Transaction Services. June 2014

Transcription

1 Transaction Services June 2014 FATCA Overview for TTS Clients Presented by Cindy Gerhard, Global Head of Product Management for Liquidity Management Services, TTS and Nicole Tanguy, Director and Tax Counsel

2 Agenda FATCA Basics 4 Intergovernmental Agreements (IGAs) 12 Classifying Foreign Entities 15 Account Due Diligence 22 FATCA Withholding 26 Reporting on U. S. Accounts Application of FATCA to Commercial Cards 30 35

3 Disclaimer IRS Circular 230 Disclosure: This presentation is not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. The information contained herein is of a general nature and is based on authorities that are subject to change. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. 1

4 FATCA Basics

5 FATCA Background The Foreign Account Tax Compliance Act (FATCA) is U.S. tax legislation that aims to prevent or detect tax evasion by U.S. Persons who Hold bank deposits and/or securities in offshore accounts, or Own foreign investment entities (e.g., personal investment corporations and trusts) FATCA was enacted into law on 3/18/2010 as part of the HIRE ACT Added new Chapter 4 to the Internal Revenue Code Basic Requirements: U.S. financial institutions (USFIs) and foreign financial institutions (FFIs) will be required to: Identify and report directly or indirectly to the IRS with respect to: i. Accounts owned directly or indirectly by specified U.S. persons, and ii. Financial institutions that do not comply (or "participate") with FATCA (so-called "nonparticipating FFIs ) Withhold a 30% FATCA tax from certain U.S. source income when paid to: i. Non-participating FFIs (NPFFIs), and ii. If the withholding agent is an FFI, recalcitrant accounts. 2

6 The State of Treasury/IRS Guidance Statutory provisions are not self-implementing Current status of U.S. Treasury/IRS guidance Final Treasury Regulations under chapter 4 published 1/28/2013 Technical corrections released 9/9/2013 Revised Final FFI agreement published 6/24/2014 Temporary and Proposed Regulations released 2/20/2014 Revisions to Form W-8 series finalized in March and April 2014 Instructions to Forms W-8BEN-E and W-8IMY published in June 2014 Instructions to Forms 8966 published in June 2014 Still Missing Revised agreements for qualified intermediaries and withholding foreign flow-through entities More technical corrections to regulations expected to be published by the end of June 2014 Delays in Treasury/IRS guidance Put serious pressure on the effective date and Narrowed the window for building needed systems and procedures Make it difficult to provide final information to clients Industry groups advocated for a delay in implementing FATCA for foreign entity accounts and payees 3

7 IRS Notice On 5/2/2014, IRS released Notice which provides certain transition relief on the implementation of FATCA New Accounts for Entities New accounts opened for legal entities after 6/30/2014 and before 1/1/2015 will be treated as preexisting accounts Means FATCA withholding will not apply to entities before 1/1/2015 unless the entity provides documentation indicating it is a non-participating FFI Prima facie FFIs must document their FATCA status prior to 1/1/2015 All other entities must document their FATCA status prior to 7/1/2016 Audit relief Calendar years 2014 and 2015 will be regarded as a transition period for IRS enforcement of FATCA s due diligence, reporting and withholding rules and for the recently published coordination rules Will not apply to withholding agents that do not make a good faith effort to implement FATCA 4

8 FATCA Requirements 5 Key Focus Areas Applies to: Accounts opened on or after July 1, 2014 for individuals and January 1, 2015 for entities FATCA Requirements: Collect documentation to establish FATCA status at account opening Identify U.S. indicia that make the claimed status incorrect or unreliable Collect and verify GIINs for certain FFIs Validate tax documentation collected against all account information New Account Due Diligence Preexisting Account Due Diligence FATCA Withholding Monitoring for Changes in Circumstance Applies to: U.S. source FDAP income paid on / after July 1, 2014, unless an exception applies (e.g. grandfathered obligations, short-term debt). Gross proceeds and foreign pass thru payments paid after 2016 Generally does not apply during due diligence period for pre-existing accounts FATCA Requirements: USFIs must withhold on NPFFIs PFFIs must withhold on NPFFIs and unless the PFFI is located in an IGA country, on recalcitrant accounts Information Reporting on U.S. accounts 5

