FATCA & its impact on your business 

The Foreign Account Tax Compliance Act (“FATCA”) requires Foreign Financial Institutions (“FFIs”) to register and report information on accounts held by US persons and certain US controlled foreign entities.  Failure to comply will result in a 30% withholding tax penalty on certain US sources of income beginning 1 July 2014.

FATCA & its impact on your business

It is critical for Irish tax resident entities and Irish branches of foreign entities to determine whether or not they are classified as Reporting Irish Financial Institutions under Ireland’s IGA with potential registration and reporting obligations.

 

Recent Updates

Extension of FATCA Reporting Deadline to 31 July 2015

 

The Irish Revenue Commissioners announced today the extension of the FATCA reporting deadline from 30 June 2015 to 31 July 2015 for Reporting Irish Financial Institutions to file a FATCA return with respect to 2014 – in all future periods the annual reporting deadline will be 30 June. We understand that the Irish Revenue Commissioners will release an official eBrief confirming this position shortly. 

 

Removal of Relevant Holding Company and Relevant Treasury Company Categories of Financial Institution ("FI") 

 

On 17 June, the Irish Revenue Commissioners released eBrief No. 57/15 confirming that a Relevant Holding Company or Relevant Treasury Company will no longer be considered an FI unless it meets the definition of one of the four original categories of FI (i.e. Custodial Institution, Depository Institution, Investment Entity or Specified Insurance Company).

 

Publication of FATCA FAQs

 

Pending publication of a new version of FATCA Guidance Notes, the Irish Revenue Commissioners have also recently published a set of FAQs to supplement the 1 October 2014 FATCA Guidance Notes.

 

The FAQ’s run to 11 pages and cover a number of important points as well as some minor clarifications and corrections. See attached summary of the key points here.

 

The attached clarifications are welcome and we understand that a number of other questions are being worked through by the Irish Revenue Commissioners pending publication of the next version of the FATCA Guidance Notes. 

 

Should you require assistance with meeting your obligations under Ireland’s IGA or other Automatic Exchange of Information (“AEoI”) protocols, please contact myself, Rachel Hewitt or another member of your KPMG team.

FATCA Deadlines 12 May 2015

Key Upcoming FATCA Deadlines

A number of important FATCA deadlines are fast approaching:

Reporting: 

 

  • The first FATCA reporting deadline with respect to the calendar year 2014 is 30 June 2015 and all Reporting Irish Financial Institutions will need to file a FATCA return for 2014 by that date, regardless of whether they have any US Reportable Accounts or not.

 

Due Diligence:

 

  • All Pre-Existing High Value Individual Accounts (i.e. Individual Accounts with a balance or value >$1M at 30 June 2014), must be reviewed in accordance with the due diligence procedures set out in Annex I of Ireland’s IGA by 30 June 2015. 
  • If such accounts were reviewed and identified as US Reportable Accounts in 2014, these accounts will be reportable for the 2014 year by 30 June 2015 (and in all subsequent periods as relevant). However, if such accounts are reviewed and identified as US Reportable Accounts in 2015, these accounts will be reportable for the 2015 year by 30 June 2016 (and in all subsequent periods as relevant).

 

AEOI Revenue Update - May 2015

The Irish Revenue Commissioners hosted a meeting on 7 May 2015 with the Automatic Exchange of Information (“AEOI”) working group on matters relating to FATCA, the Common Reporting Standard (“CRS”) and the implementation of the CRS via the EU Directive on Administrative Cooperation (“DAC II”).” Some of the key matters discussed at this meeting are noted below.

 

FATCA

  • Revenue plan to reverse the creation of the Relevant Holding Company and Relevant Treasury Company FFI categories and to revert back to the original four FFI categories included in Ireland’s IGA. This will significantly reduce the number of entities potentially falling within the scope of FATCA registration and reporting obligations and is consistent with the recent changes in the UK.
  • Revenue confirmed that the FATCA reporting deadline (i.e. 30 June 2015 for the 2014 year) will not be extended further.
  • Revenue reconfirmed yet again that nil returns will still be required for Irish FFIs with no US Reportable Accounts.
  • Revenue shortly intend to release a set of FAQs on those questions that Revenue have considered and closed out on internally and to issue updated Guidance Notes thereafter.

