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FATCA & CRS Onboarding Forms 2022

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When being onboarded with a bank or other financial intuition, there is a legal requirement to for this counterparty to obtain a CRS and FATCA Self-Certification as part of the account opening documentation. This Self-Certification is required to (a) determine whether the Entity account holder is a Specified U.S. Person, (b) determine whether the Controlling Person(s) (as relevant) of an Entity account holder is a U.S. Citizen, (c) determine the residence(s) for tax purposes of the Entity account holder, and where relevant its Controlling Person(s), and (d) obtain the applicable foreign Tax Identification Number (TIN) if appropriate.

What is CRS?

The aim of CRS is to have a globally co-ordinated approach to the disclosure of financial account information in respect of individuals and organisations, in order to combat tax avoidance. The CRS imposes on all financial institutions in participating jurisdictions, duties of identification, classification and reporting of accounts held by reportable customers to its local country tax authorities.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a piece of U.S. legislation. Its aim is to combat tax evasion by U.S. citizens and residents who hold assets off-shore by improving the exchange of information between the U.S. and foreign tax authorities.

What is TIN?

A Taxpayer Identification Number (TIN) is a generic term for the unique reference number held for an individual or entity issued by the relevant Tax Authorities. For entities, this might be your Employer Identification Number, Unique Business Reference or Corporation Tax number. 

What is a Specified US Person?

The term ‘specified US person’ means any US person other than:


A). corporation the stock of which is regularly traded on one or more established securities markets for a calendar year;

B). any corporation which is a member of the same expanded affiliated group as a corporation the stock of which is regularly traded on one or more established securities markets for the calendar year; 

C). any organisation exempt from taxation under US federal tax law or an individual retirement plan;

D). the United States or any wholly owned agency or instrumentality thereof;

E). any state, the District of Columbia, any US territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing;

F). any bank incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any state thereof;

G). any real estate investment trust;

H). any regulated investment company, or any entity registered with the Securities Exchange Commission under the Investment Company Act of 1940;

I). any common trust fund;

J). any trust that is exempt from tax or is deemed a charitable trust;

K). a dealer in securities, commodities, or derivative financial instruments that is registered as such under the laws of the United States or any state;

L). a broker;

M). any tax exempt trust under a tax exempt or public school annuity plan or governmental plan.

Non-Financial Foreign Entity (NFFE)

An NFFE (non-financial foreign entity) is a non-US incorporated/established entity that does not meet the definition of an FFI (foreign financial institution) and includes:

·  listed or privately held operating or trading businesses
·   professional service firms
·   certain entities with a passive trade (i.e. not an operating or trading business)
·    charitable organisations.

Active Non-Financial Foreign Entity (Active NFFE)

An NFFE will be regarded as an Active NFFE if it meets any one of the following: 

A). Less than 50 per cent of the NFFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50 per cent of the assets held by the NFFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income; 
B). The stock of the NFFE is regularly traded on an established securities market or the NFFE is a Related Entity of an Entity the stock of which is traded on an established securities market;
C). The NFFE is organised
in a US Territory and all of the owners of the payee are bona fide residents of that US Territory;
D). The NFFE is a non-US government, a government of a US
Territory, an international organization, a non[1]US central bank of issue, or an Entity wholly owned by one or more of the foregoing; 
E). Substantially all of the activities of the NFFE consist of holding (in whole or in part) the outstanding stock of, and providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an NFFE shall not qualify for this status if the NFFE functions (or holds 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; 
F). The NFFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution; provided, that the NFFE shall not qualify for this exception after the date that is 24 months after the date of the initial organisation of the NFFE; 
G). The NFFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganising with the intent to continue or recommence operations in a business other than that of a Financial Institution; H). The NFFE primarily engages in financing and hedging transactions with or for Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution; or
I). The NFFE meets all of the
following requirements:
     i. It is established and maintained in its country of residence exclusively for religious, charitable, scientific, artistic, cultural, or educational purposes;
     ii. It is exempt from income tax in its country of residence;
     iii. It has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
     iv. The applicable laws of the Entity’s country of residence or the Entity’s formation documents do not 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 as payment representing the fair market value of property which the Entity has purchased; and 
     v. 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 a governmental Entity or other non-profit
organisation, or escheat to the government of the Entity’s country of residence
or any political subdivision thereof.

Excepted Non-Financial Foreign Entity (Excepted NFFE)

The term Excepted NFFE refers to; 

i. Any corporation the stock of which is regularly traded on one or more established securities market (and certain affiliates thereof);
ii. Any territory entity organized under the laws of a U.S. possession and is directly or indirectly, wholly owned by 1 or more bona fide residents of the possession;
iii. Any entity that is an active NFFE; or
iv. Other entities that are excepted NFFEs; i.e.
     a. certain non-financial holding companies
     b. certain start-up companies 
     c. non-financial entities that are liquidating or emerging from reorganization or bankruptcy
     d. IRC Section 501(c) entities (other than certain insurance companies)
     e. non-profit organizations.

Passive Non-Financial Foreign Entity (Passive NFFE)

A “Passive NFFE” means any NFFE that is not 
i. an Active NFFE or
ii. a withholding foreign partnership or withholding foreign trust pursuant to relevant U.S. Treasury Regulations.

Global Intermediary Identification Number (GIIN)

The term GIIN refers to an identification number that is assigned to certain financial institutions by the U.S. Internal Revenue Service.

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