02.05 - Non-Reporting Financial Institutions

02.05 – Non-Reporting Financial InstitutionsUnder the UK’s regulations to implement CD and Gibraltar reporting the definition of a Non-Reporting Financial Institution is more limited than it is under the regulations to implement US FATCA. If a financial institution is a Deemed-Compliant Financial Institution for US FATCA reporting, then this does not mean that it will automatically be a Non-Reporting Financial Institution for CD & Gibraltar reporting.

For US FATCA reporting, the following types of financial institution

Non-Profit OrganisationsLocal Client Base Financial InstitutionsNon-Registering Local Banks

are Deemed-Compliant, Non-Reporting Financial Institutions.

However, under the International Tax Compliance (Crown Dependencies and Gibraltar) Regulations 2014, where they qualify as Financial Institutions these institutions will not be Deemed-Compliant and will instead be Reporting Financial Institutions for CD and Gibraltar due diligence and reporting purposes.

Further details of the obligations that will be faced by these Financial Institutions is given at section 2.7 Depending on the activities and business practices of the institution some entities may be able to comply using simplified due diligence techniques.

Source URL: http://haydonperryman.com/gb/guidance/dac/aeim100920/

100920 - Financial Institutions: Non-Reporting Financial Institutions

100920 – Financial Institutions: Non-Reporting Financial Institutions

All of the automatic exchange of information regimes exclude certain financial institutions from being reporting financial institutions. Such financial institutions are not required to identify, maintain or report information about Reportable Persons.

These institutions are identified in Annex II of the IGA with the USA for FATCA purposes and Annex II of the IGAs with the Crown Dependencies and Gibraltar for CDOT reporting.

For the purposes of the DAC (which is implemented in the UK by the 2015 Regulations, and which are applicable for reporting by UK financial institutions) the only Non-reporting Financial Institutions are those defined in Annex I Section XIII B.

101540 - Financial Accounts: Depository AccountsSource URL:http://haydonperryman.com/gb/guidance/dac/aeim101540/

101540 – Financial Accounts: Depository AccountsA Depository Account includes any commercial current, savings, time or thrift account, or any account evidenced by a certificate of deposit, investment certificate, thrift certificate, certificate of indebtedness, or other similar instrument where cash is placed on deposit with an entity engaged in banking or similar business. Being engaged in banking or similar business is explained at AEIM100740.

A Depository Account does not have to be an interest bearing account.

A Depository Account will include a credit balance on a credit card, for example where a purchase has been refunded, provided the credit card has been issued by a credit card company engaged in banking or a similar business.

Credit cards will not be reportable as Depository Accounts if the credit card issuer meets the conditions to be a qualified credit card issuer and is, therefore, a Non-reporting Financial Institution. Similarly, where a financial institution does not satisfy the requirements to be a qualified credit card issuer, but accepts deposits when a customer makes payment in excess of a balance due with respect to a credit card or other revolving credit facility, it may still not have to report the account as a Depository Account if it qualifies as an Excluded Account.

02.01 - IntroductionSource URL:http://haydonperryman.com/gb/guidance/fatca/02-01/

02.01 – Introduction

2.1 Introduction

The first step to be undertaken by an entity or its representative is to establish whether, for the purposes of the Agreement, the entity is a Financial Institution. This will determine the extent of the obligations that need to be undertaken.

Through the US Regulations, FATCA introduces the concept of a Foreign Financial Institution (FFI). This term applies to non-US entities that meet the definition of a Financial Institution. Under the Agreement, UK entities are regarded as United Kingdom Financial Institutions (UKFI’s) if they fall within any of, or more than one of, the following categories.

Depository Institution Section 2.26Custodial Institution Section 2.27Investment Entity Section 2.28Specified Insurance Company Section 2.29

Each category of Financial Institution is determined by set criteria, which must be met. Where an entity does not meet the definition of a Financial Institution, then the entity will be regarded as a Non-Financial Foreign Entity (NFFE). (See Section 2.6)

Under the Agreement UK Financial Institution’s will be classified either as a Reporting UK Financial Institution or a Non-Reporting UK Financial Institution.

As long as UK Financial Institutions are in compliance with the UK legislation then they will not be subject to any withholding tax on their US source income under S1471 of the US Internal Revenue Code.

Non-Reporting UK Financial Institutions

A Non-Reporting UK Financial Institution is any Financial Institution specifically identified as such in Annex II of the Agreement, or one which otherwise qualifies under Article 1. 1. (q) of the Agreement as:

· a Deemed Compliant Financial Institution,· an Owner Documented Financial Institution,· an Exempt Beneficial Owner, or· an Excepted Financial Institution.

A Non-Reporting Financial Institution will not need to obtain a Global Intermediary Identification Number (GIIN) or carry out the due diligence and reporting obligations under the Agreement.

However, there is one scenario in which an entity that is treated as Deemed Compliant under Annex II could still have some reporting obligations. That is where an entity meets the criteria of a Financial Institution with a Local Client Base, and has US Reportable Accounts. (See Section 2.13)

A Registered Deemed Compliant Financial Institution will need to obtain a GIIN. (See Section 2.15)

Reporting UK Financial Institutions

Any UK Financial Institution that is not a Non-Reporting UK Financial Institution will be a Reporting UK Financial Institution. They will be responsible for ensuring that their due diligence and reporting requirements are met.

02.08 - UK Government or UK Governmental OrganisationsSource URL:http://haydonperryman.com/gb/guidance/fatca/02-08/

02.08 – UK Government or UK Governmental OrganisationsThe UK Government and the organisations listed below are Non-Reporting Financial Institutions and will be treated as Exempt Beneficial Owners.

