investment vehicle performs the due diligence procedures set forth in Sections II through VII and reports any information required to be reported with respect to any such shares when such shares are presented for redemption or other payment; andd) the collective investment vehicle has in place policies and procedures to ensure that such shares are redeemed or immobilised as soon as possible, and in any event prior to[xx/xx/xxxx].UK Statutory InstrumentIn this regulation—“collective investment scheme” means—(a) an investment trust within the meaning of the Corporation Tax Acts(a),(b) a venture capital trust within the meaning of Part 6 of ITA 2007(b), or(c) any arrangements that are a “collective investment scheme” within the meaning of Part 17 of the Financial Services and Markets Act 2000(c); [UKSI.2014 No. 1506]7




Exempt RecipientThe term exempt recipient means a person described in § 1.6049-4(c)(1)(ii) (for interest, dividends, and royalties), a person described in § 1.6045-2(b)(2)(i) (for broker proceeds), and a person described in § 1.6041-3(q) (for rents, amounts paid on notional principal contracts, and other fixed or determinable income).

Exempt Retirement Plans

Is a Broad Participation Retirement Fund or a Narrow Participation Retirement Fund or a Pension Fund of a Governmental Entity, International Organisation or Central BankThe term “Broad Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund: a) does not have a single beneficiary with a right to more than five per cent of the fund’s assets; b) is subject to government regulation and provides information reporting to the tax authorities; and c) satisfies at least one of the following requirements: i) the fund is


generally exempt from tax on investment income, or taxation of such income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan; ii) the fund receives at least 50% of its total contributions or from retirement and pension accounts from the sponsoring employers; iii) distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to other retirement funds or retirement and pension accounts, or penalties apply to distributions or withdrawals made before such specified events; or iv) contributions (other than certain permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed USD 50,000 annually, applying the rules set forth for account aggregation and currency translation.The term “Narrow Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits to beneficiaries that are current or former


employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that: a) the fund has fewer than 50 participants; b) the fund is sponsored by one or more employers that are not Investment Entities or Passive NFEs; c) the employee and employer contributions to the fund (other than transfers of assets from retirement and pension accounts are limited by reference to earned income and compensation of the employee, respectively; d) participants that are not residents of the Jurisdiction in which the fund is established are not entitled to more than 20% of the fund’s assets; and e) the fund is subject to government regulation and provides information reporting to the tax authorities.The term “Pension Fund of a Governmental Entity, International Organisation or Central Bank” means a fund established by a Governmental Entity, International Organisation or Central Bank to provide retirement, disability, or death benefits to


beneficiaries or participants that are current or former employees (or persons designated by such employees), or that are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the Governmental Entity, International Organisation or Central Bank.


Expanded Affiliated Group

(EAG)

FATCA: Expanded affiliated group defined [§1.1471-5(i)(2)]Except as otherwise provided in this paragraph (i), an expanded affiliated group is defined in accordance with the principles of section 1504(a) to mean one or more chains of members connected through ownership by a common parent entity if the common parent entity directly owns stock or other equity interests meeting the requirements of paragraph (i)(4) of this section in at least one of the other members (for purposes of this paragraph (i), the constructive ownership rules of section 318 do not apply). Generally, only a corporation shall be treated as the common parent entity of an expanded affiliated group, unless the taxpayer elects to follow the approach described in paragraph (i)(10).

Expanded Affiliated Group (EAG) or FFIs

FATCA: 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 totalling 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 FI of EAG if such entity is controlled (within the meaning of section 954(d)(3), without regard to whether such entity is foreign or domestic) by Member FIs of such EAG (including any entity treated as a Member FI of such EAG by reason of this sentence).

FATCA IDEach registering FI will be given a FATCA ID that will be used for purposes of establishing and accessing the FI’s online FATCA account. For all FIs other than Member FIs, the FATCA ID is a randomly generated six character alphanumeric string. These 6 characters are upper case letters excluding the letter O, or numbers, or a combination of both. For Member FIs, the FATCA ID will be comprised of 12 characters: the first 6 characters will be the Lead FI’s FATCA ID, followed by a period, and the last 5 characters will be alphanumeric and assigned sequentially to each Member FI. The FATCA ID is not the same as the GIIN.

FATFThe term FATF means the Financial Action Task Force, an inter-governmental body that develops and promotes international policies to combat money laundering and terrorist financing.

FATF-compliant Jurisdiction

The term FATF-compliant Jurisdiction means a Jurisdiction that — (i) Is not subject to a FATF call on its members and other Jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing risks emanating from the Jurisdiction; (i) Is not subject to a FATF call on its members and other Jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing risks emanating from the Jurisdiction; (ii) Is not a Jurisdiction with strategic AML/CFT (anti-money laundering and combating the financing of terrorism) deficiencies that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies; and (iii) Is not a Jurisdiction with strategic AML/CFT deficiencies that the FATF has identified as not making sufficient progress on its action plan agreed upon with the FATF.

FCPA Federal Common Policy Root CA

FFIFATCA: Definition of FFI [§1.1471-5(d) ]The term FFI means, with respect to any entity that is not resident in a country that has in effect a Model 1IGA or Model 2 IGA, any financial institution (as defined in paragraph (e) of this section) that is a foreignentity. With respect to any entity that is resident in a country that has in effect a Model 1 IGA or Model 2IGA, a FFI is any entity that is treated as a Financial Institution pursuant to such Model 1 IGA or Model 2IGA. A territory financial institution is not a FFI under this paragraph (d).

FFI AgreementInter Governmental Agreement Model 1 FFIs do not sign an Foreign Financial Institution AgreementFATCA: The term FFI agreement means an agreement that is described in §1.1471-


http://www.law.cornell.edu/cfr/text/26/1.1471-4#a


http://www.law.cornell.edu/cfr/text/26/1.1471-5_i_2

4(a) . a FFI agreement includes a Ql agreement, a withholding partnership agreement, and a withholding trust agreement that is entered into by a FFI (other than a FFI that is a registered deemed-compliant FFI, including a reporting Model 1 FFI) and that has an effective date or renewal date on or after December 31, 2013. The term FFI agreement also includes a Ql agreement that is entered into by a foreign branch of a U.S. financial institution (other than a branch that is a reporting Model 1 FFI) and that has an effective date or renewal date on or after December 31, 2013.

Financial AccountCRS: The term “Financial Account” means an account maintained by a Financial Institution, and includes a Depository Account, a Custodial Account and:a) in the case of an Investment Entity, any equity or debt interest in the Financial Institution. Notwithstanding the foregoing, the term “Financial Account” does not include any equity or debt interest in an Entity that is an Investment Entity solely because it (i) renders investment advice to, and acts on behalf of, or (ii) manages



portfolios for, and acts on behalf of, a customer for the purpose of investing, managing, or administering Financial Assets deposited in the name of the customer with a Financial Institution other than such Entity;b) in the case of a Financial Institution not described in subparagraph C(l)(a), any equity or debt interest in the Financial Institution, if the class of interests was established with a purpose of avoiding reporting in accordance with Section I; andc) any Cash Value Insurance Contract and any Annuity Contract issued or maintained by a Financial Institution, other than a noninvestment-linked, non-transferable immediate life annuity that is issued to an individual and monetises a pension or disability benefit provided under an account that is an Excluded Account.The term “Financial Account” does not include any account that is an Excluded Account.FATCA: Financial accounts [§1.1471-5(b) ]



1-5(b)(1) In general [§1.1471-5(b)(1)]Except as otherwise provided in this paragraph (b), the term financial account means-(1)(i) Depository account [§1.1471-5(b)(1)(i)]Any depository account (as defined in paragraph (b)(3)(i) of this section) maintained by a financial institution;(1)(ii) Custodial account [§1.1471-5(b)(1)(ii)]Any custodial account (as defined in paragraph (b)(3)(ii) of this section) maintained by a financial institution;(1)(iii) Equity or debt interest [§1.1471-5(b)(1)(iii)] Insurance and annuity contracts [§1.1471-5(b)(1)(iv)]UK Guidance AEIM 101500: A financial account is an account maintained by a financial institution. Only accounts that fall within any of the 5 categories of financial account defined by the various automatic exchange of information agreements need to


be reviewed. Where such an account is held by a Reportable Person it becomes a Reportable Account. The 5 categories of financial account that need to be reviewed are: Depository Accounts: The financial institution that is obligated to make payments with respect to the account (excluding an agent of the financial institution).Custodial Accounts: The financial institution that holds custody over the assets in the account. Equity and debt interests in investment entities: The issuer of the equity or debt interest maintained by the investment entity. Cash Value Insurance Contracts: The financial institution that issues or, if different, is obligated to make payments with respect to the contract.Annuity Contracts: The financial institution that issues or, if different, is obligated to make payments with respect to the contract. Certain financial accounts are seen to be low-risk of being used to evade tax and are specifically excluded from needing to be reviewed. Details of these Excluded Accounts are at.


Financial AssetCRS: The term “Financial Asset” includes a security (for example, a share of stock in a corporation; partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust; note, bond, debenture, or other evidence of indebtedness), partnership interest, commodity, swap (for example, interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps, and similar agreements), Insurance Contract or Annuity Contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap, Insurance Contract, or Annuity Contract. The term “Financial Asset” does not include a non-debt, direct interest in real property.UK Statutory Instrument: “financial assets” means—(a) assets capable of being the subject-matter of a transaction that is an “investment transaction” within the meaning of the Investment Transactions (Tax) Regulations 2014(d),(b) insurance or annuity contracts,(c) commodities, or(d) derivative contracts within the meaning of Part 7 of CTA 2009(e); [UKSI.2014 No. 1506]8

Financial Institution (FI) [also see Foreign Financial Institution]

CRS: The term “Financial Institution” means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.FATCA: An institution that is a depository institution, custodial institution, investment entity, or insurance company (or holding company of an insurance company) that issues cash value insurance or annuity contracts.UK IGA: The term “Financial Institution” means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.

Flow-through entity

FATCA: The term flow-through entity means a partnership, simple trust, or grantor trust, as determined under U.S. tax

Flow-through withholding certificate

FATCA: The term flow-through withholding certificate means a Form W-8 IMY 9 submitted by a foreign partnership, foreign simple trust, or foreign grantor trust.

Foreign Account Tax Compliance Act (FATCA)

Legislation enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act.

Foreign entity FATCA: The term foreign entity means any entity that is not a U.S. person and includes a territory entity.

Foreign government, government of a US possession, or foreign central bank of issue

FATCA: The entity is the beneficial owner of the payment and is not engaged in commercial financial activities of a type engaged in by an insurance company, custodial institution, or depository institution with respect to the payments, accounts, or obligations for which this form is submitted (except as permitted in §1.1471-6(h)(2)).

Foreign passthru payment

FATCA: Foreign passthru payment [§1.1471-5(h)(2)][Reserved]

Foreign payee FATCA: The term foreign payee means any payee other than a U.S. payee.

Foreign person FATCA: The term foreign person means any person other than a U.S. person and includes a Ql branch of a U.S. financial institution.

Form 8957 Form for Foreign Account Tax Compliance Act (FATCA) Registration (online version only, unless paper form is referenced); this online form is used by FIs to complete the FATCA Registration process.

FTP File Transfer Protocol

Global Intermediary Identification Number (GIIN)

The term GIIN or Global Intermediary Identification Number means the identification number that is assigned to a participating FFI or registered deemed-compliant FFI. The term GIIN or Global Intermediary Identification Number also includes the identification number assigned to a reporting Model 1 FFI for purposes of identifying such entity to withholding agents. All GIINs will appear on the IRS FFI list.



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Governmental Entity

CRS: The term “Governmental Entity” means the government of a Jurisdiction, any political subdivision of a Jurisdiction (which, for the avoidance of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of a Jurisdiction or of any one or more of the foregoing (each, a “Governmental Entity”). This category is comprised of the integral parts, controlled entities, and political subdivisions of a Jurisdiction.a) An “integral part” of a Jurisdiction means any person, organisation, agency, bureau, fund, instrumentality, or other body, however designated, that constitutes a governing authority of a Jurisdiction. The net earnings of the governing authority must be credited to its own account or to other accounts of the Jurisdiction, with no portion inuring to the benefit of any private person. An integral part does not include any individual who is a sovereign, official, or administrator acting in a private or personal capacity.b) A controlled entity means an Entity that is separate in form from the Jurisdiction or that otherwise constitutes a separate juridical entity, provided that:i) the Entity is wholly owned and controlled by one or more Governmental Entities directly or through one or more controlled entities;ii) the Entity’s net earnings are credited to its own account or to the accounts of one or more Governmental Entities, with no portion of its income inuring to the benefit of any private person; andiii) the Entity’s assets vest in one or more Governmental Entities upon dissolution.c) Income does not inure to the benefit of private persons if such persons are the intended beneficiaries of a governmental programme, and the programme activities are performed for the general public with respect to the common welfare or relate to the administration of some phase of government. Notwithstanding the foregoing, however, income is considered to inure to the benefit of private persons if the income is derived from the use of a governmental entity to conduct a commercial business, such as a commercial banking business, that provides financial services to private persons.

Examples: Governmental EntitiesThe Swiss Federal Government, cantons, and communes and wholly owned instrumentalities and agencies thereof.

The Federal Republic of Germany, its States (Lander), or any one of their political subdivisions or local authorities.

Grandfathered obligation

FATCA: Grandfathered obligations [§1.1471-2(b) ]1-2(b)(1) Grandfathered treatment of outstanding obligations [§1.1471-2(b)(1)]Notwithstanding §1.1473-1(a), a withholdable payment does not include any payment made under a grandfathered obligation described in paragraph (b)(2)(i)(A) of this section, or any gross proceeds from the disposition of such an obligation. Notwithstanding §1.1471-5(h), a foreign passthru payment does not include any payment made under a grandfathered obligation described in paragraph (b)(2)(i)(A) or (B) of this section, or any gross proceeds from the disposition of such an obligation. A premium paid with regard to an insurance contract or annuity contract that is a grandfathered obligation is treated as a payment made under a grandfathered obligation.1-2(b)(2) Definitions [§1.1471-2(b)(2)]The following definitions apply solely for purposes of this paragraph (b).(2)(i) Grandfathered obligation [§1.1471-2(b)(2)(i)](i)(A) The term grandfathered obligation means[§1.1471-2(b)(2)(i)(A)](1) [Reserved]. For further guidance, see §1.1471-2T(b)(2)(i)(A)(1). [§1.1471-2(b)(2)(i)(A)(1)]Any obligation outstanding on July 1, 2014;(2) Any obligation that gives rise to a withholdable payment solely because the obligation is treated as giving rise to a dividend equivalent pursuant to section 871(m) 10 and the regulations thereunder, provided that the obligation is executed on or before the date that is six months after the date on which obligations of its type are first treated as giving rise to dividend equivalents; and [§1.1471-2(b)(2)(i)(A)(2)](3) Any agreement requiring a secured party to make a payment with respect to, or to repay, collateral posted to secure a grandfathered obligation. If collateral (or a pool of

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collateral) secures both grandfathered obligations and obligations that are not grandfathered, the collateral posted to secure the grandfathered obligations must be determined by allocating (pro rata by value) the collateral (or each item comprising the pool of collateral) to all outstanding obligations secured by the collateral (or pool of collateral). [§1.1471-2(b)(2)(i)(A)(3)](i)(B) Solely for purposes of a foreign passthru payment, the term grandfathered obligation also includes any obligation that is executed on or before the date that is six months after the date on which final regulations defining the term foreign passthru payment are filed with the Federal Register. [§1.1471-2(b)(2)(i)(B)](2)(ii) Obligation [§1.1471-2(b)(2)(ii)](ii)(A) Except as otherwise provided in paragraph (b)(2)(ii)(B) of this section, the term obligation means any legally binding agreement or instrument. An obligation for purposes of this paragraph (b)(2)(i) includes, for example[§1.1471-2(b)(2)(ii)(A)](1) A debt instrument (for example, a bond, guaranteed investment certificate, or term deposit); [§1.1471-2(b)(2)(ii)(A)(1)](2) An agreement to extend credit for a fixed term (for example, a line of credit or a


revolving credit facility), provided that the agreement as of its issue date fixes the material terms (including a stated maturity date) under which the credit will be provided; [§1.1471-2(b)(2)(ii)(A)(2)](3) A derivatives transaction entered into between counterparties under an ISDA Master Agreement that is evidenced by a confirmation; [§1.1471-2(b)(2)(ii)(A)(3)](4) [Reserved]. For further guidance, see §1.1471-2T(b)(2)(ii)(A)(4). [§1.1471-2(b)(2)(ii)(A)(4)]A life insurance contract under which the entire contract value is payable no later than upon the death of the individual(s) insured under the contract but, in the case of a life insurance contract that contains a provision that permits the substitution of a new individual as the insured under the contract, only until a substitution occurs; and(5) An immediate annuity contract payable for a period certain or for the life of the annuitant. [§1.1471-2(b)(2)(ii)(A)(5)](ii)(B) An obligation for purposes of this paragraph (b)(2)(ii) does not include any legal agreement or instrument that[§1.1471-2(b)(2)(ii)(B)](1) Is treated as equity for U.S. tax purposes; [§1.1471-2(b)(2)(ii)(B)(1)](2) [Reserved]. For further guidance, see §1.1471-2T(b)(2)(ii)(B)(2). [§1.1471-2(b)(2)(ii)(B)(2)]Lacks a stated expiration or term (for example, a savings deposit or demand deposit, a deferred annuity contract, or an annuity contract that permits a substitution of a new individual as the annuitant under the contract);(3) Is a brokerage agreement, custodial agreement, investment linked insurance contract, investment linked annuity contract, or similar agreement to hold financial assets for the account of others and to make and receive payments of income and other amounts with respect to such assets; or [§1.1471-2(b)(2)(ii)(B)(3)](4) Is a master agreement that merely sets forth standard terms and conditions that are intended to apply to a series of transactions between parties but that does not set forth all of the specific terms necessary to conclude a particular transaction. [§1.1471-2(b)(2)(ii)(B)(4)](2)(iii) Date outstanding [§1.1471-2(b)(2)(iii)]Except as provided in the following sentence, an obligation that constitutes indebtedness for U.S. tax purposes is outstanding on the date provided in paragraph (b)(2)(i) if it has an issue date before such date. In all other cases, including an agreement described in paragraph (b)(2)(ii)(A)(2) of this section, an obligation is outstanding on the date provided in paragraph (b)(2)(i) if a legally binding agreement establishing the obligation was executed between the parties to the agreement before such date. Any material modification of an outstanding obligation will result in the obligation being treated as newly issued or executed as of the effective date of such modification.(2)(iv) Material modification [§1.1471-2(b)(2)(iv)][Reserved]. For further guidance, see §1.1471-2T(b)(2)(iv).In the case of an obligation that constitutes indebtedness for U.S. tax purposes, a material modification is any significant modification of the debt instrument as defined in §1.1001-3(e). For life insurance contracts, a material modification includes any substitution of the insured under the contract. In all other cases, whether a modification of an obligation is material is determined based on the facts and circumstances.1-2(b)(3) Application to flow-through entities [§1.1471-2(b)(3)](3)(i) Partnerships [§1.1471-2(b)(3)(i)]A payment made under a grandfathered obligation includes a payment made to a partnership with respect to such obligation and a payment made with respect to a partnership's disposition of such obligation. A payment made under a grandfathered obligation also includes the income from such obligation that is includible in the gross income of a partner with respect to a capital or profits interest in the partnership and the gross proceeds allocated to a partner from the disposition of such obligation as determined under §1.1473-1(a)(5)(vii).(3)(ii) Simple trusts [§1.1471-2(b)(3)(ii)]A payment made under a grandfathered obligation includes a payment made to a simple trust with respect to such obligation, including a payment made with respect to a simple trust's disposition of such obligation. A payment made under a grandfathered obligation also includes income from such obligation that is includible in the income of a beneficiary and further includes a beneficiary's share of the gross proceeds from a



disposition of such obligation as determined under §1.1473-1(a)(5)(vii).(3)(iii) Grantor trusts [§1.1471-2(b)(3)(iii)]A payment made under a grandfathered obligation includes a payment made to a grantor trust with respect to such obligation, including a payment made with respect to the trust's disposition of such obligation. A payment made under a grandfathered obligation also includes income from such obligation that is includible in the gross income of a person that is treated as an owner of the trust and the gross proceeds from the disposition of such obligation to the extent such owner is treated as owning the portion of the trust that consists of the obligation.1-2(b)(4) Determination by withholding agent of grandfathered treatment [§1.1471-2(b)(4)](4)(i) In general [§1.1471-2(b)(4)(i)]A withholding agent other than the issuer of the obligation (or agent of the issuer) may, absent actual knowledge, rely on a written statement by the issuer of the obligation to determine if such obligation meets the requirements for grandfathered treatment provided under this paragraph (b).(4)(ii) Determination of material modification [§1.1471-2(b)(4)(ii)][Reserved]. For further guidance, see §1.1471-2T(b)(4)(ii).For purposes of paragraph (b)(2)(iv) of this section (defining material modification), a withholding agent, other than the issuer of the obligation (or an agent of the issuer), is required to treat a modification of the obligation as material only if the withholding agent has actual knowledge thereof, such as in the event the withholding agent receives a disclosure indicating that there has been or will be a material modification to such obligation. The issuer of the obligation (or an agent of the issuer) that is a withholding agent is required to treat a modification of the obligation as material if the withholding agent knows or has reason to know that a material modification has occurred with respect to the obligation.(4)(iii) Record retention [§1.1471-2(b)(4)(iii)]A withholding agent that relies on a document provided by the issuer of an obligation as described in paragraph (b)(4)(i) or (ii) of this section must retain such document in its records for the applicable period of limitations on assessment and collection with respect to amounts paid under the obligation or from disposition of the obligation.

Grantor trustFATCA: A grantor trust is a trust with respect to which one or more persons are treated as owners of all or a portion of the trust under sections 67111 through 67912. If only a portion of the trust is treated as owned by a person, that portion is a grantor trust with respect to that person.