9 FATCA Requirements 5 Key Focus Areas Applies to: Accounts opened prior to July 1, 2014 for individuals and January 1, 2015 for entities FATCA Requirements: Search for indicators of U.S. status on certain existing accounts held by individuals (for FFIs only) Perform enhanced due diligence on high net worth individuals (a value of $1 million or more) (for FFIs only) Search for certain indicators of accounts held by prima facie FFIs (for USFIs and non-iga countries) FFIs must request documentation to establish the foreign status of individuals with U.S. indicia Both USFIs and FFIs must request documentation to establish the FATCA status of all entities New Account Due Diligence Preexisting Account Due Diligence FATCA Withholding Monitoring for Changes in Circumstance Applies to: All accounts FATCA Requirements: Monitor for changes in circumstances that affect the FATCA Status of the account Collect additional documentation, as required Information Reporting on U.S. accounts Applies to: PFFIs and Reporting Model 1 FFIs who have U.S. accounts FATCA Requirements: Report year-end account balance/value Also report income paid 2016 and later - Also report gross proceeds 6

10 Key FATCA Due Dates 7 Near term requirements FATCA Compliance Tasks USFI FFI Due Dates 1 Comments Finalize FFI Registration 5/5/2014 For inclusion in first IRS list of FFIs released on 6/2/2014. FFI Agreements Effective 6/30/2014 Or later date the FFI enters into an FFI agreement. Grandfathered Obligations (those that produce/could 6/30/2014 Identify outstanding obligations produce U.S. source income) 7/1/2014 Begin monitoring material modifications New Account Due Diligence procedures in place 7/1/2014 or 1/1/2015 Applies to accounts opened by individuals after 6/30/2014 and entities after 12/31/2014. Withhold on U.S. Source FDAP Income 7/1/2014 Begin withholding on new individual accounts and certain pre-existing accounts for NPFFI 2 Future requirements FATCA Compliance Tasks USFI FFI Due Dates 1 Comments Due Diligence on prima facie FFIs among preexisting entity accounts 4 12/31/2014 Documentation due date 1/1/2015 Begin withholding on presumed NPFFIs 2 Form 1042-S Reporting 3/15/2015 Applies to withholdable payments U.S. Account Reporting 3 3/15/2015 First reporting year for Form 8966 is /30/2015 Documentation Due Date Due Diligence on high-value accounts among preexisting Begin withholding unless documented or individual accounts 7/1/2015 excepted 5 Limited FFI Status (Impacts EAG compliance) Ends 12/31/2015 6/30/2016 Documentation due date Due Diligence on all remaining preexisting accounts Begin withholding unless documented as (other individual accounts held by USFIs) 7/1/2016 exempt or an exception applies Begin withholding on sales/redemptions Withhold on Gross Proceeds 1/1/2017 unless documented as exempt or an exception applies Withhold on Foreign Passthru Payments 1/1/2017 Or if later, the date final regulations defining covered payments are published 1 Note: These dates are based on Notice and the final FATCA Regulations and as further amended by Notice Once a preexisting account is documented, it will be treated as having the FATCA status that is claimed from the time it is documented rather than starting at the end of the due diligence period. For preexisting entity accounts documented as NPFFIs, withholding must begin even if the due diligence period has not ended. 3 U.S. account reporting for USFIs is limited to reporting on Substantial U.S. Owners of Passive NFFEs and Specified U.S. Owners and Debt Holders of an Owner Documented FFI. 4 FFIs located in an IGA country are not required to perform due diligence to identify prima facie FFIs by 1/1/ FFIs located in an IGA country are not required to withhold on recalcitrant accounts