The Devolved Administrations as per:

the Northern Ireland Act 1998 (updated by The Northern Ireland (St Andrews Agreement) Acts 2006 & 2007, and the Northern Ireland Act 2009)the Scotland Act 1998the Government of Wales Act 2006

Local Government Authorities as per:

Section 33 of the Local Government Act 2003the Local Government Act (NI) 1972 (as amended by The Local Government (Miscellaneous Provisions) Act (NI) 2010 and Local Government Finance Act (NI) 2011)the Local Government etc. (Scotland) Act 1994the Local Government (Wales) Act 1994.

02.16 - Non-reporting members of Participating Foreign Financial Institution GroupsSource URL:http://haydonperryman.com/gb/guidance/fatca/02-16/

02.16 – Non-reporting members of Participating Foreign Financial Institution GroupsThis allows a Financial Institution to be treated as Registered Deemed Compliant if it meets the following requirements:

By the later of 30 June 2014 or the date it obtains a GIIN, the Financial Institution implements policies and procedures to allow for the identification and reporting of:Pre-existing US Reportable AccountsUS Reportable Accounts opened on or after 1 July 2014Accounts that become US Reportable Accounts as a result of a change of circumstanceAccounts held by NPFI’s

After the Financial Institution has carried out the required review of accounts opened before implementing the appropriate policies and procedures, the Financial Institutionidentifies the account as a US Reportable Account,becomes aware of a change in circumstance of the account holder’s status such that the account becomes a US Reportable Account,

then within six months of either of the above events, the Financial Institution closes the account or transfers it to a Model 1 Financial Institution, Participating Financial Institution or US Financial Institution or reports the account to HMRC.

02.05 - Non-Reporting Financial InstitutionsSource URL:http://haydonperryman.com/gb/guidance/cdot/02-05/

02.05 – Non-Reporting Financial InstitutionsUnder the UK’s regulations to implement CD and Gibraltar reporting the definition of a Non-Reporting Financial Institution is more limited than it is under the regulations to implement US FATCA. If a financial institution is a Deemed-Compliant Financial Institution for US FATCA reporting, then this does not mean that it will automatically be a Non-Reporting Financial Institution for CD & Gibraltar reporting.

For US FATCA reporting, the following types of financial institution

Non-Profit OrganisationsLocal Client Base Financial InstitutionsNon-Registering Local Banks

are Deemed-Compliant, Non-Reporting Financial Institutions.

However, under the International Tax Compliance (Crown Dependencies and Gibraltar) Regulations 2014, where they qualify as Financial Institutions these institutions will not be Deemed-Compliant and will instead be Reporting Financial Institutions for CD and Gibraltar due diligence and reporting purposes.

Further details of the obligations that will be faced by these Financial Institutions is given at section 2.7 Depending on the activities and business practices of the institution some entities may be able to comply using simplified due diligence techniques.

09.00 - New Entity AccountsSource URL:http://haydonperryman.com/gb/guidance/cdot/09-00/

09.00 – New Entity AccountsA Financial Institution that maintains a New Entity Account must determine whether the Account Holder is in one of the following categories as defined in the CD and Gibraltar Agreements:

a Specified Person;a Non-Resident Entity that is a Financial Institution;a Non-Reporting Financial Institution;an exempt beneficial owner;an Active NFFE or Passive NFFE.

If the New Entity Account Holder is found to be a Specified CD or Gibraltar Person or a Passive NFFE with controlling persons who are Specified CD or Gibraltar Persons, then they are subject to reporting.

Other than this it is not necessary for the financial institution to establish which one of the above five categories the Entity Account Holder falls into.

Example

A Financial Institution opens a depository account for a not for profit NFFE resident in Ireland. As the Controlling Persons of a not for profit NFFE are not treated as Specified Persons (see section 3.2) the Financial Institution can positively identify the NFFE as either being an Active NFFE, or a Passive NFFE without controlling persons who are Specified CD or Gibraltar Persons. The Financial Institution may classify the account as not reportable and further analysis is not required.

86. Is the Entity a Non-Reporting Financial Institution?MapCategories of Financial Institutions are then specifically excluded from being required to report information due to posing a low risk of being used to evade tax. These are Non-Reporting Financial Institutions. These are also shown in Figure 7.

CRS p. 45Com p. 166

87. Financial Institutions that need to report.MapOne of the categories of Non-Reporting Financial Institution is a general category of “Other Low-risk Non-Reporting Financial Institutions”. This is a list of jurisdiction-specific Financial Institutions that are excluded from reporting provided they meet certain conditions, including that their categorisation as such does not frustrate the purposes of the Standard. It is expected that each Jurisdiction would have only one list of domestically-defined Non-Reporting Financial Institutions (as opposed to different lists for different Participating Jurisdictions) and that it would make such a list publicly available. While the two systems are independent from each other, a starting point for what might be included in the list under the Standard is the Financial Institutions treated as Non-Reporting Financial Institutions with respect to the FATCA IGA

Financial Institutions that need to report

Nonreporting FISource URL:http://haydonperryman.com/terms-and-definitions/nonreporting-fi/

Nonreporting FIFATCA

An entity that is established in a jurisdiction that has in effect a Model 1 or 2 IGA and that is treated as a nonreporting Fl in Annex II of the applicable Model 1 or 2 IGA or that is otherwise treated as a deemed-compliant FFI or an exempt beneficial owner under Treas. Reg. §1.1471-5 or §1.1471-6.