FATCA – the latest disclosures

Many clients have received requests to complete the new style W8 form. This is part of the implementation of the Foreign Account Tax Compliance Act (FATCA), the recent US legislation requiring extensive disclosure of financial assets and income.

The previous one page form has been replaced with several forms full of technical jargon. The first challenge is complete the correct form, be it W-8BEN-E, W-8IMY, or W-9, depending on the reporting entity.
The next decision is whether to report as a Non-Financial Foreign Entity (NFFE) or as a Foreign Financial Institution (FFI).
There are 15 different classifications from which to choose on the W-8BEN-E. Depending on the classification, the entity may have to register with the IRS and obtain a Global Intermediary Identification Number (GIIN). Care must be taken as incorrect classification could result in a 30% withholding at source.
Registering for a GIIN on the IRS website is fairly simple, however it means you will be entering into an agreement with the IRS. The agreement imposes reporting requirements and could oblige the registered entity to withhold 30% on certain payments.
The IRS  announced a further delay until 1 January 2015 for existing accounts to register for a GIIN. Furthermore, there will be a period of grace until January 2016 where there will be no penalties provided an entity demonstrates it made best efforts to comply with FATCA’s requirements.
Guidance notes are available from the IRS, and Moore Stephens is assisting clients with the completion of their forms and with implementing the required reporting procedures.