11 What TTS Clients Need to Know Citi is committed to becoming globally compliant with FATCA Citi has identified its members that are FFIs, registered them with the IRS and is awaiting notice of their global intermediary identification numbers (GIINs) Citi clients need to determine their FATCA status Citi clients should expect to be required by FATCA to furnish Citi with more information and documentation than previously requested Foreign clients should expect to furnish the new FATCA required documentation at the time of account opening, upon a change in circumstances, upon renewal of an expiring Form W-8 or by the end of the due diligence period for pre-existing accounts U.S. clients should expect to furnish a Form W-9 to Citi to document their U.S. status even if they are identifiable as exempt from Form 1099 reporting All clients should be aware that they have an obligation to inform Citi of a change in their FATCA status within 30 days of when the change in circumstances occurs 8

12 Intergovernmental Agreements (IGAs) Getting Foreign Governments to Embrace FATCA

13 Purpose and Implementation An IGA establishes a partnership between the U.S. and a foreign country To improve international tax compliance To establish uniform reporting standards and an automatic information exchange To eliminate local legal obstacles to FATCA compliance, and To implement FATCA in a manner that will reduce compliance burdens and costs IGAs modify the FATCA compliance obligations of financial institutions located in the IGA country from that otherwise required by the U.S. Treasury Regulations There are two primary types of IGAs: Model 1 and Model 2 Both models suspend the requirement to withhold on or close recalcitrant accounts, provided that the information reporting requirements are met Under Model 1, FATCA information returns are to be filed with local tax authorities while under Model 2, these returns are to be filed directly with the IRS Allow reliance on self-certifications (IRS form or similar agreed upon form) 9

14 Current Status of IGAs as of June 25, countries have signed an IGA 31 are Model 1 IGAs 5 are Model 2 IGAs 47 countries have reached an agreement in substance 43 are Model 1 IGAs 4 are Model 2 IGAs On April 2, 2014, Treasury and IRS announced that it would treat IGAs as in effect in countries that have reached an agreement in substance on the terms of an IGA Provides FFIs in those countries with clarity on their FATCA status when they register with the IRS and what they need to do to implement FATCA Until the country specific IGA is signed, the terms of the model agreement apply A country will be removed from this list if the IGA is not signed by 12/31/2014 Updates to the lists of IGAs in effect are posted to the Treasury web site periodically at The text of the model agreements can be found at: Pages/FATCA.aspx 10

15 Classifying Foreign Entities

16 Foreign Financial Institutions (FFI) The term foreign financial institution includes investment entities and certain holding companies as well as traditional financial institutions Depositary banks Custodial banks or brokerage firms Insurance companies that issue policies having cash value or annuities Investment Entities, including Entities that conduct the following activities as a business on behalf of customers Trading in financial assets Portfolio management Investing, administering, or managing money or financial assets Collective investment vehicles, mutual funds, hedge funds, and private equity funds Holding company or treasury center that Is part of an expanded affiliated group (EAG) that includes another FFI Is formed in connection with or availed of by certain investment entities Definitions of each category of FFI and a table of FFI FATCA statuses will be available after the presentation 11

17 Non-Financial Foreign Entities (NFFE) An NFFE is a non-u.s. entity that is not a financial institution Passive NFFEs- A passive NFFE is an NFFE that is not an excepted NFFE. Non-U.S. family trusts or personal investment companies which are not professionally managed will generally be treated as passive NFFEs Must generally certify that they do not have any substantial U.S. owners, or provide the name, address, and taxpayer identification number of each substantial U.S. owner A substantial U.S. owner is generally a specified U.S. person that owns greater than a 10% interest in the entity. However, in the case of a grantor trust, a substantial U.S. owner is any grantor that is a specified U.S. owner (e.g. even a.01% ownership interest qualifies as a substantial U.S. owner) Excepted NFFEs- Active NFFE (less than 50% of gross income is passive income and less than 50% of the weighted average percentage of assets are assets that produce or are held for the production of passive income). Publicly traded corporations and their affiliates (A corporation whose stock is regularly traded on an established securities market or an affiliate of such corporation) 12