Gross proceedsFATCA: Gross Proceeds as amended by IRS notice 2015-66 page 11:[A]mend the chapter 4 regulations under section 1473 to extend the start date of gross proceeds withholding by providing that the definition of the term withholdable payment means any payment of U.S. source FDAP income, and for sales or other dispositions occurring after December 31, 2018, any gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends that are U.S. source FDAP income.Gross Proceeds defined (before IRS notice 2015-66) [§1.1473-1(a)(3)](3)(i) Sale or other disposition [§1.1473-1(a)(3)(i)](i)(A) In general [§1.1473-1(a)(3)(i)(A)]Except as otherwise provided in this paragraph (a)(3)(i), the term sale or other disposition means any sale, exchange, or disposition of property described in paragraph (a)(3)(ii) of this section that requires recognition of gain or loss under section 1001(c), determined without regard to whether the owner of such property is subject to U.S. federal income tax with respect to such sale, exchange, or disposition. The term sale or other disposition includes (but is not limited to) sales of securities; redemptions of stock; retirements and redemptions of indebtedness; entering into short sales; and a closing transaction under a forward contract, option, or other instrument that is otherwise a sale. Such term further includes a distribution from a corporation to the extent the distribution is a return of capital or a capital gain to the beneficial owner of the payment. Such term does not include grants or purchases of options, exercises

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of call options for physical delivery, transfers of securities for which gain or loss is excluded from recognition under section 1058, or mere executions of contracts that require delivery of personal property or an interest therein. For purposes of this section only, a constructive sale under section 1259 or a mark to fair market value under section 475 or 1296 is not a sale or disposition.(i)(B) Special rule for sales effected by brokers [§1.1473-1(a)(3)(i)(B)]In the case of a sale effected by a broker (with the term effect defined in §1.6045-1(a)(10)), a sale means a sale as defined in §1.6045-1(a)(9) 13 with respect to property described in paragraph (a)(3)(ii) of this section.(i)(C) Special rule for gross proceeds from sales settled by a clearing organization [§1.1473-1(a)(3)(i)(C)]In the case of a clearing organization that settles sales and purchases of securities between members of such organization on a net basis, the gross proceeds from sales or dispositions are limited to the net amount paid or credited to a member’s account that is associated with sales or other dispositions of property described in paragraph (a)(3)(ii) of this section by such member as of the time that such transactions are settled under the settlement procedures of such organization.(3)(ii) Property of a type that can produce interest or dividend payments that would be U.S. source FDAP income [§1.1473-1(a)(3)(ii)](ii)(A) In general [§1.1473-1(a)(3)(ii)(A)]Property is of a type that can produce interest or dividends payments that would be U.S. source FDAP income if the property is of a type that ordinarily gives rise to the payment of interest or dividends that would constitute U.S. source FDAP income, regardless of whether any such payment is made during the period such property is held by the person selling or disposing of such property. Thus, for example, stock issued by a domestic corporation is property of a type that can produce dividends from sources within the United States if a dividend from such corporation would be from sources within the United States, regardless of whether the stock pays dividends at regular intervals and regardless of whether the issuer has any plans to pay dividends or has ever paid a dividend with respect to the stock.(ii)(B) Contracts producing dividend equivalent payments [§1.1473-1(a)(3)(ii)(B)]In the case of any contract that results in the payment of a dividend equivalent as defined in section 871(m) 14 and the regulations thereunder (including as part of a termination payment), such contract shall be treated as property that is described in paragraph (a)(3)(ii)(A) of this section, without regard to whether the taxpayer is a foreign person subject to U.S. federal income tax with respect to such transaction. To the extent that the proceeds from a termination payment include the payment of a dividend equivalent, the gross amount of such proceeds will not include the amount of such dividend equivalent.(ii)(C) Regulated investment company distributions [§1.1473-1(a)(3)(ii)(C)]The amount of a distribution that is designated as a capital gain dividend under section 852(b)(3)(C) 15 or 871(k)(2) 16 is a payment of gross proceeds to the extent attributable to property described in paragraph (a)(3)(ii)(A) of this section.(3)(iii) Payment of gross proceeds [§1.1473-1(a)(3)(iii)](iii)(A) When gross proceeds are paid [§1.1473-1(a)(3)(iii)(A)]With respect to a sale that is effected by a broker that results in a payment of gross proceeds as defined in this paragraph (a)(3), the date the gross proceeds are considered paid is the date that the proceeds of such sale are credited to the account of or otherwise made available to the person entitled to the payment.(iii)(B) Amount of gross proceeds [§1.1473-1(a)(3)(iii)(B)]Except as otherwise provided in this paragraph (a)(3)-(1) The amount of gross proceeds from a sale or other disposition means the total amount realized as a result of a sale or other disposition of property described in paragraph (a)(3)(ii) under section 1001(b); [§1.1473-1(a)(3)(iii)(B)(1)](2) In the case of a sale effected by a broker, the amount of gross proceeds from a sale or other disposition means the total amount paid or credited to the account of the

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person entitled to the payment increased by any amount not so paid by reason of the repayment of margin loans. The broker may (but is not required to) take commissions with respect to the sale into account in determining the amount of gross proceeds; [§1.1473-1(a)(3)(iii)(B)(2)](3) In the case of a corporate distribution, the amount treated as gross proceeds excludes the amount described in paragraph (a)(2)(vii)(A) of this section that is treated as U.S source FDAP income; [§1.1473-1(a)(3)(iii)(B)(3)](4) [Reserved]. For further guidance, see §1.1473-1T(a)(3)(iii)(B)(4). [§1.1473-1(a)(3)(iii)(B)(4)]In the case of a sale of an obligation described in paragraph (a)(2)(vi), gross proceeds includes any interest accrued between interest payment dates other than an amount described in paragraph (a)(2)(vi) of this section that is treated as U.S. source FDAP income and (5) In the case of a sale, retirement, or redemption of a debt obligation, gross proceeds excludes the amount of original issue discount treated as U.S. source FDAP income under paragraph (a)(2)(iii) of this section. [§1.1473-1(a)(3)(iii)(B)(5)]


Group annuity contract

FATCA: The term group annuity contract means an annuity contract under which the obligees are individuals who are affiliated through an employer, trade association, labor union, or other association or group.

Group insurance contract

FATCA: The term group insurance contract means an insurance contract that— (i) Provides coverage on individuals who are affiliated through an employer, trade association, labor union, or other association or group; and (i) Provides coverage on individuals who are affiliated through an employer, trade association, labor union, or other association or group; and (ii) Charges a premium for each member of the group (or member of a class within the group) that is determined without regard to the individual health characteristics other than age, gender, and smoking habits of the member (or class of members) of the group.

HCTAHost Country Tax Authority. (For example in the UK this would be HMRC.)

High Value Account

The term “High Value Account” means a Pre-existing Individual Account with an aggregate balance or value that exceedsUSD 1,000,000 as of 31 December [xxxx] or 31 December of any subsequent year.

Holloway Contract

A ‘Holloway’ contract is a with-profits permanent health insurance contract where the profits element is designed to provide an annuity on retirement. Such contracts issued by a friendly society within the meaning of the Friendly Societies Act 1992 (c. 40) will not be Reportable Accounts where, as well as providing [permanent health ] benefits, the additional investment benefits: (a) Are derived from surpluses accrued by the [friendly society ] and apportioned to [policyholders ]; and (b) Are payable to [policyholders] on retirement, death, or as otherwise specified by contractual provisions or individual society rules for example, disability of the policyholder.

HTTPS Hypertext Transfer Protocol SecureIDES International Data Exchange Service (See Appendix 11, Page Error: Reference source

not found)Intergovernmental Agreement (IGA)

An agreement or arrangement between the U.S. or the Treasury Department and a foreign government or one or more agencies to implement FATCA.

Immediate annuity

The term immediate annuity means an annuity (i) Is purchased with a single premium or annuity consideration; and (ii) No later than one year from the purchase date of the contract commences to pay annually or more frequently substantially equal periodic payments.

Indicia(See Appendix 2 & 3.)CRS:a) identification of the Account Holder as a resident of a Reportable Jurisdiction;b) current mailing or residence address (including a post office box) in a Reportable Jurisdiction;c) one or more telephone numbers in a Reportable Jurisdiction and no telephone number in the Jurisdiction of the Reporting Financial Institution;d) standing instructions (other than with respect to a Depository Account) to transfer funds to an account maintained in a Reportable Jurisdiction;e) currently effective power of attorney or signatory authority granted to a person with an address in a Reportable Jurisdiction; orf) a “hold mail” instruction or “in-care-of” address in a Reportable Jurisdiction if the Reporting Financial Institutiondoes not have any other address on file for the Account Holder.FATCA:The term U.S. indicia has the meaning set forth in §1.1471-4(c) (5) (iv)(B) when applied to an individual and as set forth in §1.1471-3(e)(4)(v)(A) when applied to an entity. U.S. indiciaIndividuals [§1.1471-4(c)(5)(iv)(B)(1)]A participating FFI must review an account holder’s account information to the extent required under paragraphs (c)(5)(iv)(C) and (D) of this section for any of the following U.S. indicia:(i) Designation of the account holder as a U.S. citizen or resident; [§1.1471-4(c)(5)(iv)(B)(1)(i)](ii) A U.S. place of birth; [§1.1471-4(c)(5)(iv)(B)(1)(ii)](iii) A current U.S. residence address or U.S. mailing address (including a U.S. post office box); [§1.1471-4(c)(5)(iv)(B)(1)(iii)]



(iv) A current U.S. telephone number (regardless of whether such number is the only telephone number associated with the account holder); [§1.1471-4(c)(5)(iv)(B)(1)(iv)](v) Standing instructions to pay amounts from the account to an account maintained in the United States; [§1.1471-4(c)(5)(iv)(B)(1)(v)](vi) A current power of attorney or signatory authority granted to a person with a U.S. address; or [§1.1471-4(c)(5)(iv)(B)(1)(vi)](vii) An “in-care-of” address or a “hold mail” address that is the sole address the FFI has identified for the account holder. [§1.1471-4(c)(5)(iv)(B)(1)(vii)]U.S. indicia for entities [§1.1471-3(e)(4)(v)(A)]The term U.S. indicia when used with respect to an entity includes, forpurposes of this paragraph (e)(4)(v) any of the following-(1) Classification of an account holder as a U.S. resident in thewithholding agent’s customer files; [§1.1471-3(e)(4)(v)(A)(1)](2) A current U.S. residence address or U.S. mailing address; [§1.1471-3(e)(4)(v)(A)(2)](3) With respect to an offshore obligation, standing instructions to pay amounts to a U.S. address or an account maintained in the United States; [§1.1471-3(e)(4)(v)(A)(3)](4) A current telephone number for the entity in the United States but no telephone number for the entity outside of the United States; [§1.1471-3(e)(4)(v)(A)(4)](5) A current telephone number for the entity in the United States in addition to a telephone number for the entity outside of the United States; [§1.1471-3(e)(4)(v)(A)(5)](6) A power of attorney or signatory authority granted to a person with a U.S. address; and [§1.1471-3(e)(4)(v)(A)(6)](7) An “in-care-of” address or “hold mail” address that is the sole address provided for the entity. [§1.1471-3(e)(4)(v)(A)(7)]



Individual account

FATCA: The term individual account means an account held by one or more individuals.

Insurance company

The term insurance company means an entity or arrangement — (i) That is regulated as an insurance business under the laws, regulations, or practices of any Jurisdiction in which the company does business; (ii) The gross income of which (for example, gross premiums and gross investment income) arising from insurance, reinsurance, and annuity contracts for the immediately preceding calendar year exceeds 50 percent of total gross income for such year; or (iii) The aggregate value of the assets of which associated with insurance, reinsurance, and annuity contracts at any time during the immediately preceding calendar year exceeds 50 percent of total assets at any time during such year.

Insurance contract

CRS: The term “Insurance Contract” means a contract (other than an Annuity Contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk.FATCA: The term insurance contract means a contract (other than an annuity contract) under which the issuer in exchange for consideration agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk.

IntermediaryFATCA: An intermediary means, with respect to a payment that it receives, a person that, for that payment, acts as a custodian, broker, nominee, or otherwise as an agent for another person, regardless of whether such other person is the beneficial owner of the amount paid, a flow-through entity, or another intermediary.

Intermediary withholding certificate

FATCA: The term intermediary withholding certificate means a Form W-8 IMY 17 submitted by an intermediary

International Organization

CRS: The term “International Organisation” means any international organisation or wholly owned agency or instrumentality thereof. This category includes any intergovernmental organisation (including a supranational organisation) (1) that is comprised primarily of governments; (2) that has in effect a headquarters or substantially similar agreement with the Jurisdiction; and (3) the income of which does not inure to the benefit of private persons.FATCA: • Is comprised primarily of foreign governments;• Is recognized as an intergovernmental or supranational organization under a foreign law similar to the International Organizations Immunities Act;• The benefit of the entity’s income does not inure to any private person;• Is the beneficial owner of the payment and is not engaged in commercial financial activities of a type engaged in by an insurance company, custodial institution, or depository institution with respect to the payments, accounts, or obligations for which this form is submitted (except as permitted in §1.1471-6(h)(2)).

Examples: International OrganizationsUnited NationsInternational Monetary FundOrganization for Economic Cooperation and Development (OECD)World Health OrganizationInternational Committee of the Red Cross

Investment EntityThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Investment Entity” means any Entity:a) that primarily conducts as a business one or more of the following activities or operations for or on behalf of a customer:i) trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;ii) individual and collective portfolio management; oriii) otherwise investing, administering, or managing Financial Assets or money on behalf of other persons; or

17 http://www.irs.gov/pub/irs-pdf/fw8imy.pdf



http://www.irs.gov/pub/irs-pdf/fw8imy.pdf

b) the gross income of which is primarily attributable to investing, reinvesting, or trading in Financial Assets, if the Entity is managed by another Entity that is a Depository Institution, a Custodial Institution, a Specified Insurance Company, or an Investment Entity described in subparagraph A(6)(a).An Entity is treated as primarily conducting as a business one or more of the activities described in subparagraph A(6)(a), or an Entity’s gross income is primarily attributable to investing, reinvesting, or trading in Financial Assets for purposes of subparagraph A(6)(b), if the Entity’s gross income attributable to the relevant activities equals or exceeds 50% of the Entity’s gross income during the shorter of: (i) the three-year period ending on 31 December of the year preceding the year in which the determination is made; or (ii) the period during which the Entity has been in existence. The term “Investment Entity” does not include an Entity that is an Active NFE because it meets any of the criteria in subparagraphs D(9)(d) through (g).This paragraph shall be interpreted in a manner consistent with similar language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations.FATCA: The term investment entity means any entity that is described in paragraph (e)(4)(i)(A), (B), or (C) of this section.(i)(A) The entity primarily conducts as a business one or more of the following activities or operations for or on behalf of a customer[§1.1471-5(e) (4) (i)(A)](1) Trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); foreign currency; foreign exchange, interest rate, and index instruments; transferable securities; or commodity futures; [§1.1471-5(e)(4)(i)(A)(1)](2) Individual or collective portfolio management; or [§1.1471-5(e)(4)(i)(A)(2)](3) Otherwise investing, administering, or managing funds, money, or financial assets on behalf of other persons. [§1.1471-5(e)(4)(i)(A)(3)](i)(B) The entity’s gross income is primarily attributable to investing, reinvesting, or trading in financial assets (as defined in paragraph (e)(4)(ii) of this section) and the entity is managed by another entity that is described in paragraph (e)(1)(i), (ii), (iv), or (e)(4)(i)(A) of this section. For purposes of this paragraph (e)(4)(i)(B), an entity is managed by another entity if the managing entity performs, either directly or through another third-party service provider, any of the activities described in paragraph (e)(4)(i)(A) of this section on behalf of the managed entity. [§1.1471-5(e)(4)(i)(B)](i)(C) The entity functions or holds itself out as a collective investment vehicle, mutual fund, exchange traded fund, private equity fund, hedge fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets. [§1.1471-5(e)(4)(i)(C)]UK Statutory Instrument: For the purposes of these Regulations a person (person A) carries on business in theUnited Kingdom as an investment entity if—(a) person A undertakes any of the activities referred to in sub-paragraph 1(j)(1) to (3) of Article 1 of the treaty in the course of carrying on business in the United Kingdom, and A’s gross income from that business for the applicable period wholly or mainly derives from those activities, or(b) on behalf of person A, a financial institution (person B) undertakes any of the activities referred to in sub-paragraph 1(j)(1) to (3) of Article 1 of the treaty in the course of carrying on business in the United Kingdom, and person A’s gross income from the activities undertaken on behalf of person A by person B for the applicable period wholly or mainly derives from investing or dealing in financial assets. [UKSI.2014 No. 1506]UK IGA: The term “Investment Entity” means any entity that conducts as a business (or is managed by an entity that conducts as a business) one ormore of the following activities or operations for or on behalf of a customer:(1) trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;(2) individual and collective portfolio management; or(3) otherwise investing, administering, or managing funds or money on behalf of other persons.This subparagraph 1(j) shall be interpreted in a manner consistent with similar



language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations.UK Guidance: AEIM 100760: An entity will be an investment entity if it meets either one of the following two sets of criteria. Investment Entity Conducting Business on behalf of Customers An entity will be an investment entity if it primarily conducts as a business for or on behalf of a customer one or more of the following activities: * Trading in o Money market instruments (cheques, bills, certificates of deposit, derivatives, etc.). o Foreign Exchange. o Exchange, interest rate and index instruments. o Transferable securities. o Commodity futures. * Individual and collective portfolio management. * Otherwise investing, administering or managing funds or money on behalf of other persons. An entity will be regarded as primarily conducting these activities as a business if its gross income from conducting these activities is at least 50% of its total gross income during the shorter of: * The three year period ending on 31 December in the year preceding that in which its status as in investment entity is to be determined; or * The period in which the entity has been in existence. Managed Investment Entity An entity will be an investment entity if it is investing on its own account, is managed by a financial institution AND meets the Financial Assets test as described below. An entity is managed by a financial institution if that financial institution performs, either directly or through another service provider, any of the activities described in the section above (Activity Based Investment Entity) on behalf of the entity. An entity is not regarded as managed by a financial institution if that financial institution does not have discretionary authority to manage the entity’s assets either in whole or in part. An entity may be managed by a mix of other entities and individuals. If one of the entities so involved in the management of the entity is a financial institution within the meaning of the agreements then the entity meets the requirements for being managed by a financial institution. An entity meets the Financial Assets test if its gross income is primarily attributable to investing, reinvesting or trading in Financial Assets. This is a similar test to that in the section above requiring that at least 50% of its income is attributable to investing, reinvesting or trading in Financial Assets in the shorter of: * The three year period ending on 31 December in the year preceding that in which its status as in investment entity is to be determined; or * The period in which the entity has been in existence. Financial Assets are defined at Some examples of how the definition of investment entity is applied are included in this manual at AEIM101180. Certain types of entity can be complex and thus care must be taken when applying the definition of investment entity to them. Additional guidance is available for these at: * Trusts * Partnerships * Personal investment companies * Securitisation vehicles An entity would generally be considered to fall within one of the categories of investment entity if it functions or holds itself out as a collective investment vehicle, mutual fund, exchange traded fund, private equity fund, hedge fund, venture capital fund, leveraged buy-out fund or any similar investment vehicle established with an investment strategy of investing, reinvesting or trading in Financial Assets. An entity that primarily conducts as a business investing, administering, or managing non-debt, direct interests in real property on behalf of other persons, such as a real estate investment trust, will not be an investment entity. This will include structures where the interest in the property is held through a chain of entities provided the entity at the head of the chain has absolute control over the entities below, for example a parent company sitting at the head of a chain of wholly owned subsidiaries.


Investment-linked annuity contract

FATCA: The term investment-linked annuity contract means an annuity contract under which benefits or premiums are adjusted to reflect the investment return or market value of assets associated with the contract.

Investment-linked insurance contract

The term investment-linked insurance contract means an insurance contract under which benefits, premiums, or the period of coverage are adjusted to reflect the investment return or market value of assets associated with the contract.

IRS US Internal Revenue Service

IRS FFI listThe term IRS FFI list means the list published by the IRS that contains the names and GIINs for all participating FFIs, registered deemed-compliant FFIs, and reporting Model 1 FFIs.HPP comment; this definition may be incomplete, as the FFI list also includes (albeit counter-intuitively) Direct Reporting NFFEs (DR-NFFEs).

Lead (Lead FI)FATCA: A Lead FI means a USFI, FFI, or a Compliance FI that will initiate the FATCA registration process for each of its Member FIs that is a PFFI, RDCFFI, or Limited FFI and that is authorized to carry out most aspects of its Member FIs’ FATCA registrations. A Lead FI is not required to act as a Lead FI for all Member FIs within an EAG. Thus, an EAG may include more than one Lead FI that will carry out FATCA registration for a group of its Member FIs. A Lead FI will be provided the rights to manage the online account for its Member FIs. NOTE: a FFI seeking to act as a Lead FI cannot have Limited FFI status in its country of residence.

Life annuity contract

FATCA: The term life annuity contract means an annuity contract that provides for payments over the life or lives of one or more individuals.

Life insurance contract

FATCA: The term life insurance contract means an insurance contract under which the issuer, in exchange for consideration, agrees to pay an amount upon the death of one or more individuals. That a contract provides one or more payments (for example, for endowment benefits or disability benefits) in addition to a death benefit will not cause the contract to be other than a life insurance contract. For purposes of the preceding sentence, it is immaterial whether a contract satisfies any of the substantive U.S. tax rules (for example, sections 101(f) 18 , 817(h) 19 , 7702 20 , or investor control prohibition) applicable to the taxation of the contract holder or issuer.

Limited BranchFATCA: A branch that under the laws of the Jurisdiction in which it is located is unable to: (1) report, close, or transfer its U.S. accounts to a USFI, to a branch of the FFI that will report the U.S. account, to a PFFI, or to a Reporting Fl under a Model 1 IGA, or (2) withhold, block, or close an account held by a recalcitrant account holder or non-participating FFI or otherwise transfer the account to a USFI, to a branch of the FFI that will report the account to the IRS, to a PFFI, or to a Reporting Fl under a Model 1 IGA. A Limited Branch also includes a related branch under a Model 1 or 2 IGA that is treated as a non-participating FFI branch because it operates in a Jurisdiction that prevents such branch from fulfilling the requirements of a PFFI or deemed-compliant FFI.

Limited FFIFATCA: Limited FFI [§1.1471-1(b) (77) ][Reserved]. For further guidance, see §1.1471-1T(b)(77).The term limited FFI has the meaning set forth in §1.14714(e)(3)(ii). With respect to a reporting Model 2 FFI, a limited FFI is a related entity that operates in a Jurisdiction that prevents the entity from fulfilling the requirements of a participating FFI or deemed-compliant FFI or that cannot fulfil the requirements of a participating FFI or deemed-compliant FFI due to the expiration of the transitional rule for limited FFIs under §1.1471-4(e) (3) (iv), and for which the reporting Model 2 FFI meets the requirements of the applicable Model 2 IGA with respect to the entity.

Local Foreign Financial Institution

To qualify for this classification, an entity must not have fixed places of business outside of its country of incorporation. Further, the entity must have a local client base (i.e., at least 98% of its accounts (by value) are held by residents of its country of incorporation

18 http://www.law.cornell.edu/uscode/text/26/101#f19 http://www.law.cornell.edu/uscode/text/26/817#h20 http://www.law.cornell.edu/uscode/text/26/7702



http://www.law.cornell.edu/cfr/text/26/1.1471-1T#b_77



http://www.law.cornell.edu/uscode/text/26/817#h

http://www.law.cornell.edu/uscode/text/26/101#f

Lower Value Account

CRS: The term “Lower Value Account” means a Pre-existing Individual Account with an aggregate balance or value as of 31 December [xxxx] that does not exceed USD 1,000,000.

