FATCA Identification Submitting a Form W-8BEN-E to ABN AMRO Clearing December 2014

Transcription

1 FATCA Identification Submitting a Form W-8BEN-E to ABN AMRO Clearing December 2014

2 Agenda 1. Introduction to FATCA 2. Request to fill out a W-8BEN-E form 3. Background to a W-8BEN-E form a) For market makers b) For brokers c) For traders d) For corporate hedgers 2

3 Introduction to FATCA FATCA Identification December

4 FATCA FATCA Foreign Account Tax Compliance Act entered into force on 1 July Purpose of FATCA Prevent and detect offshore tax evasion by US citizens Increased information reporting Enforced by withholding tax What does FATCA require from ABN AMRO Clearing as a Financial Institution? FATCA requires ABN AMRO Clearing as a Financial Institution to: Identify its account holders and to verify whether any of them are US persons Report on US account holders and certain other accounts Withhold 30% FATCA withholding tax if required Controls and policies need to be in place to ensure compliance Register with the IRS (American Tax Authorities) 4

5 Intergovernmental Agreements (IGAs) The Netherlands have concluded a bilateral agreement (IGA) with the US regarding FATCA. The Dutch IGA ensures that: FATCA becomes part of Dutch local law; Local fines will be imposed in case of non-compliance; The US have concluded an IGA with over 100 countries. 5

6 ABN AMRO Clearing FATCA Financial Institution ABN AMRO Clearing qualifies as a custodial Financial Institution (FI) under FATCA As such, ABN AMRO is required to comply with FATCA Financial Institution means any entity that 2 holds, as substantial portion of its business, financial assets for the account of one or more other persons (custodial institution) FATCA compliance means: Identifying its account holders; By requesting and receiving documentation on the FATCA status of account holders; Verifying whether any account holder should be reported/withheld upon. As such, ABN AMRO Clearing must request its account holders for a Form W-8BEN-E or if appropriate any other Form. FATCA Identification December

7 Request to fill out a W-8BEN-E Form FATCA Identification December

8 FATCA Why have you received a Form W-8BEN-E? ABN AMRO Clearing as an FI is required to request documentation from its account holders; ABN AMRO Clearing has sent you a Form W-8BEN-E to determine your FATCA status. Why should it be filled out? Pursuant to FATCA, you are required to provide your FATCA status to a Financial Institution upon request. You should determine your FATCA status based on the FATCA legislation in the country where you are resident. What if you do not fill out the W-8BEN-E form? Local fines may be imposed if the forms are not filled out correctly or timely; In case of US source income, a 30% FATCA withholding tax may be withheld on payments made to you by ABN AMRO Clearing; ABN AMRO Clearing may be required to report on you to the local tax authorities; The local tax authorities may exchange this information with the US. 8

9 Form W-8BEN-E In order to prevent among others fines, it is important to: Determine your FATCA status based on the FATCA legislation in your country; Fill out the Form within the timeframe requested by ABN AMRO Clearing; Fill out the Form correctly; Respond timely to any follow-up questions that ABN AMRO Clearing might have; Provide additional information if requested. 9

10 General Explanation to a W-8BEN-E Form FATCA Identification December

11 General explanation of a Form W-8BEN-E Part I includes mostly general information on the entity: Line 1-2 request for the name of the entity and the country of incorporation and organization. Line 3 should be filled out if the entity is a disregarded entity for US tax purposes. 11

12 General explanation of a Form W-8BEN-E Part I includes mostly general information on the entity: Line 6 requests for the permanent residence address of the entity. The address may not be a US address (in case of a US address a W-9 should be used). A permanent residence address is always required. Line 7 requests for a mailing address if this address differs from the residence address. Line 9b requests for your domestic tax identification number. 12

13 General explanation of a Form W-8BEN-E Part I : Line 4 requests for your entity type and should always be filled out for AAC. Line 4 may allow you to claim treaty benefits under a treaty of your residence country and the US. 13

14 General explanation of a Form W-8BEN-E Part I : Line 5 should be filled out. In line 5 you should indicate your FATCA status. If located in a country that has concluded an IGA, determine your status based on the IGA. Below are the available statuses, these slightly differ from the statuses under the IGAs. 14

15 A Financial Institution under FATCA and Form W-8BEN-E FATCA Identification December

16 Financial Institution FATCA FATCA imposes obligations on Financial Institutions. Entities must review whether they are a Financial Institution and, if they have subsidiaries, whether any of them is a Financial Institution. There are 4 types of Financial Institution under the (Netherlands) IGA. Financial Institution means any entity that or or or accepts deposits in the ordinary course of a banking or similar business (depository institution) holds, as substantial portion of its business, financial assets for the account of one or more other persons (custodial institution) is an investment entity is a specified insurance company 16

17 Financial Institution An investment entity is defined as: Any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer: Trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading; Individual and collective portfolio management; or 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. A specified insurance company is defined as: 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. 17