18 Excepted Members of a Nonfinancial Group A member of a nonfinancial group that is a holding company, a treasury center or a captive finance company is an excepted NFFE and is not treated as an FFI, provided that The entity is not a depository institution or custodial institution (other than for members of its expanded affiliated group) The entity does not hold itself out as (and was not formed in connection with or availed of by) an investment vehicle (a private equity fund, venture capital fund, leveraged buyout fund, or any similar investment vehicle) For an expanded affiliated group (EAG) to be treated as a nonfinancial group, certain income and asset test must by meet by the EAG for the preceding 3-year period: No more than 25% of the gross income of the EAG is passive income, No more than 5% of the gross income is derived from members that are FFIs (other than certified deemedcompliant FFIs), and No more than 25% of the value of the assets are assets that produce passive income With exceptions for income earned or assets By or held by start-up companies and nonfinancial entities in bankruptcy or liquidation From or resulting from transactions between members 13

19 Holding Companies and Treasury Centers A foreign entity is a holding company if: Its primary activity is holding all or part of the stock or one or more members of its EAG A foreign entity is a treasury center if: Its primary activity is to enter into investment, hedging and financing transactions with or form members of its EAG for the purpose of Managing the risk of price changes or currency fluctuations respecting property held by the EAG Managing risk of interest rate changes, price changes or currency fluctuations respecting property, borrowings, assets or liabilities held by the EAG Managing the working capital of the group or investing or trading in financial assets solely for the group, or Acting as a financing vehicle for the EAG None of its equity or debt is held by a person that is not a member of the EAG, and None of the redemption or retirement amount or return earned on such equity or debt is determined primarily by reference to the investment, hedging and financing activities of the treasury center with entities outside the EAG or members of the EAG who are investment vehicles or passive NFFEs 14

20 Excepted Inter-affiliate FFI An inter-affiliate FFI is a type of FFI that is not required to perform the usual due diligence, withholding and reporting functions of an FFI To qualify for this classification, the foreign entity must not Maintain financial accounts (other than for the benefit of its affiliates), Hold an account (other than a depository account in its operating country to pay expenses in that country) with or receive payments from an entity other than a member of its EAG, Make withholdable payments to any person other than to members of its EAG that are not limited FFIs or limited branches, or Agree to report U.S. accounts under FATCA or otherwise act as an agent for FATCA purposes on behalf of any financial institution, including a member of its EAG 15

21 Key Observations The FATCA definition of a Financial Institution is not limited to the traditional types of financial institutions (banks, broker-dealers and insurance companies). It includes entities that are used by primarily for investment, reinvestment or trading. FFIs that are classified as PFFIs or RDCFFI must register with the IRS to obtain a Global Intermediary Identification Number (GIIN) in order to certify their FATCA status to a withholding agent Multinational corporations need to determine the FATCA status of each member of their expanded affiliated group Multinational corporations need to consider whether special purpose vehicles are included in their expanded affiliated group Foreign Retirement funds may or may not meet the limited exclusions in the FATCA regulations or an IGA from classification as an FFI Non-U.S. foundations and other non-u.s. charitable organizations may be FFIs unless they are tax-exempt under section 501(c) of the Internal Revenue Code 16

