FATCA - Updated FFI agreement, registration and other guidance in Rev. Proc. 2014-38 

June 24:  The IRS today released an advance copy of Rev. Proc. 2014-38 that updates an agreement entered into by a foreign financial institution (FFI) that seeks to be treated as a participating FFI by the IRS.

According to the 51-page Rev. Proc. 2014-38 [PDF 180 KB], the IRS is updating the FFI agreement to make it consistent with the February 2014 temporary regulations under Chapter 4, Chapters 3 and 61, and section 3406.

Reporting Model 2 FFIs

Rev. Proc. 2014-38 also provides guidance to FFIs and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement (IGA) on complying with the terms of the FFI agreement, as modified by the Model 2 IGA.

Under this guidance, a “reporting Model 2 FFI” is to apply the FFI agreement by substituting the term “reporting Model 2 FFI” for “participating FFI” throughout the FFI agreement—except when the FFI agreement explicitly refers to a reporting Model 2 FFI.

The FFI agreement in section 5 of Rev. Proc. 2014-38 applies to an FFI that has submitted a FATCA registration with the IRS to be treated as a participating FFI (including a reporting Model 2 FFI) and that has received a global intermediary identification number (GIIN)—regardless of whether the FFI receives a GIIN before or after the effective date of this revenue procedure.

FATCA registration for participating FFIs or reporting Model 2 FFIs

According to today’s revenue procedure, an FFI may register on Form 8957, Foreign Account Tax Compliance Act (FATCA) Registration, via the FATCA registration website—http://www.irs.gov/fatca—to enter into the FFI agreement on behalf of one or more of its branches so that each of such branches may be treated as a participating FFI and receive a global intermediary identification number (GIIN).

A reporting Model 2 FFI may also register on the FATCA registration website on behalf of one or more of its branches to obtain a GIIN and to agree to comply with the terms of the FFI agreement, as modified by an applicable Model 2 IGA. A branch of such FFIs that cannot, under the laws of the jurisdiction in which such branch is located, satisfy all of the terms of the FFI agreement will be treated as a limited branch (as defined in the FFI agreement) and will be subject to withholding under section 1471 as a nonparticipating FFI.

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