18 Financial Institutions Financial Institutions are among others: Reporting Model 1 FFIs if located in countries that have concluded a Model 1 IGA. Reporting Model 2 FFI if located in countries that have concluded a Model 2 IGA. Nonreporting IGA FFI if you are a deemed compliant FI in an IGA country. Participating FFI if not located in a country with an IGA. Nonparticipating FFI if you refuse to comply with FATCA. 18

19 General explanation of a Form W-8BEN-E Additional information for a Financial Institution: If you qualify as a Financial Institution, you are generally required to have a GIIN. Your GIIN number must be indicated in line 9a. If you have a (registered-)deemed compliant status, you may be required to register and obtain a GIIN. Please refer to local guidance or contact your tax advisor. If you have a (certified)deemed compliant status, you are generally not required to register and you generally do not have to obtain a GIIN. 19

20 Market makers FATCA Identification December

21 Market makers A market maker: Trades financial instruments on financial markets and uses its own capital at its own risk; Is obliged to maintain the trading on several exchanges in certain securities by providing liquidity; Is obliged to make the market on a continuous basis and to provide bid and offers to the market; Thereby allows people to buy and sell their securities, add liquidity to the market and narrow the bid-ask spread; Does not act for or on behalf of clients, but merely makes the market and engages in trades thereby maintaining neutrality; Generally does not treat its counterparties as customers in the sense that it is primarily engaged in the electronic trading of financial products; Generally does not send trade confirmations, monthly statements or have counterparties sign customer account agreements. 21

22 Market makers Market maker: a Passive NFFE in the Netherlands In general, a market maker that trades on its own account, uses its own capital at its own risk and does not execute trades on behalf of other persons, should qualify as a Passive NFFE in the Netherlands. This should generally also be the case in countries that have signed an IGA: Some market makers might qualify as an Active NFFE. If you qualify as an Active NFFE, please refer to the section on corporate hedgers for how to fill out the form as an Active NFFE. Market maker: a Financial Institutions in non IGA countries. If your country has not signed an IGA, a market maker should qualify as a Financial Institution. Market makers are generally classified as set out above. However, please note that facts and circumstances may differ. It is therefore recommended to review and monitor local guidance on FATCA. 22

23 How to fill out the form as a Passive NFFE in an IGA country? Part I : Generally market makers in IGA countries would be considered passive NFFEs. The market maker should certify whether there are any US substantial owners (10%) in part XXVI. 23

24 How to fill out the form as a Passive NFFE? Part XXVI : The market maker should complete Part XXVI on page 7. Line 40a should be checked. Line 40b should be checked if there are no US substantial owners (i.e. ultimate beneficial owners that are a US person and that have a 10% vote and value interest in the market maker). Line 40c should be checked if there are US substantial owners. In that case, part XXX should also be completed. 24

25 How to fill out the form as a Passive NFFE? Part XXIX: Finally, the market maker should complete Part XXIX on page 8. The box I certify that.. should be checked. Someone authorized to sign on behalf of the entity should sign and provide his name, as well as the date of signature. 25

26 Classification market makers IGA No Apply Final Regulations Yes FI Yes No For own account and not for a group company Yes Passive NFFE (monitor local guidance) 26

27 Brokers FATCA Identification December

28 Brokers A broker: Is a person or a company that acts as an intermediary between buyers and sellers; Provides brokerage services this may consist of: receipt, transmission and execution of orders on behalf of clients in financial instruments, securities and derivatives; The execution of an order may take place in the clearing account of the broker, or of the buyer/seller. 28

29 Brokers Broker should qualify as a Active NFFE if: The broker trades on the account of the client; The broker does not have discretionary authority to trade on behalf of the client, but has to be authorized or is authorized; Funds are not held by the broker as such, but maintained by the custodian; Any trades executed are directly transmitted to the client and not maintained at the account of the broker. This should generally be the case regardless of whether countries have signed an IGA: Brokers that meet these requirements are generally classified as set out above. However, please note that facts and circumstances may differ. It is therefore recommended to review and monitor local guidance on FATCA. 29

30 Brokers Broker should qualify as a Financial Institution if: The broker trades on its own account for the client; The broker has discretionary authority to trade on behalf of the client; Funds are held by the broker; Any trades executed are not directly transmitted to the client but maintained at the account of the broker; A substantial portion of the fees relates to holding financial assets on behalf of clients overnight. This should generally be the case regardless of whether countries have signed an IGA: Brokers that meet these requirements are generally classified as set out above. However, please note that facts and circumstances may differ. It is therefore recommended to review and monitor local guidance on FATCA. 30

31 How to fill out the form as an Active NFFE? Part I : Brokers that meet the conditions set out should generally qualify as Active NFFEs The broker should certify that it meets the requirements in part XXV 31