Member FI (Member)

FATCA: A Member FI is a FFI that is registering as a Member of an EAG that is not acting as a Lead FI and that is registering as a PFFI, RDCFFI, or Limited FFI. For purposes of registration, a Member FI may also include a foreign branch of a USFI that is treated as a Reporting FI under a Model 1 IGA, or that is renewing its QI Agreement. A Member FI will need to obtain its FATCA ID from its Lead FI. The FATCA ID is used to identify the Member FI for purposes of registration and is not the same number as the GIIN. A GIIN is issued to FIs, other than Limited FFIs or Limited Branches, after the FATCA registration is submitted and approved.

Model 1 IGAFATCA: The term Model 1 IGA means an agreement or arrangement between the United States or the Treasury Department and a foreign government or one or more agencies thereof to implement FATCA through reporting by financial institutions to such foreign government or agency thereof, followed by automatic exchange of the reported information with the IRS. The IRS will publish a list identifying all countries that are treated as having in effect a Model 1 IGA.

Model 2 IGAFATCA: The term Model 2 IGA means an agreement or arrangement between the United States or the Treasury Department and a foreign government or one or more agencies thereof to facilitate the implementation of FATCA through reporting by financial institutions directly to the IRS in accordance with the requirements of a FFI agreement, supplemented by the exchange of information between such foreign government or agency thereof and the IRS. The IRS will publish a list identifying all countries that are treated as having in effect a Model 2 IGA.

Narrow Participation Retirement Fund

CRS: The term “Narrow Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits to beneficiaries that are current or former employees (orpersons designated by such employees) of one or more employers in consideration for services rendered, provided that:a) the fund has fewer than 50 participants;b) the fund is sponsored by one or more employers that are not Investment Entities or Passive NFEs;c) the employee and employer contributions to the fund (other than transfers of assets from retirement and pension accounts described in subparagraph C(17)(a)) are limited by reference to earned income and compensation of the employee, respectively;d) participants that are not residents of the Jurisdiction in which the fund is established are not entitled to more than 20% of the fund’s assets; ande) the fund is subject to government regulation and provides information reporting to the tax authorities.

New AccountCRS: The term “New Account” means a Financial Account maintained by a Reporting Financial Institution opened on or after [xx/xx/ xxxx],CRS Handbook: In general a New Account is an account opened after the date set to determine Preexisting Accounts. However the Standard provides that a jurisdiction may modify the definition of Preexisting Account so that in certain cases, an account that would otherwise be treated as a New Account may be instead treated as a Preexisting Account.

New Entity Account

CRS: The term “New Entity Account” means a New Account held by one or more Entities.

New Individual Account

CRS: The term “New Individual Account” means a New Account held by one or more individuals.IRS FATCA FAQShttp://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#GeneralGeneral Compliance – Question 10 If a Reporting Model 1 FFI or a Reporting Model 2 FFI that is applying the due diligence procedures in section III, paragraph B, of Annex I of the IGA cannot obtain a self-certification upon the opening of a New Individual Account, can the FFI open the account and treat it as a U.S. Reportable Account?Added: 02-02-2015


http://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#General


Answer: No. Pursuant to section III, paragraph B, of Annex I of the IGA, the FFI must obtain a self-certification at account opening. If the FFI cannot obtain a self-certification at account opening, it cannot open the account


NFE (also see NFFE)

The term “NFE” means any Entity that is not a Financial Institution.

NFFE (also see NFE)

FATCA: The term NFFE or non-financial foreign entity means a foreign entity that is not a financial institution (including a territory NFFE). The term also means a foreign entity treated as an NFFE pursuant to a Model 1 IGA or Model 2 IGA.

Non-Exempt Recipient

FATCA: The term non-exempt recipient means a person that is not an exempt recipient.

Non-Reporting Financial Institution

CRS: The term “Non-Reporting Financial Institution” means any Financial Institution that is:a) a Governmental Entity, International Organisation or Central Bank, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution;b) a Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; a Pension Fund of a Governmental Entity, International Organisation or Central Bank; or a Qualified Credit Card Issuer;c) any other Entity that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the Entities described in subparagraphs B(l)(a) and (b), and is defined in domestic law as a Non-Reporting Financial Institution, provided that the status of such Entity as a Non-Reporting Financial Institution does not frustrate the purposes of the Common Reporting Standard;d) an Exempt Collective Investment Vehicle; ore) a trust to the extent that the trustee of the trust is a Reporting Financial Institution and reports all information required to be reported pursuant to Section I with respect to all Reportable Accounts of the trust.UK IGA: The term “Non-Reporting United Kingdom Financial Institution” means any United Kingdom Financial Institution, or other entity resident in the United Kingdom that is identified in Annex II as a Non-Reporting United Kingdom Financial Institution or that otherwise qualifies as a deemed-compliant FFI, an exempt beneficial owner, or an excepted FFI under relevant U.S. Treasury Regulations.

Non-U.S. AccountFATCA: The term non-U.S. account means an account that is not a U.S. account and that does not have an account holder that is a non-participating FFI or recalcitrant account holder.

Non-financial group entity

FATCA: • Is a holding company, treasury center, or captive finance company and substantially all of the entity’s activities are functions described in §1.1471-5(e) (5) (i)(C) through (E);• Is a member of a non-financial group described in §1.1471-5(e)(5)(i)(B);• Is not a depository or custodial institution (other than for members of the entity’s expanded affiliated group); and• Does not function (or hold itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle with an investment strategy to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes.

Non-participating FFI

The US Treasury definition of a Non Participating Foreign Financial Institution:“The term non-participating FFI means a FFI other than a participating FFI, a deemed-compliant FFI, or an exempt beneficial owner.”

Note: there are important variations in IGA jurisdictions that in effect prevent classifying an FFI as “Non Participating” until the “significant the non-compliance” process has been followed. This process can take more than 18 months to complete.

For example, here is a quote from the UK Inter Governmental Agreement. Article 4, Section 1:“Notwithstanding the foregoing, a Reporting United Kingdom Financial Institution with respect to which the conditions of this paragraph are not satisfied shall not be subject to withholding under section 1471 of the U.S. Internal Revenue Code unless such Reporting United Kingdom Financial Institution is identified by the IRS as a Non-participating Financial Institution pursuant to subparagraph 2(b) of Article 5″This would imply that under this particular Inter Governmental Agreement, in this particular Jurisdiction, in order to apply withholding, the US Internal Revenue Service



has to actually identify the Reporting UK FI as Non-participating.Further article 5(2) of the IGA reads:Significant Non-compliance. a) A Competent Authority shall notify the Competent Authority of the other Party when the first-mentioned Competent Authority has determined that there is significant non-compliance with the obligations under this Agreement with respect to a Reporting Financial Institution in the other Jurisdiction. The Competent Authority of such other Party shall apply its domestic law (including applicable penalties) to address the significant non-compliance described in the notice. b) If, in the case of a Reporting United Kingdom Financial Institution, such enforcement actions do not resolve the non-compliance within a period of 18 months after notification of significant non-compliance is first provided, the United States shall treat the Reporting United Kingdom Financial Institution as a Non-participating Financial Institution. The IRS shall make available a list of all Reporting United Kingdom Financial Institutions and other Partner Jurisdiction Financial Institutions that are treated as Non-participating Financial Institutions pursuant to this paragraph.

This means that in the UK, that a Foreign Financial Institution can not be “Non-participating” until that Foreign Financial Institution has been formally identified by HMRC (the local Competent Authority) as in “Significant Non-compliance”, local law has been applied, 18 months have elapsed without a satisfactory resolution and following completion of this process that the US Internal Revenue Service ‘make available a list’ that identifies the Foreign Financial Institution in question as Non-participating.

The position has been confirmed in the competent authority arrangements21 (signed in September 2015) between the US and the UK in section 4.3.2 (on page 9) which states that:

4.3.2 Procedures for Significant Non-Compliance: 4.3.2.1 In General: Under Article 5(2) of the IGA, the receiving Competent Authority would notify the providing Competent Authority when the receiving Competent Authority has determined there is significant non-compliance with the obligations under the IGA with respect to a Reporting Financial Institution. After such notification of significant non-compliance from the receiving Competent Authority, the providing Competent Authority would apply its domestic laws (including applicable penalties) to address the significant non-compliance described in the notice. The Competent Authorities may consult on the steps needed to address such non-compliance. If the U.S. Competent Authority were to notify the United Kingdom Competent Authority of a determination of significant non-compliance, the date on which notification was provided to, and received by, the United Kingdom Competent Authority (per Paragraph 3.3.4) would constitute the beginning of the eighteen (18) month period set forth in Article 5(2)(b) of the IGA. 4.3.2.2 Notice to Reporting United Kingdom Financial Institution: The United Kingdom Competent Authority should notify the relevant Reporting United Kingdom Financial Institution of the significant non-compliance determination, including the date the U.S. Competent Authority provided notice of such non-compliance to the United Kingdom Competent Authority (per Paragraph 3.3.4). The notice should also indicate that if the significant non-compliance is not cured within eighteen (18) months after the date the U.S Competent Authority provided notice to the United Kingdom Competent Authority, the relevant Reporting United Kingdom Financial Institution may be treated as a Nonparticipating Financial Institution, its name may be removed from the IRS FFI list, and it may therefore be subject to 30-percent withholding under section 1471(a) of the U.S. Internal Revenue Code.

On September 2015 HMRC released Guidance Notes:

21 http://www.irs.gov/pub/irs-utl/United%20Kingdom%20M1A%20CAA%20092315.pdf


http://www.irs.gov/pub/irs-utl/United%20Kingdom%20M1A%20CAA%20092315.pdf

UK CRS Guidance NotesSection AEIM 103360 states:

“If the Account Holder entity falls within the definition of a financial institution then where it is a financial institution, wherever resident for DAC/CRS or CDOT reporting or a UK or partner jurisdiction financial institution for FATCA reporting, no further review, identification or reporting will normally be required. The exception to this under the FATCA regime is where there is significant non-compliance by the financial institution which has not been rectified. In such circumstances the entity will be classified as a non-participating financial institution. Where the financial institution is a non-participating financial institution for FATCA, then reports on certain payments made to such entities will be required.”

So there you have it, an FI can only be “Non Participating,” in the UK, after “Significant Non-Compliance”. The “Significant Non-Compliance” process takes at least 18 months. FATCA became effective on July 1, 2014. Hence, it is not possible to have a UK NPFFI in 2015.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/461418/Guidance_Notes_for_the_Automatic_Exchange_of_Financial_Account_Information.pdf

Non-profit organization

FATCA: • The entity is established and maintained in its country of residence exclusively for religious, charitable, scientific, artistic, cultural or educational purposes;• The entity is exempt from income tax in its country of residence;• The entity has no shareholders or members who have a proprietary or beneficial interest in its income or assets;• Neither the applicable laws of the entity’s country of residence nor the entity’s formation documents permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of the entity’s charitable activities or as payment of reasonable compensation for services rendered or payment representing the fair market value of property which the entity has purchased; and• The applicable laws of the entity’s country of residence or the entity’s formation documents require that, upon the entity’s liquidation or dissolution, all of its assets be distributed to an entity that is a foreign government, an integral part of a foreign government, a controlled entity of a foreign government, or escheats to the government of the entity’s country of residence or any political subdivision thereof.UK Guidance AEIM 100960: Where a non-profit organisation is a financial institution, which is most likely to happen if it falls within the definition of investment entity by virtue of having its Financial Assets managed by a Financial Institution, it is potentially in scope as a reporting financial institution for both CDOT and DAC/CRS reporting. Under FATCA, such non-profit organisations are deemed compliant financial institutions and are not required to register with the IRS or report to HMRC. Under both CDOT and DAC such non-profit organisations are required to carry out due diligence processes to identify and report on any Reportable Persons. Where the non-profit organisation is not a financial institution it will be a NFE. Under all three regimes the effect is to treat the NFE as active. They are specifically defined as active under FATCA and DAC and the Controlling Persons are exempted from being reported on under CDOT.

Non-reporting FIFATCA: An entity that is established in a Jurisdiction that has in effect a Model 1 or 2 IGA and that is treated as a non-reporting Fl in Annex II of the applicable Model 1 or 2 IGA or that is otherwise treated as a deemed-compliant FFI or an exempt beneficial owner under Treas. Reg. §1.1471-5 or §1.1471-6.IRS FATCA FAQShttp://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#GeneralIGA Registration – Answer 7:A non-reporting financial institution in a Model 1 Jurisdiction is treated as a certified deemed-compliant FFI and is not required to register unless it (1) is subject to a registration requirement under its QI Agreement (see Rev. Proc. 2014-39) or its WP or WT Agreement (see Rev. Proc. 2014-47), (2) will act as a sponsoring entity, (3) will act as a lead FI for one or more related entities, (4) is explicitly required to register under the applicable IGA, or (5) has a financial account on which to report to the Model 1 Jurisdiction under the requirements of the applicable IGA.UK Guidance AEIM 100920: All of the automatic exchange of information regimes exclude certain financial institutions from being reporting financial institutions. Such financial institutions are not required to identify, maintain or report information about Reportable Persons. These institutions are identified in Annex II of the IGA with the USA for FATCA purposes and Annex II of the IGAs with the Crown Dependencies and Gibraltar for CDOT reporting. For the purposes of the DAC (which is implemented in the UK by the 2015 Regulations, and which are applicable for reporting by UK financial institutions) the only Non-reporting Financial Institutions are those defined in Annex I Section XIII B.

Non-reporting IGA FFI

FATCA: The term non-reporting IGA FFI means a FFI that is identified as a non-reporting financial institution pursuant to a Model 1 IGA or Model 2 IGA that is not a registered deemed-compliant FFI.

Non-reporting IGA FFI (including a FFI treated as a registered deemed-compliant FFI

FATCA: Meets the requirements to be considered a non-reporting financial institution pursuant to an applicable IGA.






under an applicable Model 2 IGA)

NQIFATCA: Nonqualified intermediary [§1.1441-1(c)(14)] 22 A nonqualified intermediary means any intermediary that is not a U.S. person and not a qualified intermediary, as defined in paragraph (e)(5)(ii)23 of this section, or a qualified intermediary that is not acting in its capacity as a qualified intermediary with respect to a payment. For example, to the extent an entity that is a qualified intermediary provides another withholding agent with a foreign beneficial owner withholding certificate as defined in paragraph (e)(2)(i)24 of this section, the entity is not acting in its capacity as a qualified intermediary. Notwithstanding the preceding sentence, a qualified intermediary is acting as a qualified intermediary to the extent it provides another withholding agent with Forms W-9, or other information regarding U.S. non-exempt recipients pursuant to its qualified intermediary agreement with the IRS.

NWPFATCA: The term NWP or non-withholding foreign partnership means a foreign partnership that is not a withholding foreign partnership.

NWTFATCA: The term NWT or non-withholdinq foreign trust means a foreign trust as defined in section 7701(a)(31)(B)25 that is a simple trust or grantor trust and is not a withholding foreign trust.

OCSP Online Certificate Status Protocol

Offshore accountFATCA: Paid outside the United States under §1.6049-5(e) 26 [III.F]Section 1.6049-5(e) of the final regulations describes the circumstances in which an amount is considered paid outside the United States for purposes of, among other things, determining whether a payor may rely upon documentary evidence under §1.6049-5(c)(1) of the final regulations to document a payee. It requires that the payor or middleman (i) complete the acts necessary to effect payment outside the United States and (ii) verify that the obligation or payee does not have certain specified connections with the United States (U.S. connections), such as a U.S. mailing address for the payee. See §1.6049-5(e)(1)(i) through (e)(1)(ii) and (e)(2) through (e)(4) of the final regulations. These temporary regulations retain the requirement that a payor or middleman complete the acts necessary to effect payment outside the United States, but remove the other U.S. connections described in §1.6049-5(e) of the final regulations for the purpose of being allowed to use documentary evidence under §1.6049-5(c). This modification reduces burdens by eliminating the need for a payor or middleman to monitor whether these U.S. connections are present for purposes of determining if the payor or middleman may rely upon documentary evidence under §1.6049-5(c)(1). (For a discussion of the documentary evidence rule in §1.6049-5(c), see section III.D of this preamble.) The U.S. connections, however, are still retained for other purposes under chapter 61 27 and section 3406 28 , and have been included in the definition of the term paid and received outside the United States under §1.6049-4(f)(16). 29

Offshore obligation

FATCA: The term offshore obligation means any account, instrument, or contract that is maintained and executed at an office or branch of the withholding agent at any location outside of the United States or in any location in a U.S. territory. The term also includes any equity interest in a foreign entity that is purchased by the owner of such interest outside of the United States either directly from the entity or from another person that is located outside of the United States.

OwnerFATCA: The term owner means a person described in §1.1473-1(b)(1), without regard to whether such person is a U.S. person and without regard to whether such person owns a ten percent interest in the entity. The term also includes a person that owns a

22 http://www.law.cornell.edu/cfr/text/26/1.1441-1#c_1423 http://www.law.cornell.edu/cfr/text/26/1.1441-1T#e_5_ii24 http://www.law.cornell.edu/cfr/text/26/1.1441-1#e_2_i25 http://www.law.cornell.edu/uscode/text/26/7701#a_31_B26 http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e27 http://www.law.cornell.edu/uscode/text/26/subtitle-F/chapter-61/subchapter-A28 http://www.law.cornell.edu/uscode/text/26/340629 http://www.law.cornell.edu/cfr/text/26/1.6049-4#f






http://www.law.cornell.edu/uscode/text/26/subtitle-F/chapter-61/subchapter-A

http://www.law.cornell.edu/cfr/text/26/1.6049-5T#c



http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e

http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e_4


http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e_1_ii

http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e_1_i



http://www.law.cornell.edu/uscode/text/26/7701#a_31_B

http://www.law.cornell.edu/cfr/text/26/1.1441-1#e_2_i



discretionary interest in a trust and receives a distribution during the calendar year.Definition [§1.1473-1(b)(1)]Except as otherwise provided in paragraph (b)(4) or (5) of this section, the term substantial United States owner (or substantial U.S. owner) means:(1)(i) With respect to any foreign corporation, any specified U.S. person that owns, directly or indirectly, more than 10 percent of the stock of such corporation (by vote or value); [§1.1473-1(b)(1)(i)](1)(ii) With respect to any foreign partnership, any specified U.S. person that owns, directly or indirectly, more than 10 percent of the profits interests or capital interests in such partnership; and [§1.1473-1(b)(1)(ii)](1)(iii) In the case of a trust-[§1.1473-1(b)(1)(iii)](iii)(A) Any specified U.S. person treated as an owner of any portion of the trust under sections 671 through 679; and [§1.1473-1(b)(1)(iii)(A)](iii)(B) Any specified U.S. person that holds, directly or indirectly, more than 10 percent of the beneficial interests of the trust. [§1.1473-1(b)(1)(iii)(B)]


Owner-documented FFI

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).FATCA: This status only applies if the U.S. financial institution or participating FFI to which this form is given has agreed that it will treat the FFI as an owner-documented FFI.An Owner-Documented FFI• Does not act as an intermediary;• Does not accept deposits in the ordinary course of a banking or similar business;• Does not hold, as a substantial portion of its business, financial assets for the account of others;• Is not an insurance company (or the holding company of an insurance company) that issues or is obligated to make payments with respect to a financial account;• Is not owned by or in an expanded affiliated group with an entity that accepts deposits in the ordinary course of a banking or similar business, holds, as a substantial portion of its business, financial assets for the account of others, or is an insurance company (or the holding company of an insurance company) that issues or is obligated to make payments with respect to a financial account; and• Does not maintain a financial account for any non-participating FFI.• Has provided, or will provide, a FFI owner reporting statement that contains:• The name, address, TIN (if any), chapter 4 status, and type of documentation provided (if required) of every individual and specified U.S. person that owns a direct or indirect equity interest in the owner-documented FFI (looking through all entities other than specified U.S.persons);• The name, address, TIN (if any), chapter 4 status, and type of documentation provided (if required) of every individual and specified U.S. person that owns a debt interest in the owner-documented FFI (including any indirect debt interest, which includes debt interests in any entity that directly or indirectly owns the payee or any direct or indirect equity interest in a debt holder of the payee) that constitutes a financial account in excess of $50,000 (disregarding all such debt interests owned by participating FFIs, registered deemed-compliant FFIs, certified deemed-compliant FFIs, excepted NFFEs, exempt beneficial owners, or U.S. persons other than specified U.S. persons); and• Any additional information the withholding agent requests in order to fulfil its obligations with respect to the entity.• OR the OD-FFI has provided, or will provide, an auditor’s letter, signed within four years of the date of payment, from an independent accounting firm or legal representative with a location in the United States stating that the firm or representative has reviewed the FFI’s documentation with respect to all of its owners and debt holders identified in §1.1471-3(d) (6) (iv)(A)(2), and that the FFI meets all the requirements to be an owner-documented FFI. The FFI identified in Part I has also provided, or will provide, a FFI owner reporting statement of its owners that are specified U.S. persons and Form(s) W-9, with applicable waivers.• OR the is a trust that does not have any contingent beneficiaries or designated classes with unidentified beneficiaries.UK Guidance AEIM 100930: The Owner Documented Financial Institution (ODFI) is a concept found in the US FATCA Regulations (s 1.1471-5(f) (3)) which can be used for FATCA purposes (see FATCA Guidance at paragraph 2.25) where it is beneficial for the Financial Institution. In general, ODFI classification is intended to apply to closely held passive investment vehicles that are Investment Entities by virtue of being managed by a Financial Institution, where meeting the obligations under the US Agreement would be onerous given the size of the entity. It is, however, quite limited in its effect as it is necessary for all Reportable Accounts of the ODFI to be maintained by the ODFI. The single largest benefit to the ODFI is that they do not have to register with the IRS to obtain a Global Intermediary Identification Number (GIIN) as the Financial Institution managing the Investment Entity can report for the ODFI using its own GIIN. ODFI is not a Non-reporting Financial Institution category under either the DAC or the CDOT regime. However, a similar outcome can be obtained where the ODFI for FATCA purposes employs the Financial Institution undertaking the ODFI’s reporting obligations under FATCA as a third party service provider. This service provider can carry out the ODFI’s reporting obligations under the DAC and CDOT



regimes.


Participating FFIFATCA: a FFI that: (1) is registering to agree to enter into a FFI Agreement, (2) is treated as a Reporting FI under a Model 2 IGA and that is certifying that it will comply with the terms of a FFI Agreement, as modified by the terms of the applicable Model 2 IGA, or (3) is a foreign branch of a USFI that has in effect a QI Agreement and that is also agreeing to the terms of a FFI Agreement, unless such branch is treated as a Reporting FI under a Model 1 IGA (see RDCFFI definition).