22 Account Due Diligence What TTS clients should expect

23 FATCA New Account Due Diligence For accounts opened after June 30 (individuals) or December 31, 2014 (entities), tax documentation must be collected to determine the FATCA status of the account holder or payee. Citi cannot rely on tax documentation that is unreliable or incorrect. Due diligence must be performed to validate the claim made. For New Account Due Diligence, the following key steps are required: Collect new account holder documentation Validate documentation received Verify claimed FATCA Status Assign presumed FATCA Status (if necessary) Obtain appropriate documentation for each account, as required by FATCA For U.S. resident individuals and domestic entities, obtain IRS Form W-9, even if entity is an exempt recipient For accounts held by non-u.s. individuals or entities and maintained in the U.S., obtain IRS Form W-8 For accounts maintained outside the U.S., alternative documentation may be permitted Validate that the Form W-8 is properly completed Review all documentation and information for evidence that account holder could be a US person (i.e., U.S. indicia) Obtain additional documentation to support non-u.s. status if U.S. indicia are found Ensure any legal entity ownership information provided is consistent with AML/KYC documentation for certain accounts held by entities Confirm all required supporting documentation has been provided Validate FATCA Status based on representations made by the account holder in documentation received For PFFIs and registered deemed compliant FFIs, verify GIIN against a list published by the IRS within 90 days Record FATCA Status If documentation required to establish the FATCA status of an account is missing, incomplete or invalid, certain presumptions must be applied to determine the FATCA status of an account The FATCA status must be reassessed if additional documentation or information is subsequently received 17

24 Key Observations: Citi will be considered to have reason to know that a claim is unreliable or incorrect if its knowledge of the relevant facts or statements made in tax documentation is such that a reasonably prudent person would question the claims made any information contained in the account opening file or other client files conflicts with the payee s claimed FATCA status. This includes information or documentation collected in the performance of due diligence under Antimoney laundering ( AML ) and Know-your-customer ( KYC ) rules. there are certain types of U.S. indicia present, unless additional documentation sufficient to cure the U.S. indicia is obtained. This means that clients having U.S. indicia will be required to provide additional documentation to substantiate a claim of foreign status. 18

25 Requesting Tax Documentation From Citi Some Citi clients have recently been requesting GIINs and/or Forms W-8 or W-9 from Citi to establish Citi s FATCA status for pre-existing obligations to make payments to Citi For Citi to be able to provide requesting clients with the correct GIIN and/or tax form, the request must specify all of the following information: Full name of the Citi legal entity for which a tax form is needed U.S. TIN (if available) Type of payment being made to Citi Type of business/transaction being conducted with Citi Location of Citi office/branch to which payments are being made Specify by what method you prefer that Citi use to submit the tax form (paper/fax/ ) and the applicable destination information (mailing address/fax number/ address). Citi intends to be fully compliant with FATCA globally and has registered its FFIs with the IRS to the extent required by the applicable procedures Citi will provide Form W-8BEN-E or W-8IMY, as revised for FATCA in 2014, to requestors only after its has had an opportunity to digest the recently published official instructions to these forms In order to avoid making mistakes in the completion of these forms and having to replace them In the interim, Citi will provide the 2006 version of Form W-8BEN or W-8IMY for any new accounts or new obligations it enters into Under the US Treasury Regulations and the IGAs, FATCA revised Form W-8 for pre-existing obligations are not required to be furnished before January 1, 2014 (for prima facie FFIs) or July 1, 2016 (in all other cases) Citi is ready to provide a 2013 version of Form W-9 for its US entities upon request

26 FATCA Withholding The enforcement tool

27 FATCA Withholding A withholding decision is made on the basis of four factors: (1) the type of payor, (2) the type of payment, (3) the date the payment is made and (4) the FATCA status of the payee. Type of Payor Determine whether the Citi Entity is a USFI, PFFI, Model 1 FI or Model 2 FI Date of Payment FATCA Withholding will be phased in beginning July 1, 2014 Under a transition rule, interest on deposits at non- U.S. branches of U.S. banks are exempt from withholding if paid prior to January 1, 2017 Type of Payment (Character and Source) Prior to 2017, FATCA withholding will apply only to income characterized as fixed or determinable, annual or periodic ( FDAP ) income Prior to 2017, withholding will apply only to U.S. source income. Sourcing of income is generally based on the country of residence of the issuer of the stock, debt or other obligation on which the income is paid. FATCA Status of Payee FATCA withholding applies to payees that are documented or presumed to be NPFFIs PFFIs located in non-iga countries are also required to withhold on recalcitrant account holders 19