32 How to fill out the form as an Active NFFE? Part XXV: The broker should complete Part XXV on page 7. Line 39 should be checked. Please note that the income and asset test should continue to be met each year. 32

33 How to fill out the form as an Active NFFE? Part XXIX: Finally, the broker should complete Part XXIX on page 8. The box I certify that.. should be checked. Someone authorized to sign on behalf of the entity should sign and provide his name, as well as the date of signature. 33

34 Traders FATCA Identification December

35 Traders in IGA countries A trader: A trader buys and sells financial instruments, such as stocks, bonds, commodities and derivatives; A trader may trade for a client or may trade for its own account using its own capital at its own risk; There are several types of traders including day traders, floor traders, high-frequency traders and stock traders. 35

36 Traders in IGA countries A Trader is generally considered to qualify as a Financial Institution: An investment entity includes: Any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer: Trading in money market instruments (checks, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading; ( ) In general a trader should qualify as a Financial Institution as it conducts as a business trading in e.g. money market instruments; Traders that do not trade for clients but for their own account are generally also considered to be a Financial Institution. The shareholders are considered to be the customer; This should be the case in all countries regardless of whether they have signed an IGA: Traders are generally classified as set out above. However, please note that facts and circumstances may differ. It is therefore recommended to review and monitor local guidance on FATCA. 36

37 Traders in IGA countries A Trader is generally considered to qualify as a Financial Institution. However: Some IGA countries consider entities that have a limited number of shareholders or that are family owned as NFFE instead of an Investment Entity. In case the trader does not qualify as a Financial Institution, the trader may qualify as an Active NFFE. In this case, please refer to the section on corporate hedgers for how to fill out the form as an Active NFFE. Please consult your local guidance on FATCA or your local tax advisor on the situation in your country. 37

38 How to fill out the form as a Financial Institution? Part I : Generally traders in IGA Model 1 countries would be considered Reporting Model 1 FFI Please see whether you are in a Model 1 or Model 2 IGA country: 38

39 How to fill out the form as a Financial Institution? Part I : Generally traders in IGA Model 2 countries would be considered Reporting Model 2 FFI Please see whether you are in a Model 1 or Model 2 IGA country: 39

40 How to fill out the form as a Financial Institution? Part I : Generally traders in countries that have not signed an IGA are Participating FFI Please see whether you are in an IGA country: 40

41 How to fill out the form as a Financial Institution? Additional Information must be provided: Financial Institutions are required to provide their GIIN in line 9a. If you are an FI and you have not yet registered, please register on: 41

42 How to fill out the form as a Financial Institution? Part XXIX: Finally, the trader should complete Part XXIX on page 8. The box I certify that.. should be checked. Someone authorized to sign on behalf of the entity should sign and provide his name, as well as the date of signature. 42

43 Corporate hedgers FATCA Identification December

44 Corporate hedger in IGA countries A corporate hedger: Engages in hedging, which is the practice of taking a position in one market to offset and balance against the risk adopted by assuming a position in a contrary or opposing market or investment; Intends to reduce the risk of an investment by making an offsetting investment; Manages the risk of price changes or currency fluctuations with respect to property that is held or to be held by the group; A hedger is generally a producer or user of a commodity or financial product. 44

45 Corporate hedger in IGA countries Corporate hedger: an Active NFFE in the Netherlands In general, a corporate hedger that hedges risks on behalf of its own company or group companies, should qualify as an Active NFFE in the Netherlands. This should also be the case in countries that have signed an IGA as well as in countries that have not signed an IGA: Archive.aspx Corporate hedger: a Financial Institutions A corporate hedger that does not hedge risks on behalf of group companies, but that hedges for its own account and for its own profit should qualify as a Financial Institution. This is also the case if the entity hedges for other persons or companies that are not part of the group. Corporate hedgers are generally classified as set out above. However, please note that facts and circumstances may differ. It is therefore recommended to review and monitor local guidance on FATCA. 45

46 How to fill out the form as an Active NFFE? Part I : Corporate hedgers that meet the conditions set out should generally qualify as Active NFFEs. The corporate hedger should certify that it meets the requirements in part XXV. 46

47 How to fill out the form as an Active NFFE? Part XXV: The corporate hedger should complete Part XXV on page 7. Line 39 should be checked. Please note that the income and asset test should continue to be met each year. 47

48 How to fill out the form as an Active NFFE? Part XXIX: Finally, the corporate hedger should complete Part XXIX on page 8. The box I certify that.. should be checked. Someone authorized to sign on behalf of the entity should sign and provide his name, as well as the date of signature. 48

49 Classification corporate hedger Hedging risk for group company Yes Active NFFE No Hedging for own profit or for non group company Yes FI 49

50 Questions? Robert Jan Meindersma Babette Ancery All rights reserved. Not for further distribution without the permission of. "" refers to the network of member firms of PricewaterhouseCoopers International Limited (IL), or, as the context requires, individual member firms of the network. Please see for further details.