Participating FFI group

FATCA: The term participating FFI group means an expanded affiliated group that includes one or more participating FFIs and meets the requirements of §1.1471-4(e) (1). The term participating FFI group also means an expanded affiliated group in which one or more members of the group is a reporting Model 1 FFI and each member of the group that is a FFI is a registered deemed-compliant FFI, non-reporting IGA FFI, limited FFI, or retirement fund described in §1.1471-6(f).

Participating Jurisdiction

CRS: The term “Participating Jurisdiction” means a Jurisdiction (i) with which an agreement is in place pursuant to which it will provide the information specified in Section I, and (ii) which is identified in a published list.UK IGA: The term “Partner Jurisdiction” means a Jurisdiction that has in effect an agreement with the United States to facilitate the implementation of FATCA. The IRS shall publish a list identifying all Partner Jurisdictions.

PartnershipThe attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).FATCA: The term partnership means a business entity that is not a corporation under paragraph (b) of this section and that has at least two members. Paragraph (b): Corporations. For federal tax purposes, the term corporation means—(1) A business entity organized under a Federal or State statute, or under a statute of a federally recognized Indian tribe, if the statute describes or refers to the entity as incorporated or as a corporation, body corporate, or body politic;(2) An association (as determined under §301.7701-3)30;(3) A business entity organized under a State statute, if the statute describes or refers to the entity as a joint-stock company or joint-stock association;(4) An insurance company;(5) A State-chartered business entity conducting banking activities, if any of its deposits are insured under the Federal Deposit Insurance Act, as amended, 12 U.S.C. 1811 et seq., or a similar federal statute;(6) A business entity wholly owned by a State or any political subdivision thereof, or a business entity wholly owned by a foreign government or any other entity described in § 1.892-2T;31

(7) A business entity that is taxable as a corporation under a provision of the Internal Revenue Code other than section 7701(a)(3) 32 ; and(8) Certain foreign entities.

Passive Income§1.1472-1(c)(1)(iv)(A)

Passive income means the portion of gross income that consists of:Dividends including substitute dividend amounts; Interest;Income equivalent to interest, including substitute interest and amounts received from or with respect to a pool of insurance contracts if the amounts received depend in whole or part upon the performance of the pool;Rents and royalties, other than rents and royalties derived in the active conduct of a trade or business conducted, at least in part, by employees of the NFFE; i Annuities;The excess of gains over losses from the sale or exchange of propertythat gives rise to passive income described in points (1) through (5)above;The excess of gains over losses from transactions (including futures,forwards, and similar transactions) in any commodities, but not including:- any commodity hedging transaction described in section

954(c)(5)(A), determined by treating the corporation or partnership asa controlled foreign corporation; or

- Active business gains or losses from the sale of commodities, butonly if substantially all the foreign entity's commodities are property

30 http://www.law.cornell.edu/cfr/text/26/301.7701-331 http://www.law.cornell.edu/cfr/text/26/1.892-2T32 http://www.law.cornell.edu/uscode/text/26/7701#a_3


http://www.law.cornell.edu/uscode/text/26/7701#a_3

http://www.law.cornell.edu/cfr/text/26/1.892-2T





described in paragraph (1), (2), or (8) of section 1 221 (a);The excess of foreign currency gains over foreign currency losses (asdefined in section 988(b)) attributable to any section 988 transaction;Net income from notional principal contracts as defined in §1.446-3(c)(1) i Amounts received under cash value insurance contracts; or i Amounts earned by an insurance company in connection with its reservesfor insurance and annuity contracts.


Passive Income –Exceptions§1.1472-1(c)(1)(iv)(B)

Exceptions from passive income treatment include:i Any income from interest, dividends, rents, or royalties that is received or accrued from a related person to the extent such amount is properly allocable to income of such related person that is not passive income. For purposes of this paragraph, the term "related person" has the meaning given such term by section 954(d)(3) determined by substituting "foreign entity" for "controlled foreign corporation" each place it appears in section 954(d)(3); orIn the case of a foreign entity that regularly acts as a dealer in property that gives rise to passive income, forward contracts, option contracts, or similar financial instruments (including notional principal contracts and all instruments referenced to commodities) - Any item of income or gain (other than any dividends or interest) from any transaction (including hedging transactions and transactions involving physical settlement) entered into in the ordinary course of such dealer's trade or business as such a dealer; and- If such dealer is a dealer in securities (within the meaning of section 475(c) (2)), any income from any transaction entered into in the ordinary course of such trade or business as a dealer in securities

Passive NFE / Passive NFFE

CRS: The term “Passive NFE” means any: (i) NFE that is not an Active NFE; or (ii) an Investment Entity described in subparagraph A(6)(b) that is not a Participating Jurisdiction Financial Institution.CRS Handbook:The general rule is that a Passive NFE is an NFE that is not anActive NFE. The definition of Active NFE essentially excludes Entities thatprimarily receive passive income or primarily hold amounts of assets thatproduce passive income (such as dividends, interest, rents etc.), and includesentities that are publicly traded (or related to a publicly traded Entity),Governmental Entities, International Organisations, Central Banks, or aholding NFEs of nonfinancial groups. An exception to this is an InvestmentEntity that is not a Participating Jurisdiction Financial Institution, which isalways treated as a Passive NFE.FATCA: The entity is a foreign entity that is not a financial institution (other than an investment entity organized in a possession of the United States) and is not certifying its status as a publicly traded NFFE (or affiliate), excepted territory NFFE, active NFFE, direct reporting NFFE, or sponsored direct reporting NFFE. The entity identified has provided the name, address, and TIN of each Person who owns 10 per cent or more of the NFFE.

A passive NFFE is a non-financial entity that earns more than 50% of its gross income from passive income (e.g., interest, dividends, rents, royalties, etc.) or more than 50% of its assets produce are held for the production of passive income (i.e., securities, rental property held as investments, etc.)

Passthru paymentThe term passthru payment means any withholdable payment and any foreign passthru payment.

PayeeFATCA: Identification of payee [§1.1471-3]1-3(a) Payee defined [§1.1471-3(a)]1-3(a)(1) In general [§1.1471-3(a)(1)]Except as otherwise provided in this paragraph (a), for purposes of chapter 4 a payee is the person to whom a payment is made, regardless of whether such person is the beneficial owner of the amount.1-3(a)(2) Payee with respect to a financial account [§1.1471-3(a)(2)]For purposes of payments made to a financial account and except as otherwise provided in paragraph (a)(3) of this section, the payee is the holder of the financial account.1-3(a)(3) Exceptions [§1.1471-3(a)(3)](3)(i) Certain foreign agents or intermediaries [§1.1471-3(a)(3)(i)](i)(A) Except as otherwise provided in paragraphs (a)(3)(iv) and (vi) of this section (applicable to territory financial institutions and certain U.S. branches), a foreign person that is acting as an agent or intermediary with respect to a payment in accordance with paragraph (b)(1) of this section is not the payee if such foreign person is[§1.1471-3(a)(3)(i)(A)]



(1) An NFFE, unless the NFFE is a QI that has assumed primary withholding responsibility; or [§1.1471-3(a)(3)(i)(A)(1)](2) In the case of a payment of U.S. source FDAP income, a participating FFI, deemed-compliant FFI, or restricted distributor, unless the participating FFI, deemed-compliant FFI, or restricted distributor is a QI that has assumed primary withholding responsibility. [§1.1471-3(a)(3)(i)(A)(2)](i)(B) In the case of an agent or intermediary described in paragraph (a)(3)(i)(A) of this section, the payee is the person or persons for whom the agent or intermediary collects the payment. Thus, for example, the payee of a payment of U.S. source FDAP income that the withholding agent can reliably associate with a withholding certificate from a QI that does not assume primary withholding responsibility with respect to the payment under chapter 3, or a payment to a participating FFI that is an NQI, is the person or persons for whom the QI or NQI acts. [§1.1471-3(a)(3)(i)(B)](3)(ii) Foreign flow-through entity [§1.1471-3(a)(3)(ii)](ii)(A) A foreign entity that is a flow-through entity is a payee with respect to a payment only if the flow-through entity is[§1.1471-3(a)(3)(ii)(A)](1) a FFI that is not a participating FFI or deemed-compliant FFI, or restricted distributor receiving a payment of U.S. source FDAP income; [§1.1471-3(a)(3)(ii)(A)(1)](2) An excepted NFFE that is not acting as an agent or intermediary with respect to the payment; [§1.1471-3(a)(3)(ii)(A)(2)](3) A WP or WT that is not acting as an agent or intermediary with respect to the payment; or [§1.1471-3(a)(3)(ii)(A)(3)](4) Receiving income that is (or is deemed to be) effectively connected with the conduct of a trade or business in the United States, or receiving a payment of gross proceeds from the sale of property that can produce income that is effectively connected with the conduct of a trade or business in the United States and that is excluded from the definition of a withholdable payment under §1.1473-1(a)(4). [§1.1471-3(a)(3)(ii)(A)(4)] (ii)(B) A withholding agent that makes a withholdable payment to a flow-through entity that is not described in paragraphs (a)(3)(ii)(A)(1) through (3) of this section will be required to treat the partner, beneficiary, or owner (as applicable) as the payee (looking through partners, beneficiaries, and owners that are themselves flow-through entities that are not described in paragraphs (a)(3)(ii)(A)(1) through (3)). [§1.1471-3(a)(3)(ii)(B)](3)(iii) U.S. intermediary or agent of a foreign person [§1.1471-3(a)(3)(iii)][Reserved]. For further guidance, see §1.1471-3T(a)(3)(iii).A withholding agent that makes a withholdable payment to a U.S. person and has actual knowledge that the person receiving the payment is acting as an intermediary or agent of a foreign person with respect to the payment must treat such foreign person, and not the intermediary or agent, as the payee of such payment. Notwithstanding the previous sentence, a withholding agent that makes a withholdable payment to a U.S. financial institution or a U.S. insurance broker (to the extent such withholdable payment is a payment of premiums) that is acting as an intermediary or agent with respect to the payment on behalf of one or more foreign persons may treat the U.S. financial institution or U.S. insurance broker as the payee if the withholding agent does not have reason to know that the U.S. financial institution or U.S. insurance broker will not comply with its obligations to withhold under sections 1471 and 1472.(3)(iv) Territory financial institution [§1.1471-3(a)(3)(iv)]A withholding agent that makes a withholdable payment to a territory financial institution that is a flow-through entity or is acting as an intermediary or agent with respect to the payment may treat the territory financial institution as the payee only if the territory financial institution has agreed (as evidenced by a withholding certificate described in paragraphs (c)(3)(iii)(A) and (F) of this section) to be treated as a U.S. person with respect to the payment for purposes of both chapters 3 and 4. In all other cases, the withholding agent must treat as the payee the partner, beneficiary, or owner (as applicable) of the territory financial institution that is a flow-through entity (looking through partners, beneficiaries, and owners that are themselves flow-through entities that are not described in paragraphs (a)(3)(ii)(A)(1) through (3)) or the person on whose behalf the territory financial institution is acting.(3)(v) Disregarded entity or branch [§1.1471-3(a)(3)(v)][Reserved]. For further guidance, see §1.1471-3T(a)(3)(v).Except as otherwise provided in paragraph (a)(3)(v) through (vii) of this section, a


withholding agent that makes a withholdable payment to an entity that is disregarded for U.S. federal tax purposes under §301.7701-2(c)(2)(i) as an entity separate from its single owner must treat the single owner as the payee. The rules under §1.1471-3(d)(4) and (e)(3) apply to determine the circumstances under which a withholding agent may treat a payment made to a disregarded entity owned by a FFI as made to a payee that is a participating FFI or registered deemed-compliant FFI, and not as a payment made to a payee that is a non-participating FFI.A withholding agent that makes a payment to a limited branch (including an entity disregarded as a separate entity from its owner if such owner is a FFI and the disregarded entity is unable to comply with the terms of a FFI agreement with respect to accounts that it maintains) will be required to treat the payment as being made to a non-participating FFI.(3)(vi) U.S. branch of certain foreign banks or foreign insurance companies. [§1.1471-3(a)(3)(vi)][Reserved]. For further guidance, see §1.1471-3T(a)(3)(vi). deemed-compliant FFI, or NFFE is a payment to a U.S. person if the U.S. branch is treated as a U.S. person under §1.1441-1(b)(2)(iv)(A). In such case, the U.S. branch is treated as the payee.A U.S. branch treated as a U.S. person (as defined in §1.1471-1(b) (135) ), however, is not treated as a U.S. person for purposes of the withholding certificate it may provide to a withholding agent for purposes of chapter 4. Accordingly, a U.S. branch treated as a U.S. person must furnish a withholding certificate on a Form W-8 to certify its chapter 4 status (and not a Form W-9, “Request for Taxpayer Identification Number and Certification”). See also paragraph (f)(6) of this section for the rules under which a withholding agent can presume a payment constitutes income that is effectively connected with a U.S. trade or business.A U.S. branch treated as a U.S. person may not make an election to be withheld upon, as described in section 1471(b)(3) and §1.1471-2(a)(2)(iii), for purposes of chapter 4. See §1.1471-4(c)(2)(v) for the rule requiring a U.S. branch that has elected to be treated as a U.S. person to apply the due diligence rules applicable to a U.S. withholding agent in lieu of those otherwise applicable to a participating FFI. See also §1.1474-1(i)(1) and (2) for the requirement of a U.S. branch to report information regarding certain U.S. owners of owner documented FFIs and passive NFFEs. See §1.1471-4(d) for rules for when a U.S. branch reports as a U.S. person.(3)(vii) Foreign branch of a U.S. person [§1.1471-3(a)(3)(vii)]A payment to a foreign branch of a U.S. person is generally a payment to a U.S. payee. However, a payment to a foreign branch of a U.S. financial institution will be treated as a payment to a FFI if the foreign branch is a QI that is acting as an intermediary with respect to the payment. Therefore, a foreign branch that is a QI will provide the withholding agent with an intermediary withholding certificate and the withholding agent will report the payment as having been made to the foreign branch on a Form 1042-S 33 .

33 http://www.irs.gov/pub/irs-pdf/f1042s.pdf




http://www.law.cornell.edu/cfr/text/26/1.1471-3T#a_3

Payment with respect to an offshore obligation

FATCA: Paid outside the United States under §1.6049-5(e) 34 [III.F]Section 1.6049-5(e) of the final regulations describes the circumstances in which an amount is considered paid outside the United States for purposes of, among other things, determining whether a payor may rely upon documentary evidence under §1.6049-5(c)(1) of the final regulations to document a payee. It requires that the payor or middleman (i) complete the acts necessary to effect payment outside the United States and (ii) verify that the obligation or payee does not have certain specified connections with the United States (U.S. connections), such as a U.S. mailing address for the payee. See §1.6049-5(e)(1)(i) through (e)(1)(ii) and (e)(2) through (e)(4) of the final regulations. These temporary regulations retain the requirement that a payor or middleman complete the acts necessary to effect payment outside the United States, but remove the other U.S. connections described in §1.6049-5(e) of the final regulations for the purpose of being allowed to use documentary evidence under §1.6049-5(c). This modification reduces burdens by eliminating the need for a payor or middleman to monitor whether these U.S. connections are present for purposes of determining if the payor or middleman may rely upon documentary evidence under §1.6049-5(c)(1). (For a discussion of the documentary evidence rule in §1.6049-5(c), see section III.D of this preamble.) The U.S. connections, however, are still retained for other purposes under chapter 61 and section 3406, and have been included in the definition of the term paid and received outside the United States under §1.6049-4(f)(16) (as discussed in section III.A of this preamble).

PayorFATCA: § 31.3406(a)-2 Definition of payor 35 .(a) In general. Payor means the person that is required to make an information return under section 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, 6050N, or 6050W with respect to any reportable payment (as described in section 3406(b)), or that is described in paragraph (b) of this section.(b) Persons treated as payors. The following persons are treated as payors for purposes of section 3406—(1) A grantor trust established after December 31, 1995, all of which is owned by two or more grantors (treating for this purpose spouses filing a joint return as one grantor);(2) A grantor trust with ten or more grantors established on or after January 1, 1984 but before January 1, 1996;(3) A common trust fund; and(4) A partnership or an S corporation that makes a reportable payment.§1.6049-4(a)(2)Definition of payor.For payments made after December 31, 2002, a payor is a person described in paragraph (a)(2)(i) or (ii) of this section.(i) Every person who makes a payment of the type and of the amount subject to reporting under this section (or under an applicable section under this chapter) to any other person during a calendar year.(ii) Every person who collects on behalf of another person payments of the type and of the amount subject to reporting under this section (or under an applicable section under this chapter), or who otherwise acts as a middleman (as defined in paragraph (f)(4) of this section) with respect to such payment.

Pension Fund of a Governmental Entity, International Organisation or Central Bank

CRS: The term “Pension Fund of a Governmental Entity, International Organisation or Central Bank” means a fund established by a Governmental Entity, International Organisation or Central Bank to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees (or persons designated by such employees), or that are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the Governmental Entity, International Organisation or Central Bank.

Permanent residence address(also see Residence

FATCA: The term permanent residence address is the address in the country of which the person claims to be a resident for purposes of that country’s income tax. The address of a financial institution with which the person maintains an account, a post office box, or an address used solely for mailing purposes is not a permanent residence address unless such address is the only permanent address used by the person and appears as the person’s registered address in the person’s organizational

34 http://www.law.cornell.edu/cfr/text/26/1.6049-5T#e35 http://www.law.cornell.edu/cfr/text/26/31.3406%28a%29-2



http://www.law.cornell.edu/cfr/text/26/1.6041A-1

http://www.law.cornell.edu/cfr/text/26/31.3406(a)-2












Address) documents. Further, an address that is provided subject to instructions to hold all mail to that address is not a permanent residence address. If the person is an individual who does not have a tax residence in any country, the permanent address is the place at which the person normally resides. If the person is an entity and does not have a tax residence in any country, then the permanent residence address is the place at which the person maintains its principal office.


PersonThe term person has the meaning set forth in section 7701(a)(1) 36 and the regulations thereunder, and also includes an entity or arrangement that is an insurance company. The term person does not include a wholly owned entity that is disregarded for federal tax purposes as an entity separate from its owner. Notwithstanding the previous sentence, the term person includes, with respect to a withholdable payment, a QI branch of a U.S. financial institution.

PKI FATCA: Public Key InfrastructurePMO Project Management Office

Place of BirthPlace of Birth The place of birth to be reported is the town or city and the country of birth of the Account Holder. The requirement to report place of birth is subject to the condition at Annex I Section I Paragraph E of the DAC. This makes place of birth a reportable item only where the Reporting Financial Institution is required to obtain and report it either under UK domestic law or under a European Union legal instrument in effect or that was in effect on 5 January 2015 being the date that the DAC came into force for automatic exchange of financial account information. In effect this will only apply where the Reporting Financial Institution is currently reporting place of birth information to HMRC under the EU Savings Directive (EUSD). Any Reporting Financial Institution that has no obligations under the EUSD is not required to report place of birth. Where the Reporting Financial Institution is in scope for EUSD reporting there is a further condition that has to be met before the place of birth is reportable under the DAC. Place of birth only needs reporting if it is available in the electronically searchable data maintained by the Reporting Financial Institution. The reference to an EU legal instrument ‘that was in effect on 5 January 2015’ is a recognition of the expectation that the EUSD will be repealed as the requirements of that Directive have been overtaken by the DAC. This was settled by the Council of Europe when the DAC was agreed but the process for repeal has yet to be concluded. What this means is that where place of birth information has been captured in the electronic data systems of the reporting Financial Institution for EUSD purposes that information must be retained and reported under the DAC even after the EUSD has been repealed. Our interpretation of the DAC is that the provisions in Annex 1 E do not have the effect of placing a continuing requirement, after the repeal of the EUSD, to collect and report place of birth for new accounts, on those Financial Institutions currently required to do so by the EUSD. Some Financial Institutions obtain place of birth information as part of their security protocols, for example, as personal information about the Account Holder that can be used for verifying their identity should they contact the Financial Institution by telephone or on-line. As this information has not been obtained for any domestic or EU regulatory purposes the Reporting Financial Institution should not report place of birth from this information. As only Reporting Financial Institutions in scope for EUSD are able to report place of birth under the DAC, any processes that they currently apply to separate place of birth information collected for EUSD reporting purpose from that collected for other non-regulatory reasons should be maintained for DAC reporting. Date of Birth The date of birth is reportable for all new accounts. It is only reportable for pre-existing accounts to the extent that it is already held in records maintained by the reporting financial institution or the reporting financial institution is otherwise obliged to collect it. Where the date of birth is not held in respect of pre-existing accounts the reporting financial institution must use reasonable efforts to obtain it by the end of the second calendar year following the year in which the accounts are identified as Reportable Accounts.

Point of Contact (POC)

FATCA: An individual authorized by the FI to receive FATCA-related information regarding the FI, and to take other FATCA-related actions on behalf of the FI.IRS FATCA FAQS:http://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#GeneralResponsible Officers and Points of ContactQ1: What is a Point Of Contact (POC)?A1: The Responsible Officer listed on line 10 of Form 8957 (or the online registration system) can authorize a POC to receive FATCA-related information regarding the FI, and to take other FATCA-related actions on behalf of the FI. While the POC must be an individual, the POC does not need to be an employee of the FI. For example,

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suppose that John Smith, Partner of X Law Firm, has been retained and been given the authority to help complete and submit the FATCA Registration on behalf of a FI. John Smith should be identified as the POC, and in the Business Title field for this POC, it should state Partner of X Law Firm.


Pre-FATCA Form W-8

The term pre-FATCA Form W-8 means a version of a Form W-8 (or a substitute form) that was issued prior to 2013 and version of a Form W-8 (or a substitute form) that was issued prior to 2013 and that does not contain chapter 4 statuses but otherwise meets the requirements of §1.1441-1(e)(1)(ii) applicable to such certificate and has not expired.