28 Exceptions from FATCA Withholding Short-term Debt Obligations Debt obligations with an original term of 183 days or less Examples: certain U.S. Treasury bills, commercial paper, overnight deposits, certificates of deposit or time deposits Is a permanent exception Collateral arrangements Payments made by a secured party on collateral that secures a debt instrument, a derivative financial instrument, a securities loan, sale-repurchase transaction or a margin loan A transition rule in effect only until January 1, 2017 Deposits at a foreign branch of U.S. bank For FATCA purposes, interest on a deposit at a foreign branch of a U.S. bank is considered U.S. source income starting July 1, 2014 However, a transition rule excepts payments made before January 1, 2014 from FATCA withholding 20

29 Who Is the Withholding Agent? A withholding agent is a US or foreign person that has the control, receipt, custody, disposal or payment of a withholdable payment; A withholding agent has an obligation to withhold only to the extent that it has control over or custody of money or property owned by the payee or the beneficial owner from which to withhold an amount, and has knowledge of the facts that give rise to the payment. Citi is a withholding agent with respect to withholdable payments it is obligated to make to a client A withholding agent has control over money or property if the withholding agent directs another party to make the payment. For example, if a client has an obligation to pay income to a third party and directs Citi to wire money from its deposit account at Citi to the third party, then, the client and not Citi is the withholding agent. Citi lacks knowledge of the facts that gave rise to the payment obligation. Accordingly, the client must direct Citi to pay 70% of the amount otherwise due to the third party and must deposit the remaining 30% with the IRS In contrast, a client whose bank account is debited/charged by Citi for the amount of bank fees or interest for an overdraft lacks control and custody of the money or property used to pay the fee or interest to Citi Accordingly, the client is not a withholding agent with respect to bank fees or interest collected by Citi by debiting the client s bank account This means that the client is not in fact required to collect a US tax form from Citi to establish an exemption from FATCA withholding

30 Reporting on U.S. Accounts The real FATCA objective

31 FATCA Reporting Citi will be required to report certain information regarding payments and financial accounts either directly to the IRS or to a local government New Form 8966 (FATCA Report) will be used to report information on U.S. accounts (direct accounts held by specified U.S. persons) Specified U.S. owners of owner-documented FFIs Substantial U.S. owners of passive NFFEs Recalcitrant account holders in the aggregate NPFFIs either in the aggregate or on a specific payee basis FFIs (but not USFIs) are required to report recalcitrant accounts and NPFFI accounts on Form 8966 Consistent with existing law requirements, both Citi FFIs and USFIs will be required to use Form 1099 to report most direct U.S. accounts instead of Form 8966 Means that specified U.S. persons will receive copies of Forms 1099 filed However, Citi FFIs located in Model 1 IGA countries must also report US accounts on both Form 8966 and Form 1099 Form 1042-S will be used to report U.S. source FDAP income paid to foreign persons for both Chapter 4 and Chapter 3 purposes, including any U.S. tax withheld 21

32 Reporting on Form 8966 a Phased Approach The following table presents regulatory due dates for filing Form 8966 on U.S. accounts Calendar Year Reporting Due Reporting to the IRS with Respect to a U.S. Account or ODFFIS with Owners that are Specified U.S. Persons 2014 March 31, March 31, 2016 Report only name, address, TIN, account number, and account balance. Report only name, address, TIN, account number, account balance, and income paid and subsequent years March 31, 2017 Report name, address, TIN, account number, account balance, income paid, and gross proceeds paid. Note: The identity of each substantial U.S. owner of a passive NFFE and each specified U.S. owner of an ODFFI must be reported on Form 8966 along with the name of the foreign entity. 22

