FATCA: impact on data management. Jacob Gertel, Business Development April 2014

Transcription

1 FATCA: impact on data management Jacob Gertel, Business Development April

2 Agenda Introduction IRS Final Regulation and Amendments Highlights SIX Financial Information Data Offering Issuer Level Classification & Status Instrument Level Tax Status Pass-through Payment Information Implementation Timeline 2

3 INTRODUCTION Foreign Account Tax Compliance Act (FATCA) FATCA enacted in the Hiring Incentives to Restore Employment (HIRE) Act, is a significant extension of the current QI (Qualified Intermediary) regime in the US, which will remain in place. FATCA is affecting all Foreign Financial Institutions (FFIs) worldwide. 1 Three main areas of impact for participating FFIs 2 Customer and counterparty Implementing the corresponding (individuals and legal entities) withholding mechanism for 3 classification and uncooperative individuals and identification of US accounts non-participating FFIs (including obtaining the relevant Implementing the required IRS SIX Financial Information will documents and waivers) reporting provide high-quality data on issuer classifications & instrument level tax status 3

4 FATCA IRS Final Regulation and Amendments Highlights Embedding the Inter Governmental Agreements (IGA) Model I & II into the regulation Expansion of the FFI categories Clarification of documentation issues (such as W-8BEN) and compliance and verification obligations of FFIs Introduction of the FFI registration process and the new Global Intermediary Identification Number (GIIN) Withholding of FDAP payments by FFI and US withholding agents for new account holders and non- participating FFI in the absence of proper documentation Key Dates 19 Aug Feb 5 May 2 Jun 30 Jun 1 Jul 1 Jan 2017 IRS Portal accessible for FFIs New IRS Procedures and Amendments to regulations (details on next slide) Recommended FFI registration (ensures inclusion in the 1 st list published) IRS publication of FFI list with GIIN (thereafter updated on a monthly basis) cut-off for Grandfathered obligations (not subject to FATCA withholding) Distinguishing between old and new account date, 30% withholding to start Withholding on Gross Proceeds and Passthrough Payments starts 4

5 20 FEB New IRS Procedures and Amendments to regulations Clear message from Treasury: FATCA will go into effect on July 1, there will be no delay for the FATCA start date. Amendments to FATCA regulations to take into account stakeholder comments The document contains amendments to the Final Regulations with regards to reporting mechanism: the treatment of special purpose debt securitization vehicles the treatment of entities as branches of foreign disregarded financial institutions the definition of expanded affiliated group and transitional rules for collateral arrangements prior to 2017 Coordination of FATCA with pre-existing reporting and withholding rules The document coordinates FATCA with other existing regulations like Chapter 61 and section 3406 (dealing with reporting and withholding requirements): rules for identification of payees coordination of the withholding requirements under Chapter 3, Section 3406, and FATCA coordination of Chapter 61 and FATCA regarding information reporting with respect to U.S. persons conforming changes to the regulations implementing the various regimes 5

6 2 APR New IRS Procedures and Amendments to regulations The new date for registering ensuring appearance on the first FFI list which will published on 2.6. is 5.5. (previously: 25.4.) Jurisdictions will included on the IRS list also in cases where the agreements were consent achieved but not signed yet Key Dates 19 Aug Feb 5 May IRS Portal accessible for FFIs New IRS Procedures and Amendments to regulations (details on next slide) Recommended FFI registration (ensures inclusion in the 1 st list published) amendments are not influencing SIX Financial Information s current FATCA data management 2 Jun 30 Jun 1 Jul 1 Jan 2017 IRS publication of FFI list with GIIN (thereafter updated on a monthly basis) cut-off for Grandfathered obligations (not subject to FATCA withholding) Distinguishing between old and new account date Withholding on Gross Proceeds and Passthrough Payments starts 6

7 SIX Financial Information Data Offering Existing Data QI Regime Data Additional Data Issuer Level Classification & Status Instrument Level Tax Status Pass-through Payment Information 7

8 Issuer Level Classification & Status US Entity Foreign Entity FATCA Entity Type Non-Financial US Entity US Financial Entity Non-Financial Foreign Entity NFFE Foreign Financial Entity FFI GIIN-Number 98Q96B LE.250 The IRS will maintain a register for all FFIs which have signed the agreement (Participating FFI as well as potentially exempt and deemed compliant FFIs). Entities will be marked as compliant upon information provided by the IRS (The IRS committed to maintain and publish the list). Exempt FFI Deemed Compliant FFI Registered deemed compliant FFI Certified deemed compliant FFI Participating FFI Non-Participating FFI FFI Status 8