Pre-existing Account

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Pre-existing Account” means a Financial Account maintained by a Reporting Financial Institution as of [xx/xx/ xxxx],CRS Handbook:Expanded definition of Preexisting Account. A jurisdiction may, bymodifying the definition of Preexisting Account, allow a FinancialInstitution to treat certain new accounts held by preexisting customersas a Preexisting Account for due diligence purposes. A customer istreated as pre-existing if it holds a Financial Account with theReporting Financial Institution or a Related Entity. Thus, if apreexisting customer opens a new account, the Financial Institutionmay rely on the due diligence procedures it (or its Related Entity)applied to the customer’s Preexisting Account to determine whether theaccount is a Reportable Account. A requirement for applying this ruleis that the Reporting Financial Institution must be permitted to satisfyits AML/KYC procedures for such account by relying on theAML/KYC performed for the Preexisting Account and the opening ofthe account does not require new, additional, or amended customer information. This option is not contained in the FATCA IGAs, butsimilar requirements may be adopted for FATCA by using thedefinition of pre-existing account in the US FATCA regulations. TheEU Directive includes this option.FATCA: The term pre-existing account means a financial account that is a pre-existing obligation.UK Guidance: AEIM 102640: Pre-existing accounts are those in existence at the point that the various automatic exchange of information regimes ‘switch on’ under the timelines for due diligence and reporting. Pre-existing individual accounts are accounts held by a Reportable Person who is an individual. These are split between High Value Accounts and Lower Value Accounts and there are different due diligence procedures for each type. High value pre-existing individual accounts are defined as accounts with an aggregate balance or value that exceeds an amount equivalent to US$1 million as at the end of the calendar year that is the subject of the report. Thus for reporting in 2017 under the DAC/CRS the accounts in scope are those Reportable Accounts in existence as at 31 December 2015. Lower value pre-existing individual accounts are those with an account balance or value that does not exceed an amount equivalent to US$1 million at the end of the calendar year. As well as differences in the amount of due diligence required for the two types of pre-existing individual account, financial institutions have longer to carry out their due diligence on Lower Value Accounts compared to High Value Accounts . However, to the extent that Lower Value Accounts are identified as Reportable Accounts in a calendar year they are reportable for that calendar year. Under the DAC/CRS financial institutions have until 31 December 2017 to carry out due diligence on Lower Value Accounts in existence at 31 December 2015 thus all such accounts must be reported no later than 2018 but if any Reportable Accounts are identified on or before 31 December 2016 they must be reported in 2017. It is expected that more jurisdictions will become Reportable Jurisdictions over time. Under the wider approach Financial Institutions will have identified the territory of tax residence of all pre- existing Account Holders as at 31 December 2015 and will be capturing information for all new accounts opened from 1 January 2016. Any changes of tax residence as a result of a change of circumstances thereafter will be captured when the change is recognised by the Financial Institution. Where new Reportable Jurisdictions are added to the list Financial Institutions will already have identified tax residents of those jurisdictions. Financial Institutions will therefore be able to contact relevant Account Holders to acquire any further information they may need for


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reporting purposes, for example a Tax Identification Number or Date of Birth following the process detailed at . For FATCA and CDOT reporting financial institutions have the option to apply a threshold exemption to Lower Value Accounts that take them out of the scope for carrying out due diligence processes.


Pre-existing Entity Account

CRS: The term “Pre-existing Entity Account” means a Pre-existing Account held by one or more Entities.UK IGA: The term “Pre-existing Entity Account” means a Pre-existing Account held by one or more Entities.

Pre-existing Individual Account

CRS: The term “Pre-existing Individual Account” means a Pre-existing Account held by one or more individuals.FATCA: The term pre-existing individual account means a pre-existing account held by one or more individuals.

Pre-existing obligation

FATCA: With respect to a withholding agent that is a participating FFI, the term pre-existing obligation means any account, instrument, or contract (including any debt or equity interest) maintained, executed, or issued by the FFI that is outstanding on the effective date of the FFI agreement. With respect to a withholding agent that is a registered deemed-compliant FFI, a pre-existing obligation means any account, instrument, or contract (including any debt or equity interest) that is maintained, executed, or issued by the FFI prior to the later of the date that the FFI registers as a deemed-compliant FFI pursuant to §1.1471-5(f)(1) and receives a GIIN or the date the FFI is required to implement its account opening procedures under §1.1471-5(f). (ii) The term pre-existing obligation also includes any obligation (referring to an account, instrument, contract, debt, or equity interest) of an account holder or payee, regardless of the date such obligation was entered into, if the withholding agent (and, as applicable, the member of the withholding agent’s expanded affiliated group or sponsored FFI group) treats both of the aforementioned obligations, and any other obligations of the payee or account holder that are treated as pre-existing obligations under this paragraph (b)(98)(ii), as consolidated obligations; and (C) With respect to an obligation that is subject to AML due diligence, the withholding agent is permitted to satisfy such AML due diligence for the obligation by relying upon the AML due diligence performed for the pre-existing obligation described in paragraph (b)(96)(i) of this section.

Prima facie FFIFATCA: If the payee is a prima facie FFI, the withholding agent must treat the payee as a non-participating FFI beginning on January 1, 2015, until the date the withholding agent obtains documentation sufficient to establish a different chapter 4 status of the payee. A prima facie FFI means any payee if-(1) The withholding agent has available as part of its electronically searchable information a designation for the payee as a QI or NQI; or [§1.1471-2(a) (4) (ii)(B)(1)](2) For an account maintained in the United States, the payee is presumed to be a foreign entity under §1.1471-3(f) or is documented as a foreign entity for purposes of chapter 3 or 61, and the withholding agent has recorded as part of its electronically searchable information one of the following North American Industry Classification System or Standard Industrial Classification codes indicating that the payee is a financial institution: (i) Commercial Banking (NAICS 522110). (ii) Savings Institutions (NAICS 522120). (iii) Credit Unions (NAICS 522130). (iv) Other Depositary Credit Intermediation (NAICS 522190). (v) Investment Banking and Securities Dealing (NAICS 523110).(vi) Securities Brokerage (NAICS 523120).(vii) Commodity Contracts Dealing (NAICS 523130).(viii) Commodity Contracts Brokerage (NAICS 523140).(ix) Miscellaneous Financial Investment Activities (NAICS 523999).(x) Open-End Investment Funds (NAICS 525910).(xi) Commercial Banks, NEC (SIC 6029).(xii) Branches and Agencies of Foreign Banks (branches) (SIC 6081).(xiii) Foreign Trade and International Banking Institutions (SIC 6082). [§1.1471-2(a)(4)(ii)(B)(2)(xiii)](xiv) Asset-Backed Securities (SIC 6189)(xv) Security & Commodity Brokers, Dealers, Exchanges & Services (SIC 6200). (xvi) Security Brokers, Dealers & Flotation Companies (SIC 6211).(xvii) Commodity Contracts Brokers & Dealers (SIC 6221).(xviii) Unit Investment Trusts, Face-Amount Certificate Offices, and Closed-End Management Investment Offices (SIC 6726).




Private Arrangement Intermediary (PAI)

A contractual arrangement between a Ql and a PAI that is an RDCFFI or certified deemed-compliant FFI under which the PAI generally agrees to perform all of the obligations of the Ql with respect to the accounts maintained directly by the PAI. For the requirements of a PAI contract, see the renewed 2013 Model Ql Agreement available at http://www.irs.gov/fatca

Professionally Managed

An entity is managed by another entity if the managing entity performs, either directly or through another third-party service provider, any of the following activities on behalf of the managed entity.Trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); foreign currency; foreign exchange, interest rate, and index instruments; transferable securities; or commodity futures;Individual or collective portfolio management; orOtherwise investing, administering, or managing funds, money, or financial assets on behalf of other persons

Publicly traded NFFE or NFFE affiliate of a publicly traded corporation

FATCA: • The entity is a foreign corporation that is not a financial institution; and • The stock of such corporation is regularly traded on one or more established securities market. OR• The entity is a foreign corporation that is not a financial institution; • The entity is a member of the same expanded affiliated group as an entity the stock of which is regularly traded on an established securities market.

Qualified Intermediary (QI)

FATCA: Definition of qualified intermediary [§1.1441-1(e)(5)(ii)][Reserved]. For further guidance, see §1.1441-1T(e)(5)(ii).With respect to a payment to a foreign person, the term qualified intermediary means a person that is a party to a withholding agreement with the IRS and such person is –(ii)(A) [Reserved]. For further guidance, see §1.1441-1T(e)(5)(ii)(A) [§1.1441-1(e)(5)(ii)(A)]A foreign financial institution that is a participating FFI (including a reporting Model 2 FFI), a registered deemed-compliant FFI (including a reporting Model 1 FFI), a FFI treated as a deemed-compliant FFI under an applicable IGA that is subject to due diligence and reporting requirements with respect to its U.S. accounts similar to those applicable to a registered deemed-compliant FFI under §1.1471-5(f)(1), excluding a U.S. branch of any of the foregoing entities, or any other category of FFI identified in a qualified intermediary agreement as eligible to act as a qualified intermediary;(ii)(B) [Reserved]. For further guidance, see §1.1441-1T(e)(5)(ii)(B) [§1.1441-1(e)(5)(ii)(B)]A foreign branch or office of a U.S. financial institution or a foreign branch or office of a U.S. clearing organization that is either a reporting Model 1 FFI or agrees to the reporting requirements applicable to a participating FFI with respect to its U.S. accounts;(ii)(C) [Reserved]. For further guidance, see §1.1441-1T(e)(5)(ii)(C) [§1.1441-1(e)(5)(ii)(C)]A foreign corporation for purposes of presenting claims of benefits under an income tax treaty on behalf of its shareholders to the extent permitted to act as a qualified intermediary by the IRS; or(ii)(D) [Reserved]. For further guidance, see §1.1441-1T(e)(5)(ii)(D) [§1.1441-1(e)(5)(ii)(D)]Any other person acceptable to the IRS.

QI agreementFATCA: Withholding agreement [§1.1441-1(e)(5)(iii)](iii)(A) In general [§1.1441-1(e)(5)(iii)(A)][Reserved]. For further guidance, see §1.1441-1T(e)(5)(iii)(A).The IRS may, upon request, enter into a withholding agreement with a foreign person described in paragraph (e)(5)(ii) of this section pursuant to such procedures as the IRS may prescribe in published guidance (see §601.601(d)(2) 37 of this chapter). Under the withholding agreement, a qualified intermediary shall generally be subject to the applicable withholding and reporting provisions applicable to withholding agents and payors under chapters 3, 4, and 61 of the Internal Revenue Code, section 3406, the regulations under those provisions, and other withholding provisions of the Internal Revenue Code, except to the extent provided under the agreement.(iii)(B) Terms of the withholding agreement [§1.1441-1(e)(5)(iii)(B)]

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http://www.irs.gov/fatca

[Reserved]. For further guidance, see §1.1441-1T(e)(5)(iii)(B).The agreement shall specify the obligations of the qualified intermediary under chapters 3 and 4 and, for a qualified intermediary that is a FFI, require the qualified intermediary to satisfy the documentation, withholding, and reporting obligations required of a participating FFI or registered deemedcompliant FFI (including a reporting Model 1 FFI as defined in §1.14711(b)(114)) with respect to each branch of the qualified intermediary other than a U.S. branch that is treated as a U.S. person under paragraph (b)(2)(iv)(A) of this section. The agreement will specify the type of certifications and documentation upon which the qualified intermediary may rely to ascertain the classification (e.g., corporation or partnership), status (i.e., U.S. or foreign and chapter 4 status) of beneficial owners and payees who receive reportable amounts and reportable payments collected by the qualified intermediary for purposes of chapters 3 and 61, section 3406, and, if necessary, entitlement to the benefits of a reduced rate under an income tax treaty.The agreement shall specify if, and to what extent, the qualified intermediary may assume primary withholding responsibility in accordance with paragraph (e)(5)(iv) of this section. It shall also specify the extent to which applicable return filing and information reporting requirements are modified so that, in appropriate cases, the qualified intermediary may report payments to the IRS on an aggregated basis, without having to disclose the identity of beneficial owners and payees. However, the qualified intermediary may be required to provide to the IRS the name and address of those foreign customers who benefit from a reduced rate under an income tax treaty pursuant to the qualified intermediary arrangement for purposes of verifying entitlement to such benefits, particularly under an applicable limitation on benefits provision.Under the agreement, a qualified intermediary may agree to act as an acceptance agent to perform the duties described in §301.61091(d)(3)(iv)(A) of this chapter. The agreement may specify the manner in which applicable procedures for adjustments for under withholding and over withholding, including refund procedures, apply in the context of a qualified intermediary arrangement and the extent to which applicable procedures may be modified. In particular, a withholding agreement may allow a qualified intermediary to claim refunds of over withheld amounts. The agreement shall specify the manner in which the qualified intermediary may deal with payments to other intermediaries and flow-through entities and the obligations of a qualified intermediary that acts as a qualified securities lender with respect to payments of substitute dividends under chapters 3 and 4.In addition, the agreement shall specify the manner in which the IRS will verify compliance with the agreement, including the time and manner for which a qualified intermediary will be required to certify to the IRS regarding its compliance with the agreement (including its performance of a periodic review) and the types of information required to be disclosed as part of the certification. In appropriate cases, the IRS may require review procedures be performed by an approved auditor (in addition to those performed as part of the periodic review) and may conduct a review of the auditor’s findings. The agreement may include provisions for the assessment and collection of tax in the event that failure to comply with the terms of the agreement results in the failure by the withholding agent or the qualified intermediary to withhold and deposit the required amount of tax. Further, the agreement may specify the procedures by which amounts withheld are to be deposited, if different from the deposit procedures under the Internal Revenue Code and applicable regulations.To determine whether to enter a qualified intermediary withholding agreement and the terms of any particular withholding agreement, the IRS will consider the type of local know-your-customer laws and practices to which the entity is subject, as well as the extent and nature of supervisory and regulatory control exercised under the laws of the foreign country over the foreign entity.


QI branch of a U.S. financial institution

FATCA: The term QI branch of a U.S. financial institution means a foreign branch of a U.S. financial institution for which a QI agreement is in effect.

Qualified Collective Investment Vehicle

To qualify for this classification, the entity must be an investment entity, must be regulated as an investment fund, and each equity holder of the entity must fall into certain permissible categories including Participating FFIs, Registered Deemed-Compliant FFIs, and Exempt Beneficial Owners, etc. This classification generally makes sense for funds or other investment entities that distribute their funds exclusively through financial institutions that they expect to comply with FATCA

Qualified Credit Card Issuer

CRS: The term “Qualified Credit Card Issuer” means a Financial Institution satisfying the following requirements:a) the Financial Institution is a Financial Institution 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 with respect to the card and the overpayment is not immediately returned to the customer; andb) beginning on or before [xx/xx/xxxx], the Financial Institution implements policies and procedures either to prevent a customer from making an overpayment in excess of USD 50,000, or to ensure that any customer overpayment in excess of USD 50,000 is refunded to the customer within 60 days, in each case applying the rules set forth in paragraph C of Section VII for account aggregation and currency translation. For this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns.

Qualifying Relationship

UK Statutory Instrument: For the purposes of this regulation, a person has a “qualifying relationship” with a qualifying entity if—(a) the person is connected (within the meaning in section 1122 of CTA 2010) with the entity, or(b) the person provides services or holds investments on behalf of the entity. [UKSI.2014 No. 1506]38

Reason To Knowhttp://www.irs.gov/pub/irs-pdf/p515.pdf (Page 18) Reason To Know In general, you are considered to have reason to know that a claim of foreign status or of a reduced rate of withholding is incorrect if statements contained in the withholding certificate or other documentation, or other relevant facts of which you have knowledge, would cause a reasonably prudent person in your position to question the claims made.

Recalcitrant account holder

HPP Comment: Article 4, section 2 of an IGA suspends the rules (withholding and account closure – not reporting) relating to Recalcitrant Accounts.FATCA: Recalcitrant account holders [§1.1471-5(g)]1-5(g)(1) Scope [§1.1471-5(g)(1)]This paragraph (g) provides rules for determining when an account holder of a participating FFI or registered deemed-compliant FFI is a recalcitrant account holder. Paragraph (g)(2) of this section defines the term recalcitrant account holder. Paragraphs (g)(3) and (4) of this section provide timing rules for when an account holder will begin to be treated as a recalcitrant account holder by a participating FFI and when an account holder will cease to be treated as a recalcitrant account holder by such institution. For rules for determining the holder of an account, see paragraph (a)(3) of this section. For the withholding requirements of a FFI with respect to its recalcitrant account holders, see paragraph (f) of this section and §1.1471-4(b). For the reporting requirements of a FFI with respect to its recalcitrant account holders, see §1.1471-4(d)(6), and, for the reporting required with respect to payments made to such account holders, see §1.1474-1(d)(4)(iii). The rules provided in this paragraph (g) to classify certain account holders as recalcitrant account holders shall not, however, apply to a U.S. branch of a participating FFI. Instead, a U.S. branch of a participating FFI or registered deemed-compliant FFI that is treated as a U.S. person shall apply the presumption rules of §1.1471-3(f) (for foreign entity account holders) and chapter 3 or 61 (for individual payees) to determine the status of a payee if it cannot reliably associate a reportable payment made to the payee with valid documentation.1-5(g)(2) Recalcitrant account holder [§1.1471-5(g)(2)]The term recalcitrant account holder means any holder of an account maintained by a FFI if such account holder is not a FFI (or presumed to be a FFI under §1.1471-3(f)), the account does not meet the requirements of the exception to U.S. account status




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http://www.irs.gov/pub/irs-pdf/p515.pdf


described in paragraph (a)(4) of this section (for depository accounts with a balance of $50,000 or less) and does not qualify for any of the exceptions from the documentation requirements described in §1.1471-4(c) (3)(iii), (c)(4)(iii), (c)(5)(iii), (c)(5)(iv)(E) (or the participating FFI elects to forego such exceptions) and-(2)(i) The account holder fails to comply with requests by the FFI for the documentation or information that is required under §1.1471-4(c) for determining the status of such account as a U.S. account or other than a U.S. account; [§1.1471-5(g)(2)(i)](2)(ii) The account holder fails to provide a valid Form W-9 upon request from the FFI or fails to provide a correct name and TIN combination upon request from the FFI when the FFI has received notice from the IRS indicating that the name and TIN combination reported by the FFI for the account holder is incorrect; [§1.1471-5(g)(2)(ii)](2)(iii) If foreign law would (but for a waiver) prevent reporting by the FFI (or branch or division thereof) of the information described in §1.1471-4(d)(3) or (5) with respect to such account, the account holder (or substantial U.S. owner of an account holder that is a U.S. owned foreign entity) fails to provide a valid and effective waiver to permit such reporting; or [§1.1471-5(g)(2)(iii)](2)(iv) The account holder provides the documentation described in §1.1471-3(d)(12) to establish its status as a passive NFFE (other than a WP or WT) but fails to provide the information regarding its owners required under §1.1471-3(d)(12)(iii). [§1.1471-5(g)(2)(iv)]1-5(g)(3) Start of recalcitrant account holder status [§1.1471-5(g)(3)](3)(i) Pre-existing accounts identified under the procedures described in §1.1471-4(c) for identifying U. S. accounts [§1.1471-5(g)(3)(i)](i)(A) In general [§1.1471-5(g)(3)(i)(A)]An account holder of a pre-existing account described in paragraph (g)(2) of this section maintained by a participating FFI will be treated as a recalcitrant account holder beginning on the dates provided in paragraphs (g)(3)(B) through (D) of this section. An account holder of a pre-existing account described in paragraph (g)(2) of this section that is maintained by a registered deemed-compliant FFI will be treated as a recalcitrant account holder beginning on the dates provided in paragraph (f) of this section (setting forth the time by which the FFI must identify its accounts in accordance with the requirements of §1.1471-4(c) in order to meet the requirements of its applicable registered deemed-compliant status).(i)(B) Accounts other than high-value accounts [§1.1471-5(g)(3)(i)(B)]Account holders of pre-existing accounts maintained by a participating FFI that are not high-value accounts (as described in §1.1471-4(c)(5)(iv)(D)) and that are described in paragraph (g)(2) of this section will be treated as recalcitrant account holders beginning on the date that is two years after the effective date of the FFI agreement. (i)(C) High-value accounts [§1.1471-5(g)(3)(i)(C)]Account holders of pre-existing accounts maintained by a participating FFI that are high-value accounts (as described in §1.1471-4(c)(5)(iv)(D)) and that are described in paragraph (g)(2) of this section will be treated as recalcitrant account holders beginning on the date that is one year after the effective date of the FFI agreement.(i)(D) Pre-existing accounts that become high-value accounts [§1.1471-5(g)(3)(i)(D)][Reserved]. For further guidance, see §1.1471-5T(g)(3)(i)(D).With respect to a calendar year beginning after December 31, 2015, an account holder that is described in paragraph (g)(2) of this section and that holds a pre-existing account that a participating FFI identifies as a high-value account pursuant to §1.1471-4(c)(5)(iv)(D) will be treated as a recalcitrant account holder beginning on the earlier of the date a withholdable payment is made to the account following end of the calendar year in which the account is identified as a high-value account or the date that is six months after the calendar year end.(3)(ii) Accounts that are not pre-existing accounts and accounts requiring name/TIN correction [§1.1471-5(g)(3)(ii)]An account holder of an account other than a pre-existing account and that is described in paragraph (g)(2) of this section will be treated as a recalcitrant account holder beginning on the date that is the earlier of 90 days after the date the account is opened by the participating FFI or the date that a withholdable payment that is subject to withholding under §1.1441-2(a) is made to the account. An account holder for which the participating FFI received a notice from the IRS indicating that the name and TIN combination provided for the account holder is incorrect will be treated as a recalcitrant





account holder following the date of such notice within the time prescribed in §31.3406(d)-5(a) of this chapter.(3)(iii) Accounts with changes in circumstances [§1.1471-5(g)(3)(iii)]An account holder holding an account that is described in paragraph (g)(2) of this section following a change in circumstances (other than a change in account balance or value in a subsequent year that causes an individual account to be identified as a high-value account) will be treated as a recalcitrant account holder beginning on the date that is 90 days after the change in circumstances. For the definition of a change in circumstances with respect to an account, see §1.1471-4(c)(2)(iii).1-5(g)(4) End of recalcitrant account holder status [§1.1471-5(g)(4)]An account holder that is treated as a recalcitrant account holder under paragraphs (g)(2) and (3) of this section will cease to be so treated as of the date on which the account holder is no longer described in paragraph (g)(2) of this section.


Registered Deemed-Compliant FFI (RDCFFI)

(1) a FFI that is registering to confirm that it meets the requirements to be treated as a local FFI, non-reporting Member FI of a PFFI group, qualified collective investment vehicle, restricted fund, qualified credit card issuer, or sponsored investment entity or controlled foreign corporation (see Treas. Reg. §1.1471-5(f) (1) (i) for more information about these categories), (2) a Reporting FI under a Model 1 IGA that is registering to obtain a GIIN, or (3) a FFI that is treated as a Non-reporting Fl under a Model 1 or 2 IGA and that is registering pursuant to the applicable Model 1 or 2 IGA.