 

CRS/DAC II

 

  • In relation to the CRS and the EU equivalent of same, DAC II, Revenue confirmed that their intention is to only issue minimal guidance on the CRS in the coming months and to place reliance on the more detailed commentary issued by the OECD in July 2014.
  • The next step in the process is to issue Regulations via Statutory Instrument to implement both the CRS and DAC II later this year.
  • Revenue reconfirmed the position that the EU Savings Directive returns would be phased out in tandem with the introduction of the CRS.
  • Revenue also confirmed that they will be mandating the completion of nil returns for the CRS similar to FATCA.

 

FATCA Update - March 2015

26 March 2015: In light of recent developments in other Model I IGA jurisdictions, in particular the abolition of the nil return reporting requirement in the UK, the Irish Revenue Commissioners have issued updated guidance to advisers and industry groups on the following Irish FATCA related matters:

  • To confirm the continued requirement for Irish Financial Institutions to file nil returns with the Irish Revenue Commissioners via ROS by 30 June annually in accordance with Regulation 9 of S.I. No. 292 of 2014
  • In response to a very restrictive answer by the US on a recent FAQ, the Irish Revenue Commissioners have helpfully confirmed with the IRS that an Irish Financial Institution is not required to obtain a FATCA self-certification immediately upon opening a new individual account. However, the Irish Financial Institution’s account opening procedures should not be regarded as fully completed until such a self-certification is obtained. Accordingly, an Irish Financial Institution should be prepared to close an account if an account holder does not provide a self-certification within a reasonable length of time
  • No update was provided in relation to the UK’s decision to revoke the Relevant Holding Company and Relevant Treasury Company categories of FFIs. However, additional guidance on the Irish categories of Relevant Holding Companies and Relevant Treasury Companies will be issued in the coming months along with the next version of the Irish FATCA Guidance Notes.

 

FATCA: Final Irish regulations signed into law - June 2014

On 30 June 2014, the Irish Revenue Commissioners published the Final Irish Regulations on FATCA (PDF, 179KB), which govern the FATCA compliance of Irish tax resident entities, as provided for in S. 891E of the Taxes Consolidation Act 1997.

 

The Final Regulations contain a number of clarifications and additional matters, including:

 

  • Specifying the Regulations come into operation on 1 July 2014
  • Incorporating two new Foreign Financial Institution (“FFI”) categories for (i) Relevant Holding Companies; and (ii) Relevant Treasury Companies
  • Confirming Reporting Irish Financial Institutions have until 31 December 2014 to register for a Global Intermediary Identification Number (“GIIN”) with the IRS
  • Confirming FATCA annual return date to the Irish Revenue Commissioners is 30 June

 

Further analysis of the Final Irish Regulations for implementing FATCA will follow.

 

FATCA: Implications & insights for non-financial foreign entities - April 2014

The FATCA obligations outlined in Ireland’s IGA with respect to registration, due diligence, reporting, etc. only extend to Irish entities that are classified as Financial Institutions under Ireland’s IGA. If an Irish entity is not classified as a Financial Institution, it will mostly likely be a Non-Financial Foreign Entity and should not have any FATCA registration or reporting obligations.

 

Download FATCA: Implications & insights for non-financial foreign entities

 

FATCA: IRS publish additional guidance on IGAs - April 2014

The US Treasury Department and IRS have announced that Foreign Financial Institutions (“FFIs”) have an additional 10 days to complete their FATCA registration, in order to be included on the first IRS FFI list. This pushes back the registration deadline from 25 April 2014 to 5 May 2014 to obtain a Global Intermediary Identification Number (“GIIN”), and be included on the 2 June 2014 IRS FFI list. Please click here to view the announcement.