9 Sample Extract from the IRS FFI Register The IRS has published a first draft of the information they will make available for registered FFIs. GIIN,FINm,CountryNm 98Q96B LE.250,Test Bank One,France Financial Institution 98Q96B BR.826,Branch,United Type Kingdom Lead = Q96B BR.036,Branch,Australia Sponsoring Entity 98Q96B BR.076,Branch,Brazil = Single = Q96B BR.818,Branch,Egypt Member = Last 598Q96B ME.276,Test characters of FATCA ID Bank Two,Germany 98Q96B BR.826,Branch,United Kingdom 8124H SP.208,Test Bank Three,Denmark C54S SL.276,Test Bank Four,Germany C54S BR.208,Branch,Denmark 126BM LE.826,Test Bank Five,United Kingdom 126BM BR.250,Branch,France 126BM ME.208,Test Bank Nine,Denmark FATCA ID Country Identifier 126BM ME.276,Test Bank Ten,Germany (first 6 characters) 126BM BR.344,Branch,Hong Kong SE19K SL.250,Test Bank Eleven,France 76GHU BR.036,Branch,Australia 76GHU BR.818,Branch,Egypt 92YNJG BR.076,Branch,Brazil Category Code LE = Lead SL = Single ME = Member BR = Branch SP = Sponsoring Entity 9

10 Instrument Level Tax Status LIVE DATA available now FATCA Instrument Tax Status Material Modification In Scope US Security In Scope Materially Modified Security Exempt Grandfathered US Security Exempt Short-Term Obligation Partly In Scope Security Issued by FFI Out of Scope Security Issued by NFFE 30% withholding tax deducted for recalcitrant account holders and non-participating FFIs Previously Grandfathered Security which has undergone a Material Modification and is now subject to withholding Obligations with a fixed maturity date outstanding on 1 July exempt from 30% withholding tax Obligations which are payable 183 days or less from the date of original issue Subject to the pass-through payment percentage rules for the purpose of the 30% withholding tax Not subject to the 30% withholding tax 10

11 EXAMPLE In scope Instrument: IBM Share, ISIN US

12 EXAMPLE Exempt short-term : JPM Debt Instrument, ISIN US46640QGG01 12

13 EXAMPLE Exempt grandfathered : IBM Bond, ISIN US459200HK05 13

14 Monitoring Instruments for Material Modifications Grandfathered obligations will be monitored for a series of event types that could potentially be treated as a material modification and hence cause the loss of the grandfathered status. Item Event Type 400 Merger / Takeover 400 Demerger / Reorganisation 400 Legal proceedings 400 Liquidation 380 Extension of maturity by creditor 381 Unforeseen extension of maturity by debtor 388 Shortening of maturity by debtor 379 Change of interest rate 382 Reduction or non-payment of capital 278 Interest payment (status default) 281 Settlement of interest / capital arrears 598 Other Events 14

15 MATERIAL MODIFICATIONS Ongoing oversight & reporting of martial modifications Grandfathered Securities Corporate Events Issuer / Agent Create Monitoring List Request Qualification Monitoring List Process Monitoring List Update Instrument Tax Status 15

16 Pass-through Payment Information Passthrough Payment Percentage SHS ABC Banking Participating FFI GIIN-Number 98Q96B LE /01/ /03/ PCT 01/04/ /06/ PCT 01/07/ /09/ PCT All participating FFIs will be required to publish their Passthrough Payment Percentage on a quarterly basis. The calculation is based on the value of US assets vs. total assets and take into account the last four quarters (Asset Test) - effective 1 January /10/ /12/ PCT 16

17 Implementation Timeline Regulators Timeline Timeline of SIX /02/2012: Published 19/08/2013 Starting of Proposed 8 February regulations 2012: from IRS Starting FFI registration of FFI with IRS Published registration Proposed with IRS 5/05/ regulations from Recommen Summer 2012: Final 1 January ded FFI IRS regulations from 17/01/2013: IRS IRS published final the Final Regulations /2015: Start of registration anticipated withholding IRS and reporting of US clients personal 7 /8 July 10/11 Nov 6/7 July information 9/10 Nov and /8 July / /7 acc /17 balance Nov 2012 Nov July 2013* VDF * Releases Development Data Offering VDF Release 2/12: FATCA Structures 5/6 July * 5/6 July * 01/07/ Grandfathered Obligations cut-off 15/16 Nov * 15/16 Nov * /07/ : FATCA withholding begins for new NPFFI, recalcitrant account holders 02/06/ IRS posts the first IRS FFI List Issuer Classification (based on IRS-FFI List) 4/5 July 2015* /01/2017: Reporting of pass-through payments, Full info. on US accounts inc. gross proceeds 14/15 Nov 2015* FATCA Instrument Level Status available as of 25/01/ 2017 Implementation Pass- Through Payment Information Today 17

18 Thank you for your attantion Jacob Gertel Business Development, SIX Financial Information