Regularly Traded§1.1472-1(c)(1)(i)(A)

Stock of a corporation is regularly traded on one or more established securities markets for a calendar year ifOne or more classes of stock of the corporation that, in the aggregate, represent more than 50% of the total combined voting power of all classes of stock of such corporation entitled to vote and of the total value of the stock of such corporation are listed on such market or markets during the prior calendar year; andWith respect to each class relied on to meet the more-than-50% listing requirementTrades in each such class are effected, other than in de minimis quantities, on such market or markets on at least 60 days during the prior calendar year; andThe aggregated number of shares in each such class that are traded onsuch market or markets during the prior year are at least 10% of the average number of shares outstanding in that class during the prior calendar year

Related EntityCRS: An Entity is a “Related Entity” of another Entity if either Entity controls the other Entity, or the two Entities are under common control. For this purpose control includes direct or indirect ownership of more than 50% of the vote and value in an Entity.CRS Handbook:Related Entities are generallydefined as one entity that controls another entity or two or more entitiesthat are under common control. Control is defined to include direct orindirect ownership of more than 50 percent of the vote and value in anEntity. As provided in the Commentary, most funds will likely notqualify as a Related Entity of another fund, and thus will not be able toapply the rules described above for treating certain New Accounts asPreexisting Accounts or apply the account aggregation rules toFinancial Accounts maintained by Related Entities. A jurisdiction maymodify the definition of Related Entity so that a fund will qualify as aRelated Entity of another fund by providing that control includes, withrespect to Investment Entities described in subparagraph (A)(6)(b), twoentities under common management, and such management fulfils thedue diligence obligations of such Investment Entities. A similarapproach can be achieved under FATCA by applying the SponsoringRegime. The EU Directive also provides this modification.FATCA: An entity that is related to another entity under an applicable Model 1 or 2 IGA. An entity is related to another if either entity controls the other or the two entities are under common control. Control includes direct or indirect ownership of more than 50% of the vote or value in an entity.

Relationship manager

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).FATCA: A relationship manager is an officer or other employee of a FFI who is assigned responsibility for specific account holders on an on-going basis (including as an officer or employee that is a member of a FFI’s private banking department), advises account holders regarding their banking, investment, trust, fiduciary, estate planning, or philanthropic needs, and recommends, makes referrals to, or arranges for the provision of financial products, services, or other assistance by internal or external providers to meet those needs. Notwithstanding the previous sentence, a person is only a relationship manager with respect to an account that has a balance or value of more than $1,000,000, taking into account the aggregation rules described in §1.1471-5(b) (4) (iii)(A) and (B).UK Guidance AEIM 102980: The relationship manager enquiry is required for high value individual accounts in addition to the electronic search and the paper record search. The financial institution must consider whether any relationship manager





associated with an account, which includes any accounts aggregated with such an account, has actual knowledge that would identify the Account Holder as a Reportable Person. A relationship manager is an employee or officer of the financial institution who has been assigned responsibility for specific Account Holders on an ongoing basis. A relationship manager will provide advice to Account Holders regarding their accounts as well as recommending and arranging for the provision of financial products, services and other related assistance. Relationship management must be more than ancillary or incidental to a person’s job role. Thus a person with some contact with Account Holders, but whose functions are administrative or clerical nature, is not considered to be a relationship manager. The relationship manager also has an important role in identifying any change of circumstance in relation to a high value individual account. A financial institution must ensure that it has procedures in place to capture changes that are made known to the relationship manager in respect of the Account Holder’s reportable status.


Relevant Holding Company

[UKSI.2014 No. 1506] 39For the purposes of these Regulations a “relevant holding company” means— (a) a person whose business consists wholly or mainly of holding (directly or indirectly) any shares or securities issued by a related entity which is within any of regulation 3(1)(a) to (d), or (b) a person whose business consists wholly or mainly of holding shares or securities, and who has a qualifying relationship with a qualifying entity.[Note this would be a Passive NFFE not a FFI.]

Reportable Account

CRS: The term “Reportable Account” means an account held by one or more Reportable Persons or by a Passive NFE with one or more Controlling Persons that is a Reportable Person, provided it has been identified as such pursuant to the due diligence procedures described in Sections II through VII.[UKSI.2014 No. 1506] In these Regulations a “reportable account”, in relation to a reporting financial institution, means—(a) subject to paragraph (2), a U.S. reportable account maintained by that institution in the United Kingdom for the purposes of its business as described in regulation 3(1), or(b) subject to paragraph (3), an account that is—(i) a pre-existing individual account meeting the description at paragraph II.A of Annex I of the treaty,(ii) a new individual account meeting the description at paragraph III.A of Annex I of the treaty, and(iii) a pre-existing entity account meeting the description at paragraph IV.A of Annex I of the treaty.(2) A U.S. reportable account is not a reportable account if—(a) the account holder is deceased or is a personal representative (within the meaning of section 989 of ITA 2007),(b) the account is held to comply with an order or judgment made or given in legal proceedings, or (c) the funds held in the account are held solely as security for the performance of a party’s obligation under a contract for the disposal of an estate or interest in land or of tangible moveable property.(3) An account within any of paragraphs (i) to (iii) of paragraph (1)(b) is not a reportable account for a calendar year if there is an election by the reporting financial institution in force for that year to treat any such account as not being a reportable account.(4) An election under paragraph (3) must be made for each calendar year in which the election is to have effect in the return required by regulation 12 for that year.(5) The institution must apply the account balance aggregation and currency translation rules atparagraph VI.C of Annex I of the treaty for the purposes of determining—(a) whether or not a financial account maintained by an institution meets any of the descriptions in paragraph (1)(b), and(b) which case in the table in regulation 11(3) applies to an account.But, in determining the balance or value of an account denominated in a currency other than US dollars, instead of applying the currency translation rule in sub-paragraph VI.C.4 of Annex I, the institution may translate the relevant dollar threshold amounts referred to in Annex 1 and regulation 11(3) into the other currency by reference to the spot rate of exchange on the date for which the institution is determining the threshold amounts.(6) For the purposes of these Regulations—(a) any reference to an entity account is to a financial account which is not an account the account holder of which (or, if more than one, each account holder of which) is an individual holding the account otherwise than as a partner of a partnership, and(b) any reference to an individual account is to a financial account held in the name of an individual (whether solely or jointly with another) but not as a partner of a partnership.UK Guidance: AEIM 102520: An account is treated as a Reportable Account from the date it is identified as such pursuant to the due diligence procedures that the financial institution is required to follow. Information must be reported annually to HMRC on that account in the calendar year following the year to which the reportable information relates. Once an account has been identified as a Reportable Account it remains so until there is a change that takes the account out of the definition of Reportable





Account. This can happen in a number of ways: The Account Holder ceases to be a Reportable Person. The account is closed or transferred to another financial institution in its entirety

(where it may become a Reportable Account by that business). The account becomes an Excluded Account.

The reporting financial institution becomes a Non-reporting Financial Institution. While the account remains a Reportable Account it must be reported even where the balance or value of the account is zero or negative (the latter are treated as ‘zero’ balances). It also remains reportable where nothing has been credited to or in respect of the account during the appropriate reportable period. When an account ceases to be a Reportable Account it no longer needs to be reported, but where the account is closed information with respect to that account must be reported until the date of closure in accordance with the rules of each regime (see AEIM102170).


Reportable Jurisdiction

CRS: The term “Reportable Jurisdiction” means a Jurisdiction (i) with which an agreement is in place pursuant to which there is an obligation in place to provide the information specified in Section I, and (ii) which is identified in a published list.

Reportable Jurisdiction Person

CRS: The term “Reportable Jurisdiction Person” means an individual or Entity that is resident in a Reportable Jurisdiction under the tax laws of such Jurisdiction, or an estate of a decedent that was a resident of a Reportable Jurisdiction. For this purpose, an Entity such as a partnership, limited liability partnership or similar legal arrangement that has no residence for tax purposes shall be treated as resident in the Jurisdiction in which its place of effective management is situated.

Reportable Payment

The term reportable payment means a payment of interest or dividends (as defined in section 3406(b)(2)) and other reportable payments (as defined in section 3406(b)(3)).

Reportable Person

CRS: The term “Reportable Person” means a Reportable Jurisdiction Person other than: (i) a corporation the stock of which is regularly traded on one or more established securities markets; (ii) any corporation that is a Related Entity of a corporation described in clause (i); (iii) a Governmental Entity; (iv) an International Organisation; (v) a Central Bank; or (vi) a Financial Institution.

Reporting Financial Institution

CRS: The term “Reporting Financial Institution” means (i) any Financial Institution that is resident in a Participating Jurisdiction, but excludes any branch of that Financial Institution that is located outside such Participating Jurisdiction, and (ii) any branch of a Financial Institution that is not resident in a Participating Jurisdiction, if that branch is located in such Participating Jurisdiction.FATCA: a Financial Institution that is treated as a Reporting FI under the terms of a Model 1 or Model 2 IGA that is in effect. The term Reporting FI also includes a foreign branch of a USFI that is treated as a Reporting FI under the terms of a Model 1 IGA that is treated as in effect. A foreign branch of a USFI treated as a Reporting FI under the terms of a Model 2 IGA is not required to submit a FATCA Registration form to obtain a GIIN, unless it is renewing a QI Agreement.[UKSI.2014 No. 1506] “reporting financial institution” means a person who carries on business in the United Kingdom as (a) a depository institution,(b) an investment entity,(c) a custodial institution,(d) a specified insurance company,(e) a relevant holding company, or(f) a treasury company.(2) But a person who is a non-reporting United Kingdom financial institution may only qualify as a reporting financial institution for the purposes of these Regulations if that person is a registered deemed-compliant financial institution.

Reporting Model 1 FFI

FATCA: The term reporting Model 1 FFI means a FFI with respect to which a foreign government or agency thereof agrees to obtain and exchange information pursuant to a Model 1 IGA, other than a FFI that is treated as a non-participating FFI under the Model 1 IGA.

Reporting Model 2 FFI

FATCA: The term reporting Model 2 FFI means a participating FFI that is described in § 1.1471-1(b)(91):The term participating FFI means a FFI that has agreed to comply with the requirements of a FFI agreement, including a FFI described in a Model 2 IGA that has agreed to comply with the requirements of a FFI agreement (a reporting Model 2 FFI). The term participating FFI also includes a QI branch of a U.S. financial institution, unless such branch is a reporting Model 1 FFI.

Residence Address (also see Permanent Residence Address)

The residence address held by a financial institution must be sufficiently detailed to identify where the Account Holder resides and will generally be in a form that identifies the street and the town, city or area where the individual lives in sufficient detail for the financial institution to determine the jurisdiction in which the residence is located. In general, an “in-care-of” address or a post office box is not a residence address. However, a post office box can be part of a residence address where the address also contains a street, an apartment or suite number, or a rural route and thus clearly identifies the actual residence of the Account Holder. An “in-care-of” address is unlikely to provide sufficient detail to identify the residence of the Account Holder as the address is that of the person receiving mail on behalf of the Account Holder. Exceptionally, an “in-care-of” address may be relied on where it is clear that the



Account Holder is military personnel and the “in-care-of” address is a standard address of the type used for individuals residing on military bases. Additionally, an “in-care-of” address may be relied on where the address relates to a care or residential home.


Resident alienhttp://www.irs.gov/pub/irs-pdf/p515.pdf (Pages 7 and 8.)A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.

Green card test. An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. This is known as the green card test because these aliens hold immigrant visas (also known as green cards).

Substantial presence test. An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Under this test, the individual must be physically present in the United States on at least:

1. 31 days during the current calendar year, and 2. 183 days during the current year and the 2 preceding years, counting all the

days of physical presence in the current year, but only 1 3 the number of days of presence in the first preceding year, and only 1 6 the number of days in the second preceding year.

In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. This exception is for a limited period of time. For more information on resident and non-resident status, the tests for residence, and the exceptions to them, see Publication 519.

Responsible officer (RO)

HPP comment: The IGAs and the CRS are silent on the Responsible Officer and are also silent on Attestations. (The IGAs include no mention of “Responsible” or “Responsibility”.)

However, in contrast to silence on these issues from IGA Jurisdictions and the OECD’s CRS, the IRS states the following: http://www.irs.gov/Businesses/Corporations/Frequently-Asked-Questions-FAQs-FATCA--Compliance-Legal#General

IGA RegistrationQ5: In a Model 1 IGA Jurisdiction, does the FFI need to fill out Question 10 about Responsible Officers?

A5: Yes, if a FFI treated as a reporting Model 1 FFI wishes to have a GIIN, a Responsible Officer must be designated in Part 1, line 10 of Form 8957. Please see the FAQs on Responsible Officers for further information.

My own opinion is that the question alludes to the IGA’s silence on the Responsible Officer (perhaps implying the RO concept may not apply in Model 1 Countries). Further, perhaps the IRS’ answer implies that the RO concept applies in Model 1 IGA countries, notwithstanding silence in the IGAs themselves.

Legal opinions vary about whether the role of a Officer, who takes on personal liability for FATCA compliance for a FFI, applies in Model 1 IGA Countries.

FATCA: The term responsible officer means, with respect to a participating FFI, an officer of any participating FFI or reporting Model 1 FFI in the participating FFI’s expanded affiliated group with sufficient authority to fulfil the duties of a responsible officer described in §1.1471-4, which include the requirement to periodically certify to the IRS regarding the FFI’s compliance with its FFI agreement. The term responsible officer means, in the case of a registered deemed-compliant FFI, an officer of any deemed-compliant FFI or participating FFI in the deemed-compliant FFI’s expanded affiliated group with sufficient authority to ensure that the FFI meets the applicable requirements of §1.1471-5(f) . If a participating FFI elects to be part of a consolidated compliance program, the term responsible officer means an officer of the compliance FI (as described in §1.1471-4(f) ) with sufficient authority to fulfil the duties of a







http://www.irs.gov/pub/irs-pdf/p515.pdf

responsible officer described in §1.1471-4(f)(2) and (3) on behalf of each FFI in the compliance group.


Responsible PartyFATCA: The individual responsible for the performance of the FI under the terms of a QI, WP, or WT Agreement.

Restricted distributor

FATCA: • Operates as a distributor with respect to debt or equity interests of the restricted fund with respect to which this form is furnished; • Provides investment services to at least 30 customers unrelated to each other and less than half of its customers are related to each other; • Is required to perform AML due diligence procedures under the antimoney laundering laws of its country of organization (which is an FATF compliant Jurisdiction); • Operates solely in its country of incorporation or organization, has no fixed place of business outside of that country, and has the same country of incorporation or organization as all members of its affiliated group, if any; • Does not solicit customers outside its country of incorporation or organization; • Has no more than $175 million in total assets under management and no more than $7 million in gross revenue on its income statement for the most recent accounting year; • Is not a member of an expanded affiliated group that has more than $500 million in total assets under management or more than $20 million in gross revenue for its most recent accounting year on a combined or consolidated income statement; and • Does not distribute any debt or securities of the restricted fund to specified U.S. persons, passive NFFEs with one or more substantial U.S. owners, or non-participating FFIs.With respect to all sales of debt or equity interests in the restricted fund with respect to which this form is furnished that are made after December 31, 2011, the entity identified:Has been bound by a distribution agreement that contained a general prohibition on the sale of debt or securities to U.S. entities and U.S. resident individuals and is currently bound by a distribution agreement that contains a prohibition of the sale of debt or securities to any specified U.S. person, passive NFFE with one or more substantial U.S. owners, or non-participating FFI.ORIs currently bound by a distribution agreement that contains a prohibition on the sale of debt or securities to any specified U.S. person, passive NFFE with one or more substantial U.S. owners, or non-participating FFI and, for all sales made prior to the time that such a restriction was included in its distribution agreement, has reviewed all accounts related to such sales in accordance with the procedures identified in §1.1471-4(c) applicable to pre-existing accounts and has redeemed or retired any, or caused the restricted fund to transfer the securities to a distributor that is a participating FFI or reporting Model 1 FFI securities which were sold to specified U.S. persons, passive NFFEs with one or more substantial U.S. owners, or non-participating FFIs.

Restricted FundTo qualify for this classification, the entity must be regulated as an investment fund, it must do business only with specified distributors, it must amend contracts to prevent US investors and it must either redeem or transfer any interests issued directly by the fund (i.e., there is no secondary market)

RSA Rivest, Shamir and Adleman

Securitisation structure

UK HMRC Automatic Exchange of Financial Account Information Guidance Notes, 14th September 2015. Securitisation structures are typically legally remote from the entity in relation to which the risks and rewards of the structure are associated. Typically, a securitisation structure will include an issuing entity, funding entity, seller, mortgage trustee and often counterparties. The common principles as to whether an entity meets the definition of a financial institution should be applied to all entities within a securitisation structure. More specifically, the expectation would be that issuing entities are likely to be classified as investment entities on the basis of their activities, trusts should be considered in accordance with the guidance at AEIM100800 and holding and funding entities will likely be treated as financial institutions in their own right. A securitisation vehicle that is a financial institution will need to consider if it has any financial accounts that may be reportable. For FATCA there is a specific treatment of certain limited securitisation vehicles established prior to 17 January 2013. Details can be found at. Example of a securitisation programme. Cash Flows: 1. Mortgage customer makes their regular monthly mortgage payment to bank A plc. 2. Bank A plc identifies the appropriate SPV that the cash belongs to and pays the cash to that entity, say, a trust. 3. Once a month on the distribution date the trust pays cash to the funding company. 4. The funding company pays cash on payment date to Bank B. 5. Bank B passes the cash to Euroclear or Clear Stream, the exchanges on which




the bonds are held. 6. Euroclear and Clear Stream pass the cash to the custodian bank who then credits the bondholders' accounts. Bondholders then draw on their cash at the custodian bank. The above scenario provides the following reporting obligations: • Mortgages are not within the financial account definition so there is no financial account with Bank A Plc and therefore no reporting requirement in relation to them. • Steps 3 – 5 involve payments made between financial institutions and as such there is no need for any of these payments to be reported unless a Financial Institution that receives a payment is a Non-Participating Financial Institution for FATCA purposes. The trust though may have reporting requirements if any of its Account Holders are Reportable Persons. . • In step 6 the custodian will have financial accounts in which the bonds are held and as such the custodian will need to identify if it has any Reportable Accounts. Where it does, it must perform the necessary reporting.


SFTP Secure File Transfer Protocol

Simple trustFATCA: The term simple trust means a trust that meets the requirements of section 651(a)(1) and (2).

Single FI (Single)FATCA: A Single FI means a Financial Institution that does not have any Member FIs and that is registering for PFFI or RDCFFI status for itself or one or more of its branches. A Single FI may also include a foreign branch of a USFI treated as a Reporting FI under a Model 1 IGA or that has in effect a QI Agreement.

Specified Insurance Company

The attention of those in the UK is drawn to Appendix 13 where this term is also defined by local guidance (Page Error: Reference source not found).CRS: The term “Specified Insurance Company” means any Entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.FATCA: Is an insurance company or a holding company (as described in paragraph (e)(5)(i)(C) of this section) that is a member of an expanded affiliated group that includes an insurance company, and the insurance company or holding company issues, or is obligated to make payments with respect to, a cash value insurance or annuity contract described in paragraph (b)(1)(iv) of this section (specified insurance company); or [§1.1471-5(e) (1) (iv)]UK IGA: The term “Specified Insurance Company” means any entity that is an insurance company (or the holding company of an insurance company)that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract. [UK IGA]UK Guidance: AEIM 100840. A specified insurance company is an entity that is an insurance company, including a holding company in an insurance group that writes products that are classified as Cash Value Insurance Contracts or Annuity Contracts or makes payments with respect to such contracts. Insurance companies that only provide general insurance or term life insurance will not be specified insurance companies, nor will reinsurance companies that only provide indemnity reinsurance contracts. An insurance broker that sells cash value insurance or Annuity Contracts on behalf of insurance companies is part of the payment chain and will not be a specified insurance company unless obliged to make payments to the Account Holder under the terms of the Cash Value Insurance Contract or Annuity Contract.

Specified U.S. person

FATCA: Specified U.S. person [§1.1473-1(c)]The term specified United States person (or specified U.S. person) means any U.S. person [The term U.S. person or United States person means a person described in section 7701(a)(30), the United States government (including an agency or instrumentality thereof), a State (including an agency or instrumentality thereof), or the District of Columbia (including an agency or instrumentality thereof). For purposes of the preceding sentence, the determination of whether an insurance company is a U.S. person is made without regard to an election by a company not licensed to do business in any State to be subject to U.S. income tax as if it were a domestic insurance company. Thus, a foreign insurance company not licensed to do business in any State that elects pursuant to section 953(d) to be subject to U.S. income tax as if it were a U.S. insurance company is not a U.S. person.]other than-3-1(c)(1) A corporation the stock of which is regularly traded on one or more established securities markets, as described in §1.1472-1(c)(1)(i); [§1.1473-1(c)(1)]3-1(c)(2) Any corporation that is a member of the same expanded affiliated group as a corporation described in §1.1472-1(c)(1)(i); [§1.1473-1(c)(2)]3-1(c)(3) Any organization exempt from taxation under section 501(a) or an individual retirement plan as defined in section 7701(a)(37); [§1.1473-1(c)(3)]3-1(c)(4) The United States or any wholly owned agency or instrumentality thereof; [§1.1473-1(c)(4)]3-1(c)(5) Any State, the District of Columbia, any U.S. territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing; [§1.1473-1(c)(5)]3-1(c)(6) Any bank as defined in section 581; [§1.1473-1(c)(6)]3-1(c)(7) Any real estate investment trust as defined in section 856; [§1.1473-1(c)(7)] 3-1(c)(8) Any regulated investment company as defined in section 851 or any entity









https://www.law.cornell.edu/uscode/text/26/953#d

https://www.law.cornell.edu/uscode/text/26/7701#a_30



registered with the Securities Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-64); [§1.1473-1(c)(8)]3-1(c)(9) Any common trust fund as defined in section 584(a); [§1.1473-1(c)(9)]3-1(c)(10) Any trust that is exempt from tax under section 664(c) or is described in section 4947(a)(1); [§1.1473-1(c)(10)]3-1(c)(11) A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any State; [§1.1473-1(c)(11)]3-1(c)(12) A broker; and [§1.1473-1(c)(12)]3-1(c)(13) Any tax exempt trust under a section 403(b) plan or section 457(g) plan. [§1.1473-1(c)(13)]








Sponsored Direct Reporting NFFE§1.1471-5(e)(5)(i)(D)

A NFFE is a sponsored direct reporting NFFE if the NFFE is a direct reporting NFFE and if another entity, other than a nonparticipating FFI, has agreed with the NFFE to act as its sponsoring entity. See §1.1472-1 (c) (5) for a complete list of the requirements that the sponsoring entity must meet.

Sponsored FFIFATCA: An investment entity or a 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.

Sponsored FFI group

FATCA: The term sponsored FFI group means a group of sponsored FFIs that share the same sponsoring entity.

Sponsoring EntityFATCA: An entity that will perform the due diligence, withholding, and reporting obligations of one or more sponsored investment entities or controlled foreign corporations (Sponsored FFIs).

SSH Secure Shell

Standardized industry code

FATCA: The term standardized industry code means a code that is part of a coding system used by the withholding agent or FFI to classify account holders by business type for purposes other than U.S. tax purposes and that was implemented by the withholding agent by the later of January 1, 2012, or six months after the date the withholding agent was formed or organized.

Standing instructions to pay amounts

FATCA: The term standing instructions to pay amounts means current payment instructions provided by the account holder, or an agent of the account holder, that will repeat without further instructions being provided by the account holder. Therefore, for example, a payment instruction to make an isolated payment is not a standing instruction to pay amounts, even if the instructions are given one year in advance. However, an instruction to make payments indefinitely is a standing instruction to pay amounts for the period during which such instructions are in effect, even if such instructions are amended after a single payment.