 

The Announcement also indicates that countries that have reached “agreements in substance” with the US on the terms of an Intergovernmental Agreement (“IGA”) can be treated as having an IGA in effect until 31 December 2014. However after 31 December 2014, only signed IGAs will be considered to be in effect. This treatment will be available to jurisdictions that:

 

  • Reach “agreements in substance” prior to 1 July 2014; and
  • Consent to having the status of their agreements disclosed.

 

To date the US has signed 26 IGAs and on 2 April the US Treasury Department announced that an additional 19 jurisdictions will be treated as having an IGA in effect under the “agreements in substance” approach, bringing the total number of jurisdictions that are treated as having IGAs in effect for 2014 to 45. Please click here to view list of 45 jurisdictions.

 

This is a helpful clarification for entities that are tax resident in countries that have not yet signed an IGA, but are aware that an IGA has been substantially concluded and so allows these entities to register if they want to be included on the first IRS FFI list.

 

If you have any questions or would like assistance with registering for a GIIN, please contact Kevin Cohen, Rachel Hewitt or another member of our KPMG FATCA team.

 

FATCA: IRS releases final form W-8BEN-E - March 2014

Over the weekend, the IRS released the Final Form W-8BEN-E “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)”. Instructions have not yet been released. This new form incorporates the FATCA classifications that will be used by Irish entities to demonstrate to US withholding agents from which they receive US source income that they are tax resident in a Model 1 IGA country and their FATCA status.

 

The key features of the new Form W-8BEN-E include:

 

  • Inclusion of the Global Intermediary Identification Number (“GIIN”);
  • 31 FATCA status classifications;
  • Various FATCA self-certifications (depending on FATCA status); and
  • A request for details of Substantial US owners where an entity is a Passive NFFE.

 

While an entity in a Model 1 IGA country, such as Ireland, should only be subject to FATCA withholding tax in limited circumstances, Irish entities should be prepared to provide a completed Form W-8BEN-E to US withholding agents if requested, to prevent the application of the 30% FATCA withholding tax on US source income with effect from 1 July 2014.

 

The new Form W-8BEN “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)” issued on 3 March 2014 will replace the former Form W-8BEN “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding” and is to be used by individuals going forward (prior to these FATCA updates, a single Form W-8BEN could have been used by both individuals and entities).

 

If you have any questions or would like assistance completing the new Form W-8BEN-E, please contact Kevin Cohen, Rachel Hewitt or another member of our KPMG FATCA team.

 

FATCA Ireland's IGA - December 2012

Download: FATCA: Ireland’s IGA (PDF, 197KB) December 2012

 

 

Key decision steps for Irish entities

  • Determine if the entity is classified as an FFI under Ireland’s IGA
  • Determine if the entity qualifies for any registration and/or reporting exemptions
  • Register for a Global Intermediary Identification Number (“GIIN”) via the IRS portal
  • Undertake the necessary due diligence procedures to identify US Reportable Accounts
  • Prepare the applicable information to report to the Irish Revenue Commissioners
  • Consider the applicability of other country’s IGAs or US FATCA Regulations to subsidiaries or branches located outside of Ireland
  • Consider the organisational impact of FATCA on the entity’s business, including its interactions with other service providers, the risk of the 30% FATCA withholding tax on US source income and the inclusion of FATCA language in legal agreements

 

How KPMG can help

Our FATCA team can help walk through the implications of the above steps and assist you in moving towards becoming Irish IGA compliant.

 

If you would like a FATCA brochure or require further information on how we can assist your company, please call us or email: rachel.hewitt@kpmg.ie.

FATCA contacts

Kevin Cohen, FATCA partner

Kevin Cohen

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Partner

kevin.cohen@kpmg.ie
+353 1 410 2369

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Rachel Hewitt

Rachel Hewitt
Manager

rachel.hewitt@kpmg.ie

+353 1 700 4392

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