33 U.S. Accounts and Specified U.S. Persons A U.S. account is any financial account maintained by an FFI where the account holder is a specified U.S. person or a U.S. owned foreign entity. A Specified U.S. person is any U.S. person OTHER THAN: A publicly traded corporation or member of its expanded affiliated group; Organization exempt from tax under Section 501(a) or an individual retirement plan; The U.S., the District of Columbia, any state, any U.S. territory, any political subdivision the foregoing, or any wholly-owned agency or instrumentality thereof; Banks; REITS; RICs, Common trust fund or trust exempt from tax; A U.S. registered dealer in securities, commodities or derivatives; or A broker. Above list is similar to list of exempt recipients used to identify persons exempt from Form 1099 reporting, except that certain private corporations are specified U.S. persons A specified U.S. owner of a financial account or an ODFFI is reportable on Form

34 Substantial U.S. Owners A substantial U.S. owner is a specified U.S. person that Owns, directly or indirectly, more than 10 percent of the stock in a foreign corporation, the profits interests or capital interests in a foreign partnership, or the beneficial interests in a trust Is a grantor treated as an owner of any portion of a trust A substantial U.S. owner of a passive NFFE is reportable on a Form

35 Application of FATCA to Commercial Cards

36 Commercial Cards Are Depository Accounts Final FATCA regulations clarify that a Credit Balance on a credit card issued by a credit card company is considered a depository account and may be subject to the associated documentation requirements Citi s Commercial Cards product and programs are credit card based and can be in-scope for FATCA FATCA requirements apply regardless of whether interest is paid on any credit balance FATCA Requirements In countries where FATCA applies to Citi Commercial Cards, Citi may be required to Document the FATCA status of account holders, and Report US account holders directly or indirectly to the IRS An exception to the documentation and reporting requirements applies in IGA countries if credit balances are $50,000 or less, credit balances in excess of $50,000 are refunded to the account holder by the earlier of the 60 th day or December 31

37 Exceptions from Documentation and Reporting Requirements Commercial cards issued by Citibank N.A. (CBNA) from an office in the United States or an office in a non-iga country are out of scope for FATCA, Because they currently do not pay any withholdable payments to the cardholders New Commercial Cards issued by a non-us entity or a foreign branch of CBNA located in an IGA country are excepted from the FATCA documentation and reporting requirements if Any credit balance in excess of $50,000 is refunded within 60 days or by December 31 Regardless of whether the account holder is an individual or an entity or there is joint and several liability New Commercial Cards issued by a non-us entity located in a non-iga country are excepted from the FATCA documentation and reporting requirements if An individual is the account holder (no joint and several liability) and Any credit balance in excess of $50,000 is refunded within 60 days or by December 31 All entity account holders must be documented within 90 days since there is no allowance for credit balances of $50,000 or less owned by entities Aggregation rules apply to determine whether or not the aggregated credit balance exceeds $50,000 For purposes of these exceptions, a New Commercial Card is one issued under a program that is entered into on or after January 1, 2015 To apply these exceptions, Citi is implementing a process to monitor credit balances and to refund excess balances in a timely manner where applicable

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Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world Citigroup Inc. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world [Name of Legal Vehicle] [Name of regulatory body.] All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world. Citi believes that sustainability is good business practice. We work closely with our clients, peer financial institutions, NGOs and other partners to finance solutions to climate change, develop industry standards, reduce our own environmental footprint, and engage with stakeholders to advance shared learning and solutions. Highlights of Citi s unique role in promoting sustainability include: (a) releasing in 2007 a Climate Change Position Statement, the first US financial institution to do so; (b) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of renewable energy, clean technology, and other carbon-emission reduction activities; (c) committing to an absolute reduction in GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (d) purchasing more than 234,000 MWh of carbon neutral power for our operations over the last three years; (e) establishing in 2008 the Carbon Principles; a framework for banks and their U.S. power clients to evaluate and address carbon risks in the financing of electric power projects; (f) producing equity research related to climate issues that helps to inform investors on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions. Citi works with its clients in greenhouse gas intensive industries to evaluate emerging risks from climate change and, where appropriate, to mitigate those risks. efficiency, renewable energy and mitigation