Subject to withholding

FATCA: The term subject to withholding, with respect to an amount, means an amount for which withholding is required under chapter 4 or an amount for which chapter 4 withholding was otherwise applied.

Substantial U.S. owner

FATCA: Substantial U.S. owner [§1.1473-1(b)]3-1(b)(1) Definition [§1.1473-1(b)(1)]Except as otherwise provided in paragraph (b)(4) or (5) of this section, the term substantial United States owner (or substantial U.S. owner) means:(1)(i) With respect to any foreign corporation, any specified U.S. person that owns, directly or indirectly, more than 10 percent of the stock of such corporation (by vote or value); [§1.1473-1(b)(1)(i)](1)(ii) With respect to any foreign partnership, any specified U.S. person that owns, directly or indirectly, more than 10 percent of the profits interests or capital interests in such partnership; and [§1.1473-1(b)(1)(ii)](1)(iii) In the case of a trust-[§1.1473-1(b)(1)(iii)](iii)(A) Any specified U.S. person treated as an owner of any portion of the trust under sections 671 through 679; and [§1.1473-1(b)(1)(iii)(A)](iii)(B) Any specified U.S. person that holds, directly or indirectly, more than 10% of the beneficial interests of the trust. [§1.1473-1(b)(1)(iii)(B)]3-1(b)(2) Indirect ownership of foreign entities [§1.1473-1(b)(2)]For purposes of determining a person’s interest in a foreign entity, the following rules shall apply.(2)(i) Indirect ownership of stock [§1.1473-1(b)(2)(i)]Stock of a foreign corporation that is owned directly or indirectly by an entity (other than a participating FFI, a deemed-compliant FFI (excluding an owner-documented FFI), a U.S. financial institution, a U.S. person that is not a specified U.S. person, an exempt beneficial owner, or an excepted NFFE) that is a corporation, partnership, or trust shall be considered as being owned proportionately by such entity’s shareholders, partners, or, in the case of a trust, persons treated as owners under sections 671 through 679 of any portion of the trust that includes the stock, and the beneficiaries of the trust. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.(2)(ii) Indirect ownership in a foreign partnership or ownership of a beneficial interest in



a foreign trust [§1.1473-1(b)(2)(ii)]A capital or profits interest in a foreign partnership or an ownership or beneficial interest (as described in paragraph (b)(3) of this section) in a foreign trust that is owned or held directly or indirectly by an entity (other than a participating FFI, a deemed-compliant FFI (excluding an owner-documented FFI), a U.S. financial institution, a U.S. person that is not a specified U.S. person, an exempt beneficial owner, or an excepted NFFE) that is a corporation, partnership, or trust shall be considered as being owned or held proportionately by such entity’s shareholders, partners, or, in the case of a trust, persons treated as owners under sections 671 through 679 of any portion of the trust that includes the partnership or beneficial trust interest, and the beneficiaries of the trust. Partnership or beneficial trust interests considered to be owned or held by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned or held by such person.(2)(iii) Ownership and holdings through options [§1.1473-1(b)(2)(iii)]If a specified U.S. person holds, directly or indirectly (applying the principles of paragraphs (b)(2)(i) and (ii) of this section) an option to acquire stock in a foreign corporation, a capital or profits interest in a foreign partnership, or an ownership or beneficial interest in a foreign trust, such person is considered to own the underlying equity or other ownership interest in such foreign entity for purposes of this paragraph (b). For purposes of the preceding sentence, an option to acquire such an option, and each one of a series of such options, shall be considered an option to acquire such stock or other ownership interest described in this paragraph (b)(2)(iii).(2)(iv) Determination of proportionate interest [§1.1473-1(b)(2)(iv)]For purposes of this paragraph (b), and except as otherwise provided in paragraph (b)(3) of this section, the determination of a person’s proportionate interest in a foreign corporation, partnership, or trust is based on all of the relevant facts and circumstances. In making this determination, any arrangement that artificially decreases a specified U.S. person’s proportionate interest in any such entity will be disregarded in determining whether such person is a substantial U.S. owner. In lieu of applying the rules of this paragraph (b)(2) to determine whether an owner’s proportionate interest in a foreign entity meets the 10 percent threshold described in paragraph (b)(1) of this section, the entity or its withholding agent may opt to treat the owner as a substantial U.S. owner.(2)(v) Interests owned or held by a related person [§1.1473-1(b)(2)(v)][Reserved]. For further guidance, see §1.1473-1T(b)(2)(v).For purposes of determining whether a specified U.S. person is a substantial U.S. owner in a foreign entity described in paragraphs (b)(2)(i) through (iv) of this section, if a specified U.S. person owns or holds, directly or indirectly, any interest in the foreign entity, that interest must be aggregated with any such interest in the foreign entity owned or held, directly or indirectly, by a related person. For purposes of the preceding sentence, a related person is a person or spouse of a person described in §1.267(c)-1(a)(4), determined by reference to such specified U.S. person.3-1(b)(3) Beneficial interest in a foreign trust [§1.1473-1(b)(3)](3)(i) In general [§1.1473-1(b)(3)(i)]For purposes of paragraph (b)(1)(iii)(B) of this section, a person holds a beneficial interest in a foreign trust if such person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust. For purposes of this section, a mandatory distribution means a distribution that is required to be made pursuant to the terms of the trust document. A discretionary distribution means a distribution that is made to a person at the discretion of the trustee or a person with a limited power of appointment of such trust.(3)(ii) Determining the 10 percent threshold in the case of a beneficial interest in a foreign trust [§1.1473-1(b)(3)(ii)]A person will be treated as holding directly or indirectly more than 10 percent of the beneficial interest in a foreign trust if(ii)(A) The person receives, directly or indirectly, only discretionary distributions from the trust and the fair market value of the currency or other property distributed, directly or indirectly, from the trust to such person during the prior calendar year exceeds 10 percent of the value of either all of the distributions made by the trust during that year or all of the assets held by the trust at the end of that year; [§1.1473-1(b)(3)(ii)(A)]


(ii)(B) The person is entitled to receive, directly or indirectly, mandatory distributions from the trust and the value of the person’s interest in the trust, as determined under section 7520, exceeds 10 percent of the value of all the assets held by the trust as of the end of the prior calendar year; or [§1.1473-1(b)(3)(ii)(B)] (ii)(C) (C) The person is entitled to receive, directly or indirectly, mandatory distributions and may receive, directly or indirectly, discretionary distributions from the trust, and the value of the person’s interest in the trust, determined as the sum of the fair market value of all of the currency or other property distributed from the trust at the discretion of the trustee during the prior calendar year to the person and the value of the person’s interest in the trust as determined under section 7520 at the end of that year, exceeds either 10 percent of the value of all distributions made by such trust during the prior calendar year or 10 percent of the value of all the assets held by the trust at the end of that year. [§1.1473-1(b)(3)(ii)(C)]3-1(b)(4) Exceptions [§1.1473-1(b)(4)](4)(i) De-minimis amount or value exception [§1.1473-1(b)(4)(i)]A specified U.S. person is not treated as a substantial U.S. owner if-(i)(A) The fair market value of the currency or other property distributed, directly or indirectly, from the trust to such specified U.S. person during the prior calendar year is $5,000 or less and, [§1.1473-1(b)(4)(i)(A)](i)(B) In the case of a specified U.S. person that is entitled to receive mandatory distributions, the value of such person’s interest in the trust is $50,000 or less. [§1.1473-1(b)(4)(i)(B)](4)(ii) Trusts wholly owned by certain U.S. persons [§1.1473-1(b)(4)(ii)]A trust that is treated as owned only by U.S. persons under sections 671 through 679 is not required to treat any of its beneficiaries as substantial U.S. owners.3-1(b)(5) Special rule for certain financial institutions [§1.1473-1(b)(5)]In the case of any financial institution described in §1.1471-5(e)(1)(iii) or (iv) (referring to investment entities and specified insurance companies), this section shall be applied by substituting “0 percent” for “10 percent” in each place that it appears. Additionally, in the case of a financial institution described in §1471-5(e)(1)(iii) that is a trust, the rules of paragraph (b)(3) and (4) of this section (referring to beneficial interests in a trust) shall be applied by substituting “calendar year” for “prior calendar year” in each place that it appears.3-1(b)(6) Determination dates for substantial U.S. owners [§1.1473-1(b)(6)]A foreign entity may make the determination of whether it has one or more direct or indirect substantial U.S. owners as of the last day of such entity’s accounting year or as of the date on which such foreign entity provides the documentation described in §1.1471-3(d) to the withholding agent for which such determination is required to be made. See §1.1471-4(c) for when a participating FFI is required to obtain documentation with respect to its account holders.3-1(b)(7) Examples [§1.1473-1(b)(7)]Ex. 1 Indirect ownership [§1.1473-1(b)(7) Example 1]U, a specified U.S. person, owns directly 100% of the sole class of stock of F1, a foreign corporation. F1 owns directly 90% of the sole class of stock of F2, a foreign corporation, and U owns directly the remaining 10% of the sole class of stock of F2. F2 owns directly 10% of the sole class of stock of F3, a foreign corporation, and U owns directly 3% of the sole class of stock of F3. U is treated as owning 13% (3% directly and 10% indirectly) of the sole class of stock of F3 and 100% (10% directly and 90% indirectly) of the sole class of stock of F2 for purposes of this paragraph (b). U is a substantial U.S. owner of F1, F2, and F3.Ex. 2 Indirect ownership through entities that are specified U.S. persons [§1.1473-1(b)(7) Example 2]U, a specified U.S. person, owns directly 100% of the sole class of stock of US1, a U.S. corporation that is a specified U.S. person. US1 owns directly 100% of the sole class of stock of US2, a U.S. corporation that is a specified U.S. person. US2 owns directly 15% of the sole class of stock of FC, a foreign corporation. For purposes of this paragraph (b), U, US1, and US2 are all substantial U.S. owners of FC.Ex. 3 Determining the 10% threshold in the case of a beneficial interest in a foreign trust [§1.1473-1(b)(7) Example 3]U, a U.S. citizen, holds an interest in FT1, a foreign trust, under which U may receive discretionary distributions from FT1. U also holds an interest in FT2, a foreign trust, and FT2, in turn, holds an interest in FT1 under which FT2 may receive discretionary


distributions from FT1. U receives $25,000 from FT1 in Year 1. FT2 receives $120,000 from FT1 in Year 1 and distributes the entire amount to its beneficiaries in Year 1. The distribution from FT1 is FT2’s only source of income and FT2’s distributions in Year 1 total $120,000. U receives $40,000 from FT2 in Year 1. FT1’s distributions in Year 1 total $750,000. U’s discretionary interest in FT1 is valued at $65,000 at the end of Year 1 and therefore does not meet the 10% threshold as determined under paragraph (b)(3)(ii)(A). U’s discretionary interest in FT2, however, is valued at $40,000 at the end of Year 1 and therefore meets the 10% threshold as determined under paragraph (b)(3)(ii)(A).Ex. 4 Determining ownership (determination date) [§1.1473-1(b)(7) Example 4]F, a foreign corporation that is an NFFE, has a calendar year accounting year. On December 31 of Year 1, U, a specified U.S. person, owns 12% of the sole class of outstanding stock of F. In March of Year 2, F redeems a portion of U’s stock and reduces U’s ownership of F to 9%. In May of Year 2, F opens an account with P, a participating FFI, and delivers to P the documentation required under §1.1471-3(d). At the time F opens its account with P, U is the only specified U.S. person that directly or indirectly owns stock in F. Because of the redemption, U’s interest in F is 9% on the date F opens its account with P. Pursuant to paragraph (b)(6) of this section, F may determine whether it has a substantial U.S. owner as of the date it provides the documentation required under §1.1471-3(d) to P, which would be the day it opens the account. As a result, F may indicate in its §1.1471-3(d) documentation that it has no substantial U.S. owners.


Territory EntityFATCA: The term territory entity means any entity that is incorporated or organized under the laws of any U.S. territory.

Territory Financial Institution

FATCA: The term territory financial institution means a financial institution that is incorporated or organized under the laws of any U.S. territory, not including a territory entity that is an investment entity but that is not a depository institution, custodial institution, or specified insurance company.

Territory financial institution treated as a U.S. person

FATCA: The term territory financial institution treated as a U.S. person means a territory financial institution that is treated as a U.S. person under § 1.1471-3(a)(3)(iv) (which reads): A withholding agent that makes a withholdable payment to a territory financial institution that is a flow-through entity or is acting as an intermediary or agent with respect to the payment may treat the territory financial institution as the payee only if the territory financial institution has agreed (as evidenced by a withholding certificate described in paragraphs (c)(3)(iii)(A) and (F) of this section) to be treated as a U.S. person with respect to the payment for purposes of both chapters 3 and 4. In all other cases, the withholding agent must treat as the payee the partner, beneficiary, or owner (as applicable) of the territory financial institution that is a flow-through entity (looking through partners, beneficiaries, and owners that are themselves flow-through entities that are not described in paragraphs (a)(3)(ii)(A)(1) through (3)) or the person on whose behalf the territory financial institution is acting.

Territory NFFEFATCA: The term territory entity means any entity that is incorporated or organized under the laws of any U.S. territory.

TIEA FATCA: Tax Information Exchange Agreement

TINCRS: The term “TIN” means Taxpayer Identification Number (or functional equivalent in the absence of a Taxpayer Identification Number).FATCA: The term TIN means the tax identifying number assigned to a person under section 6109.40

TLS Transport Layer Security

Treasury Center§1.1471-5(e)(5)(i)(D)

An entity is a treasury center if the main purpose of the entity is to enter into investment, hedging, and financing transactions with or for members of its affiliated group for purposes of managing the risk of price, currency or interest rate fluctuations. See §1.1471-5(e) (5) (i) (D) for a complete definition.[Note in IGA countries, for example the UK and Singapore, Treasury Centres are not FFIs, but NFFEs.]

Treasury Company

[UKSI.2014 No. 1506]41 For the purposes of these Regulations a “treasury company” means a company whosebusiness consists wholly or mainly in carrying on for a financial group of which it is a member, or for a qualifying entity with whom it has a qualifying relationship, any of the activities within section 316(9) of TIOPA 2010(a), and for this purpose—(a) the reference in paragraph (d) of that subsection to a UK group company and a group treasury company is to a related entity which is within any of paragraph (1)(a) to (d) of regulation 3, and(b) “financial group” means a group of entities consisting of the company and its related entities where at least one of those entities falls within any of paragraph (1)(a) to (d) of regulation 3.

TrustUK AEIM 100700: Trusts are treated as entities by all of the agreements for automatic exchange of information. A trust can be either a financial institution or a NFE. Where a trust meets one of the definitions for being a financial institution it is most likely to be an investment entity and its financial accounts would usually be the equity and debt interests in the trust itself. It may, alternatively, meet the requirements for being a Custodial Institution. For example, shares held in trust may be in a Custodial Account maintained by the trust and therefore subject to reporting by the trust as the Custodial Institution that maintains the account. This may be the case where a trust such as an Employee Benefit Trust continues to hold Financial Assets, such as shares, for an employee after they have been granted. Where an Employee Benefit Trust holds shares for the future benefit of employees, but the shares are not allocated, then under most circumstances this right to a future allocation would not fall to be a Custodial

40 http://www.law.cornell.edu/cfr/text/26/301.6109-141 http://www.legislation.gov.uk/uksi/2014/1506/pdfs/uksi_20141506_en.pdf




Account. Similarly, when shares are allocated and the trustee is directed to transfer the assets as soon as reasonably possible to the beneficiary, a broker, a custodian, etc., then the trust will not be treated as maintaining a financial account for the duration of time it takes to complete the transfer. Further guidance on trusts can be found at.AEIM100800. Trusts are treated as entities by all of the agreements for automatic exchange of information. A trust can be either a financial institution or a NFE. Where a trust meets one of the definitions for being a financial institution it is most likely to be an investment entity but it may, alternatively, meet the requirements to be a Custodial Institution. A trust is unlikely to be regarded as an investment entity by virtue of investing as a business because trusts generally do not carry on businesses for or on behalf of customers unless they are collective investment schemes. A trust may be an investment entity however where its gross income is primarily derived from investing, reinvesting or trading in Financial Assets and it is managed by a financial institution. The test of being managed by a financial institution will be met where the trust or its activities are being managed by a Financial Institution. A trust is managed by a Financial Institution where either one or more of the trustees is a financial institution or the trustees have appointed a discretionary fund manager who is a financial institution to manage the trust’s assets. For a more detailed description of what constitutes management by a financial institution please see the guidance at. If the trust is not managed by a Financial Institution in this way, and does not meet any of the other definitions of financial institution, it will be a non-financial entity. For example, where the trustees of a trust are individuals (and therefore not financial institutions) and the trust holds only a Depository Account or other investments with a financial institution, and that financial institution does not have discretion to manage the account or the assets in the account, then the trust will not be an investment entity.AEIM100820. A trust is typically regarded as being managed by a Financial Institution where either one or more of the trustees is a financial institution or the trustees have appointed a financial institution, such as a discretionary fund manager, to manage the trust’s assets or to manage the trust. Does a Financial Institution Manage the Trust? A financial institution will manage the trust where it has been appointed by the trustees to carry out the day to day functions of the trust on behalf of the trustees. This goes beyond managing the investment of the trust’s assets and includes other management functions that the trustees have to perform but which are contracted to the financial institution. Does a Financial Institution Manage the Financial Assets of the Trust? A financial institution manages the Financial Assets of the trust where it has discretion to manage the investments or investment strategy for the assets. This will usually be where the trust has appointed a discretionary fund manager to manage their portfolio or a part thereof. The appointment of a discretionary fund manager will be evidenced by an agreement between the parties that provides for discretionary management. Where the trustees of a trust invest in retail investments the arrangement will not amount to discretionary management where the trustees make the decision on what investments to make, even though advice may be taken on investing and third party brokers used to buy, hold or sell the investments. The Glossary of Definitions in the Financial Services Handbook defines both retail investment and retail investment activity. The Society for Trust and Estate Practitioners (STEP) in conjunction with the Law Society for England and Wales and The Institute of Chartered Accountants in England and Wales (ICAEW) have produced a series of questions and a supporting flowchart that may be useful when considering the status of a trust. Please note that use of this flowchart will in no way take the place of HMRC guidance and it should be used as a supplementary tool only. [http://www.step.org/sites/default/files/Policy/fatca-flow-chart-12-august-2014.pdf] Any information accessed from the link above should not be reported as representing the official views of HMRC or of its employees. The opinions expressed and arguments employed are those of the authors


Trustee Documented Trust

UK Guidance: AEIM 100940:A trustee-documented trust is a trust that is a financial institution where the trustee of the trust is itself a reporting financial institution and reports all the information required in respect of the Reportable Accounts of the trust. The trustee in such a case must report the information that the trustee-documented trust would have reported but for its status as a Non-reporting Financial Institution and must identify, when reporting, the trustee-documented trust in respect of which it fulfils the reporting and due diligence obligations.

Unique IdentifierUK HMRC Automatic Exchange of Financial Account Information Guidance Notes, 14th September 2015 The account number to be reported is the unique identifying number or code that the reporting financial institution has assigned to the Reportable Account. This will include identifiers such as bank account numbers and policy numbers for insurance contracts as well as other non-traditional unique identifiers. The unique identifier should be sufficient to enable the financial institution to identify the Reportable Account in future. Where there is not a unique identifying number or code the financial institution should report any functional equivalent that they use to identify the account. This may include non-unique identifiers that relate to a class of interests, which, along with the name of the Account Holder, enable the account to be identified. Exceptionally, if the Reportable Account does not have any form of identifying number or code the financial institution should report a description of the account sufficient to identify the account held by the named Account Holder in future.

U.S. AccountFATCA: 1.1471-5 Definitions applicable to section 1471 [§1.1471-5]1-5(a) U.S. accounts [§1.1471-5(a)]1-5(a)(1) In general [§1.1471-5(a)(1)]This paragraph (a) defines the term U.S. account and describes when a person is treated as the holder of a financial account (account holder). This paragraph also provides rules for determining when an exception to U.S. account status applies for certain depository accounts, including account aggregation requirements relevant to applying the exception.1-5(a)(2) Definition of U.S. account [§1.1471-5(a)(2)]Subject to the exception described in paragraph (a)(4)(i) of this section, a U.S. account is any financial account maintained by a FFI that is held by one or more specified U.S. persons or U.S. owned foreign entities. For the definition of the term financial account, see paragraph (b) of this section. For the definition of the term specified U.S. person, see §1.1473-1(c). For the definition of the term U.S. owned foreign entity, see paragraph (c) of this section. For reporting requirements of participating FFIs with respect to U.S. accounts, see §1.1471-4(d).1-5(a)(3) Account holder [§1.1471-5(a)(3)](3)(i) In general [§1.1471-5(a)(3)(i)][Reserved]. For further guidance, see §1.1471-5T(a)(3)(i).Except as otherwise provided in this paragraph (a)(3), the account holder is the person listed or identified as the holder or owner of the account with the FFI that maintains the account, regardless of whether such person is a flow-through entity. Thus, for example, except as otherwise provided in paragraph (a)(3)(ii) of this section, if a trust (including a simple or grantor trust) or an estate is listed as the holder or owner of a financial account, the trust or estate is the account holder, rather than its owners or beneficiaries.Similarly, except as otherwise provided in this paragraph (a)(3), if a partnership is listed as the holder or owner of a financial account, the partnership is the account holder, rather than the partners in the partnership. In the case of an account held by an entity that is disregarded for U.S. federal tax purposes under §301.77012(c)(2)(i) 42 , the account shall be treated as held by the person owning such entity.With respect to an account held by an exempt beneficial owner, such account is treated as held by an exempt beneficial owner only when all payments made to such account would be treated as made to an exempt beneficial owner. See §1.1471-6(h) for when a payment derived from certain commercial activities is not treated as made to an exempt beneficial owner.(3)(ii) Financial accounts held by agents that are not financial institutions [§1.1471-5(a)(3)(ii)]

42 http://www.law.cornell.edu/cfr/text/26/301.7701-2#c_2_i


http://www.law.cornell.edu/cfr/text/26/301.7701-2#c_2_i

http://www.law.cornell.edu/cfr/text/26/1.1471-5T#a_3




A person, other than a financial institution, that holds a financial account for the benefit or account of another person as an agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as an account holder with respect to such account for purposes of this section. Instead, such other person is treated as the account holder.(3)(iii) Jointly held accounts [§1.1471-5(a)(3)(iii)]With respect to a jointly held account, each joint holder is treated as an account holder for purposes of determining whether the account is a U.S. account. Thus, an account is a U.S. account if any of the account holders is a specified U.S. person or a U.S. owned foreign entity and the account is not otherwise excepted from U.S. account status under paragraph (a)(4) of this section. When more than one U.S. person is a joint holder, each U.S. person will be treated as an account holder and will be attributed the entire balance of the jointly held account, including for purposes of applying the aggregation rules set forth in paragraph (b)(4)(iii) of this section.(3)(iv) Account holder for insurance and annuity contracts [§1.1471-5(a)(3)(iv)]An insurance or annuity contract is held by each person that is entitled to access the contract’s value (for example, through a loan, withdrawal, surrender, or otherwise) or change a beneficiary under the contract. If no person can access the contract’s value or change a beneficiary, the account holders are any person named in the contract as an owner and any person who is entitled to receive a future payment under the terms of the contract. When an obligation to pay an amount under the contract becomes fixed, each person entitled to receive a payment is an account holder.(3)(v) Examples [§1.1471-5(a)(3)(v)]Ex. 1 Account held by agent [§1.1471-5(a)(3)(v) Example 1]F, a non-resident alien, holds a power of attorney from U, a specified U.S. person, that authorizes F to open, hold, and make deposits and withdrawals with respect to a depository account on behalf of U. The balance of the account for the calendar year is $100,000. F is listed as the holder of the depository account at a participating FFI, but because F holds the account as an agent for the benefit of U, F is not ultimately entitled to the funds in the account. Because the depository account is treated as held by U, a specified U.S. person, the account is a U.S. account.Ex. 2 Jointly held accounts [§1.1471-5(a)(3)(v) Example 2]U, a specified U.S. person, holds a depository account in a participating FFI. The balance of the account for the calendar year is $100,000. The account is jointly held with A, an individual who is a non-resident alien. Because one of the joint holders is a specified U.S person, the account is a U.S. account.Ex. 3 Jointly held accounts [§1.1471-5(a)(3)(v) Example 3]U and Q, both specified U.S. persons, hold a depository account in a participating FFI. The balance of the account for the calendar year is $100,000. The account is a U.S. account and both U and Q are treated as holders of the account.1-5(a)(4) Exceptions to U.S. account status [§1.1471-5(a)(4)](4)(i) Exception for certain individual accounts of participating FFIs [§1.1471-5(a)(4)(i)][Reserved]. For further guidance, see §1.1471-5T(a)(4)(i)Unless a participating FFI elects under paragraph (a)(4)(ii) of this section not to apply this paragraph (a)(4)(i), the term U.S. account shall not include any depository account maintained by such financial institution during a calendar year if the account is held solely by one or more individuals and, with respect to each holder of such account, the aggregate balance or value of all depository accounts held by each such individual does not exceed $50,000 as of the end of the calendar year or on the date the account is closed. For rules for determining the account balance or value, see paragraphs (a)(3)(iii) and (b)(4) of this section.(4)(ii) Election to forgo exception [§1.1471-5(a)(4)(ii)]A participating FFI may elect to disregard the exception described in paragraph (a)(4)(i) of this section by reporting all U.S. accounts, including those accounts that would otherwise meet the conditions of the exception. (4)(iii) Example Aggregation rules for exception to U.S. account status for certain depository accounts [§1.1471-5(a)(4)(iii)]In Year 1, a U.S. resident individual, U, holds a depository account with CB, a commercial bank that is a participating FFI. The balance in U’s CB account at the end of Year 1 is $35,000. In Year 1, U also holds a custodial account with CB’s brokerage business. The custodial account has a $45,000 balance as of the end of Year 1. CB’s retail banking and brokerage businesses share computerized information management


systems that associate U’s depository account and U’s custodial account with U and with one another within the meaning of paragraph (b)(4)(iii)(A) of this section. For purposes of applying the $50,000 threshold described in paragraph (a)(4)(i) of this section, however, a depository account is aggregated only with other depository accounts. Therefore, U’s depository account is eligible for the paragraph (a)(4)(i) exception to U.S. account status because the balance of the depository account does not exceed $50,000.


U.S. branch treated as a U.S. person

FATCA: Payments to a U.S. branch of certain foreign banks or foreign insurance companies [§1.1441-1(b)(2)(iv)](iv)(A) U.S. branch treated as a U.S. person in certain cases [§1.1441-1(b)(2)(iv)(A)][Reserved]. For further guidance, see §1.1441-1T(b)(2)(iv)(A).A payment to a U.S. branch of a foreign person is a payment to a foreign person. However, a U.S. branch of a participating FFI, registered deemed compliant FFI or NFFE that is described in this paragraph (b)(2)(iv)(A) may agree to be treated as a U.S. person for purposes of withholding on specified payments to the U.S. branch. See §1.1471-3(d) for rules regarding how a withholding agent may determine the chapter 4 status of an entity.If a U.S. branch agrees to be treated as a U.S. person with a withholding agent, it is required to act as a U.S. person with respect to all other withholding agents, including when acting as an intermediary with respect to withholdable payments for purposes of chapter 4. See §1.1471-3(a) (3) (iv). In such cases, the U.S. branch is treated as a payee that is a U.S. person. Notwithstanding the preceding sentence, a withholding agent making a payment to a U.S. branch treated as a U.S. person under this paragraph (b)(2)(iv)(A) shall not treat the branch as a U.S. person for purposes of reporting the payment made to the branch.Therefore, a payment to such U.S. branch shall be reported on Form 1042-S under §1.1461-1(c) and §1.1474-1(d)(1)(i) for a payment of U.S. source FDAP income that is a chapter 4 reportable amount as defined in §1.1471-1(b) (18) . Further, a U.S. branch that is treated as a U.S. person under this paragraph (b)(2)(iv)(A) shall not be treated as a U.S. person for purposes of the withholding certificate it provides to a withholding agent. Therefore, the U.S. branch must furnish a U.S. branch withholding certificate on a Form W8IMY as provided in paragraph (e)(3)(v) of this section and not a Form W-9. An agreement to treat a U.S. branch as a U.S. person must be evidenced by a U.S. branch withholding certificate described in paragraph (e)(3)(v) of this section furnished by the U.S. branch to the withholding agent. A U.S. branch described in this paragraph (b)(2)(iv)(A) is any U.S. branch of a foreign bank subject to regulatory supervision by the Federal Reserve Board or a U.S. branch of a foreign insurance company required to file an annual statement on a form approved by the National Association of Insurance Commissioners with the Insurance Department of a State, a Territory, or the District of Columbia. In addition, a territory financial institution (including a territory financial institution that is a flow-through entity) will be treated as a U.S. branch for purposes of this paragraph (b)(2)(iv)(A).The Internal Revenue Service (IRS) may approve a list of U.S. branches that may qualify for treatment as a U.S. person under this paragraph (b)(2)(iv)(A) (see §601.601(d)(2) 43 of this chapter). See §1.6049-5(c)(5)(vi) for the treatment of U.S. branches as U.S. payors if they make a payment that is subject to reporting under chapter 61 of the Internal Revenue Code. Also see §1.6049-5(d)(1)(ii) for the treatment of U.S. branches as foreign payees under chapter 61 of the Internal Revenue Code.

U.S. Financial Institution (USFI)

FATCA: The term U.S. financial institution means a financial institution that is a U.S. person, including a U.S. branch treated as a U.S. person.

U.S. owned foreign entity

FATCA: U.S. owned foreign entity [§1.1471-5(c) ][Reserved]. For further guidance, see §1.1471-5T(c).The term U.S. owned foreign entity means any Foreign entity that has one or more substantial U.S. owners (as defined in §1.1473-1(b)). See §1.1473-1(e) for the definition of foreign entity for purposes of chapter 4. For the requirements applicable to determining direct and indirect ownership in an entity, see §1.1473-1(b)(2).

U.S. payee FATCA: The term U.S. payee means any payee that is a U.S. person.

U.S. payorFATCA: U.S. payor, U.S. middleman, non-U.S. payor, and non-U.S. middleman. The terms payor and middleman have the meanings ascribed to them under §1.6049-4(a). A non-U.S. payor or non-U.S. middleman means a payor or middleman other than a U.S. payor or U.S. middleman. The term U.S. payor or U.S. middleman means—(i) Definition.(A) A person described in section 7701(a)(30) 44 (including a foreign branch or office of such person);

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(B) The government of the United States or the government of any State or political subdivision thereof (or any agency or instrumentality of any of the foregoing);(C) A controlled foreign corporation within the meaning of section 957(a);(D) A foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons (as defined in § 1.1441-1(c)(2)) who, in the aggregate hold more than 50 percent of the income or capital interest in the partnership or if, at any time during its tax year, it is engaged in the conduct of a trade or business in the United States;(E) A foreign person 50 percent or more of the gross income of which, from all sources for the three-year period ending with the close of its taxable year preceding the collection or payment (or such part of such period as the person has been in existence), was effectively connected with the conduct of trade or business within the United States; or(F) [Reserved] For further guidance, see § 1.6049-5T(c)(5)(i)(F).(ii) Reporting by U.S. payors in U.S. possessions. U.S. payors are not required to report on Form 1099 income that is from sources within a possession of the United States and that is exempt from taxation under section 931 45 , 932, or 933, each of which sections exempts certain income from sources within a possession of the United States paid to a bona fide resident of that possession. For purposes of this paragraph (c)(5)(ii), 46 a U.S. payor may treat the beneficial owner as a bona fide resident of the possession of the United States from which the income is sourced if, prior to payment of the income, the U.S. payor can reliably associate the payment with valid documentation that supports the claim of residence in the possession of the United States from which the income is sourced. This paragraph (c)(5)(ii) shall not apply if the U.S. payor has actual knowledge or reason to know that the documentation is unreliable or incorrect or that the income does not satisfy the requirements for exemption under section 931, 932, or 933. For the rules determining whether income is from sources within a possession of the United States, see section 937(b) and the regulations thereunder.

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U.S. personFATCA: The term U.S. person or United States person means a person described in section 7701(a)(30), the United States government (including an agency or instrumentality thereof), a State (including an agency or instrumentality thereof), or the District of Columbia (including an agency or instrumentality thereof). For purposes of the preceding sentence, the determination of whether an insurance company is a U.S. person is made without regard to an election by a company not licensed to do business in any State to be subject to U.S. income tax as if it were a domestic insurance company. Thus, a foreign insurance company not licensed to do business in any State that elects pursuant to section 953(d) to be subject to U.S. income tax as if it were a U.S. insurance company is not a U.S. person.

U.S. source FDAP income

FATCA: U.S. source FDAP income defined [§1.1473-1(a)(2)](2)(i) In general [§1.1473-1(a)(2)(i)](i)(A) FDAP income defined [§1.1473-1(a)(2)(i)(A)]For purposes of chapter 4, the term FDAP income means fixed or determinable annual or periodic income that is described in §1.1441-2(b)(1) or §1.1441-2(c) (excluding income described in paragraph (a)(2)(vi) of this section or §1.1441-2(b)(2) (such as gains derived from the sale of certain property)) and including the types of income enumerated in paragraphs (a)(2)(iii) through (v) of this section.(i)(B) U.S. source [§1.1473-1(a)(2)(i)(B)]The term U.S. source means derived from sources within the United States. A payment is derived from sources within the United States if it is income treated as derived from sources within the United States under sections 861 through 865 and other relevant provisions of the Code. In the case of a payment of FDAP income for which the source cannot be determined at the time of payment, see §1.1471-2(a)(5).(i)(C) Exceptions to withholding on U.S. source FDAP income not applicable under chapter 4 [§1.1473-1(a)(2)(i)(C)]Except as otherwise provided in paragraph (a)(4) of this section, no exception to withholding on U.S. source FDAP income for purposes other than chapter 4 applies for purposes of determining whether a payment of such income is a withholdable payment under chapter 4. Thus, for example, an exclusion from an amount subject to withholding under §1.1441-2(a) or an exclusion from taxation under section 881 does not apply for purposes of determining whether such income constitutes a withholdable payment.(2)(ii) Special rule for certain interest [§1.1473-1(a)(2)(ii)]Interest that is described in section 861(a)(1)(A) (relating to interest paid by foreign branches of domestic corporations and partnerships) is treated as U.S. source FDAP income.(2)(iii) Original issue discount [§1.1473-1(a)(2)(iii)]The rules described in §1.1441-2(b)(3)(ii) for determining when an amount representing original issue discount is subject to withholding for chapter 3 purposes apply for purposes of determining when original issue discount from sources within the United States is U.S. source FDAP income. (2)(iv) REMIC residual interests [§1.1473-1(a)(2)(iv)]U.S. source FDAP income includes an amount described in §1.1441-2(b)(5).(2)(v) Withholding liability of payee that is satisfied by withholding agent [§1.1473-1(a)(2)(v)]If a withholding agent satisfies a withholding liability arising under chapter 4 with respect to a withholdable payment from the withholding agent’s own funds, the satisfaction of such liability is treated as an additional payment of U.S. source FDAP income to the payee to the extent that the withholding agent’s satisfaction of such withholding liability also satisfies a tax liability of the payee under section 881 47 or 871 with respect to the same payment, and the satisfaction of the tax liability constitutes additional income to the payee under §1.1441-3(f) that is U.S. source FDAP income. In such case, the amount of any additional payment treated as made by the withholding agent for purposes of this paragraph (a)(2)(v) and any tax liability resulting from such payment shall be determined under §1.1441-3(f). See §1.1474-6 regarding the coordination of the withholding requirements under chapters 3 and 4 in the case of a withholdable payment that is also subject to withholding under chapter 3.(2)(vi) Special rule for sales of interest bearing debt obligations [§1.1473-1(a)(2)(vi)]

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[Reserved]. For further guidance, see §1.1473-1T(a)(2)(vi).Special rule for sales of interest bearing debt obligations. Income that is otherwise described as U.S. source FDAP income in paragraphs (a)(2)(i) through (v) of this section does not include an amount of interest accrued on the date of a sale or exchange of an interest bearing debt obligation if the sale occurs between two interest payment dates and is not part of a plan described in §1.1441-3(b)(2)(ii).(2)(vii) Payment of U.S. source FDAP income [§1.1473-1(a)(2)(vii)](vii)(A) Amount of payment of U.S. source FDAP income [§1.1473-1(a)(2)(vii)(A)]The amount of U.S. source FDAP income is the gross amount of the payment of such income, unreduced by any deductions or offsets. The rules of §1.1441-3(b)(1) shall apply to determine the amount of an interest payment on an interest-bearing obligation. In the case of a corporate distribution, the distributing corporation or intermediary shall determine the portion of the distribution that is treated as U.S. source FDAP income under this paragraph (a)(2) in the same manner as the distributing corporation or intermediary determines the portion of the distribution subject to withholding under §1.1441-3(c). Any portion of a payment on a debt instrument or a corporate distribution that does not constitute U.S. source FDAP income under this paragraph (a)(2) solely because of a provision other than the source rules of sections 861 through 865 shall be taken into account as gross proceeds under paragraph (a)(3) of this section. For rules regarding the determination of the amount of a payment of U.S. source FDAP income under paragraph (a)(2) of this section made in a medium other than U.S. dollars, see §1.1441-3(e). For determining the amount of a payment of a dividend equivalent, see section 871(m) and the regulations thereunder.(vii)(B) When payment of U.S. source FDAP income is made [§1.1473-1(a)(2)(vii)(B)]A payment is considered made when the amount would be includible in the income of the beneficial owner under the U.S. tax principles governing the cash method of accounting. If a FFI acts as an intermediary with respect to a payment of U.S. source FDAP income, the FFI will be treated as making a payment of such U.S. source FDAP income to the person with respect to which the FFI acts as an intermediary when it pays or credits such amount to such person. The following rules also apply for purposes of this paragraph (a)(2)(vii)(B): §§1.1441-2(e)(2) (regarding when a payment is considered made in the case of income allocated under section 482); 1.1441-2(e)(3) (regarding blocked income); 1.1441-2(e)(4) (regarding when a dividend is considered paid); and 1.1441-2(e)(5) (regarding when interest is considered paid if a foreign person has made an election under §1.884-4(c)(1)).












U.S. TerritoryFATCA: The term U.S. territory or possession of the United States means American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands.

U.S. withholding agent

FATCA: The term U.S. withholding agent means a withholding agent that is either a U.S. person or a U.S. branch of a foreign person.

United StatesFATCA: The United States of America, including the States thereof, but does not include the U.S. Territories. Any reference to a “State” of the United States includes the District of Colombia.

UTC FATCA: Coordinated Universal Time.

Withholdable payment

FATCA: Definition of withholdable payment [§1.1473-1(a)]3-1(a)(1) In general [§1.1473-1(a)(1)]Except as otherwise provided in this paragraph (a) and §1.1471-2(b) (regarding grandfathered obligations), the term withholdable payment means-(1)(i) Any payment of U.S. source FDAP income (as defined in paragraph (a)(2) of this section); and [§1.1473-1(a)(1)(i)](1)(ii) For any sales or other dispositions occurring after December 31, 2018, (amended from 2016 to 2018 as a result of IRS Notice 2015-66 page 11) any gross proceeds from the sale or other disposition (as defined in paragraph (a)(3)(i) of this section) of any property of a type that can produce interest or dividends that are U.S. source FDAP income. [§1.1473-1(a)(1)(ii)]

WithholdingFATCA: The term withholding means the deduction and remittance of tax at the applicable rate from a payment.

Withholding agentFATCA: Withholding agent [§1.1473-1(d)]3-1(d)(1) In general [§1.1473-1(d)(1)]Except as provided in this paragraph (d), the term withholding agent means any person, U.S. or foreign, in whatever capacity acting, that has the control, receipt, custody, disposal, or payment of a withholdable payment or foreign passthru payment.3-1(d)(2) Participating FFIs and registered deemed-compliant FFIs as withholding agents [§1.1473-1(d)(2)]The term withholding agent includes a participating FFI that has the control, receipt, custody, disposal, or payment of a passthru payment (as defined in §1.1471-5(h)). The term withholding agent also includes a registered deemed-compliant FFI to the extent that such FFI is required to withhold on a passthru payment as part of the conditions for maintaining its status as a deemed-compliant FFI under §1.1471-5(f) (1) (ii). For the withholding requirements of a participating FFI, including the requirement to withhold with respect to limited branches and limited FFIs that are in the same expanded affiliated group as the participating FFI, see §§1.1471-4(b) and 1.1472-1(a).3-1(d)(3) Grantor trusts as withholding agents [§1.1473-1(d)(3)]The term withholding agent includes a grantor trust with respect to a withholdable payment or a foreign passthru payment (in the case of a grantor trust that is a participating FFI) made to a person treated as an owner of the trust under sections 671 through 679. For purposes of determining when a payment is treated as made to such a person, see §1.1473-1(a)(5)(v).3-1(d)(4) Deposit and return requirements [§1.1473-1(d)(4)]See §1.1474-1(b) for a withholding agent’s requirement to deposit any tax withheld, and §1.1474-1(c) and (d) for the requirement to file income tax and information returns (including the special allowance in §1.1474-1(b)(2) for participating FFIs with respect to dormant accounts).3-1(d)(5) Multiple withholding agents [§1.1473-1(d)(5)]When several persons qualify as a withholding agent with respect to a single payment, only one tax is required to be withheld and deposited. See §1.1474-1(a). A person who, as a nominee described in §1.6031(c)-1T, has furnished to a partnership all of the information required to be furnished under §1.6031(c)-1T(a) shall not be treated as a withholding agent if the person has notified the partnership that it is treating the provision of information to the partnership as a discharge of its obligations as a withholding agent.3-1(d)(6) Exception for certain individuals [§1.1473-1(d)(6)]An individual is not a withholding agent with respect to a withholdable payment made by the individual outside the course of such individual’s trade or business (including as an agent with respect to making or receiving such payment).







Withholding certificate

FATCA: The term withholding certificate means a Form W-8, Form W-9, or any other certificate that under the Code or regulations certifies or establishes the chapter 4 status of a payee or beneficial owner.A withholding certificate that is not a W8 or W9 would need to:

(i) be signed (or otherwise positively affirmed), (ii) be dated (at the latest at the date of receipt), and(iii) solicit, at a minimum, the following information:

I. name;II. residence address for tax purposes;III. Jurisdiction(s) of residence for tax purposes (note that a U.S.

citizen is considered a U.S. tax resident even if the person is also a tax resident of another Jurisdiction);

(iv) taxpayer identification number (If taxpayer has both a U.S. TIN and a foreign TIN, the U.S. TIN must be provided, and the foreign TIN may be provided);

(v) in the case of an entity, the entity’s status (an entity’s FATCA status would include its status as a

I. Non-participating FFI, II. Participating FFI, III. Reporting Model 1 FFI, IV. Reporting Model 2 FFI, V. Non-reporting IGA FFI, VI. Active NFFE, Passive NFFE, etc.); and

(vi) in the case of a Passive NFFE, the name, residence address for tax purposes, and taxpayer identification number with respect to any Controlling Person that is a Specified U.S. Person.

For purposes of enforcement and administration with respect to the implementation of FATCA by withholding agents, FFIs, and other entities with chapter 4 responsibilities, the IRS will take into account the transition period for calendar years 2014 and 2015. See Notice 2014-33 for additional information.

An IGA Jurisdiction planning to implement the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters (the Common Reporting Standard) may want the self-certification form to also require date of birth. With this additional information, the self-certification form would be consistent with the Common Reporting Standard and the multilateral understanding of a valid self-certification.

This does not address what would be an acceptable beneficial owner withholding certificate for purposes of chapter 3. For an acceptable beneficial owner withholding certificate for purposes of chapter 3 reporting and withholding responsibilities, see §1.1441-1(e)(2)(ii).

Withholding Foreign Partnership (WP)

FATCA: A foreign partnership that has entered into a withholding foreign partnership agreement (WP Agreement) with the IRS.

Withholding Foreign Trust (WT)

FATCA: A foreign trust that has entered into a withholding foreign trust agreement (WT Agreement) with the IRS.

Written statementFATCA: Requirements for written statements [§1.1471-3(c) (4) ]A written statement is a statement by the payee, or other person receiving the payment, that provides the person’s chapter 4 status and any other information reasonably requested by the withholding agent to fulfil its obligations under chapter 4 with respect to the payment, such as whether the person is receiving the payment as a beneficial owner, intermediary, or flow-through entity.A written statement is valid only if it is provided by a person with respect to an offshore obligation, contains the name of the person, the person’s address, the certifications relevant to the person’s chapter 4 status (as contained on a withholding certificate), any additional information required with respect to the chapter 4 status claimed as provided under paragraph (d) of this section (for example, a GIIN), and a signed and dated certification that the information provided on the form is accurate and will be updated by the individual within 30 days of a change in circumstances that causes the



form to become incorrect. A written statement may be submitted in any form that is acceptable to the withholding agent, including a statement made as part of the account opening documentation. A written statement may be used in lieu of a withholding certificate only to the extent provided under §1.1471-3(d) , as applicable to the chapter 4 status claimed.



Documents

Contents Web viewA certificate or other documentation becomes invalid on the date that the withholding agent holding the ... a retirement or pension account that