IIB Seminar on U.S. Taxation of International Banks FATCA FFI Agreements and Form W-8 Series Instructions

IIB Seminar on U.S. Taxation of International Banks FATCA FFI Agreements and Form W-8 Series Instructions June 17-18, 2013 Laurie Hatten-Boyd, KPMG LLP Denise Hintzke, Deloitte Tax LLP Yaron Reich, Cleary Gottlieb Steen & Hamilton LLP William Sheridan, Burt, Staples & Maner LLP Chip K. Collins, UBS AG (Moderator)

Agenda I. Onboarding considerations II. Remediating existing clients III. Impact of Intergovernmental Agreements (IGAs) IV. Examples and practical considerations 1

I. Onboarding Considerations

Documentation Multiple Strategies Possible 3 USWA USFIs must use IRS Forms (W-8 series and W-9) Foreign Financial Institution (FFI) Forms W-8 series and W-9 Documentary Evidence / KYC Written Statements / Self Certifications Challenges: Documents take different physical forms Different content requirements by documentation type Different validation rules/requirements Tracking change of circumstance Considerations: Operationalizing requirements and review processes re-solicit now? 3

Onboarding Challenges, Opportunities and Solutions Challenges Opportunities Potential Solutions Increased complexity of diligence rules: What document is necessary When is document necessary Individual vs. entity accounts Accounts investing in the U.S. vs. non-u.s. markets, and Pre-existing vs. new accounts Multi-national financial institutions IGA I, IGA II, no IGA Implement multiple rule sets? Least common denominator? Increased flexibility in forms of documentation permitted under the regulations and IGAs: U.S. tax forms Self-certifications and written statements KYC documentation Consider electronic due diligence system for new accounts Eliminate complexity and reduce risk using an automated solution Choose a tool which provides: Regulatory certainty Ongoing risk mitigation and cost reduction An audit trail, and Flexible document options Documentary evidence expires Need to monitor accounts daily for change of change in circumstances Forms W-8 can be valid indefinitely, Manage change of circumstances with an electronic solution linked to account master Obtain the proper document from each new customer 4

Data Elements FATCA onboarding will require a significant number of new data elements that you will need to make plans to: Capture. Store. Monitor for Changes in Circumstance. Maintain an Audit Trail. Push to Withholding and Reporting Systems. 5

Sample Data Elements Data Element Data Element Description Cite Account Number A system generated unique identifier associated with the account within a particular account database/product processor. 1.1471-3(c)(8); 1.1471-4(d)(3)(ii)(B) Legal Name of Account Holder Legal name of the individual or entity that holds the account. 1.1474-1(d)(3)(v); 1.1471-4(d)(3)(ii)(A) Country of Birth The country in which the account holder was born. 1.1471-3(e)(4)(iv)(C)(1); 1.1471-3(e)(4)(iv)(C)(2); 1.1471-3(e)(4)(ii)(C)(1); 1.1471-3(e)(4)(ii)(C)(1) Date of Birth The date on which the individual account holder was born. 1.1474-1(d)(3)(v) Date of Incorporation / Formation Used to indicate when an entity was incorporated or formed legally. 1.1471-3(d)(11)(ii)(B) Date of Liquidation or Bankruptcy Indicator of Liquidation/Bankruptcy Used to indicate when an entity filed for liquidation or bankruptcy. Confirmation from account holder that legal entity has been in liquidation or bankruptcy for period greater than three years. 1.1471-3(d)(11)(iii)(A) 1.1471-3(d)(11)(iii)(A) Primary Citizenship The country in which the account holder maintains their primary citizenship. 1.1471-3(e)(4)(ii)(C)(1); 1.1471-4(c)(5)(iv)(B)(1)(i) Green Card Holder Indicator Indicates that an individual account holder is a Green Card holder. 1.1471-3(e)(4)(v)(A)(1) Renounced U.S. Citizenship or Green Card Indicator Other Citizenship Indicates that the account holder has renounced U.S. permanent residence status or citizenship (where born in the U.S.A. or U.S. territory). The country in which the account holder maintains their primary citizenship. Must have "Primary Citizenship" populated before "Citizenship." 1.1471-3(e)(4)(v)(A)(1) 1.1471-3(e)(4)(ii)(C)(1); 1.1471-4(c)(5)(iv)(B)(1)(i) Country of Incorporation / Formation The country in which the entity account holder was incorporated or formed. Tax Residence Country The country where the account holder claims to be a resident for purposes of that country s income tax. 1.1471-3(e)(4)(v)(A)(1) 1.1471-3(e)(4)(ii)(B); 1.1471-3(e)(4)(v)(A)(2) 6

Sample Data Elements (cont d) Data Element Data Element Description Cite Permanent Residence Address Mailing Address GIIN GIIN Status GIIN Status Date The address in the country where a person claims to be a resident for purposes of that country's income tax. The address that an account holder uses to receive communications with respect to an account. A unique public identifier issued by the IRS for a registering FFI (Participating FFI, Registered Deemed Compliant FFI, or limited FFI). Indicates whether the GIIN has been applied for or verified. To track the date a claim was made that an GIIN has been "Applied For" or the date the GIIN was verified. 1.1471-3(e)(4)(ii)(B); 1.1471-3(e)(4)(v)(A) (2) 1.1471-3(e)(4)(ii)(B); 1.1471-3(e)(4)(v)(A) (2) 1.1471-3(e)(d)(4)(i-iii) 1.1471-3(e)(d)(4)(i); 1.1471-3(e)(d)(4)(ii); 1.1471-3(e)(d)(4)(iii) 1.1471-3(e)(d)(4)(i-iii) Non-U.S. Taxpayer Identification The Value of Taxpayer Identification Number issued by a Non-U.S. government. Number 1.1474-1(d)(3)(v) Non-U.S. Taxpayer Identification Stores the country of issuance of the taxpayer identification number (TIN) issued Number Country to the account holder. A country will be provided for each Non-U.S. TIN. 1.1474-1(d)(3)(v) U.S. Taxpayer Identification Number (TIN) The Value of Taxpayer Identification Number. 1.1471-4(d)(3)(ii) FATCA Status Indicates the FATCA status of the account holder. 1.1471-2(a)(1) Document Type Indication of the type of documentation that has been collected from the account 1.1471-3(c)(5)(i); holder. 1.1471-3(c)(5)(ii) Document Expiration Date Date on which documentation expires. 1.1471-3(c)(6)(ii)(A) Documentary Evidence Review Date on which documentary evidence is reviewed by withholding agent or it's Date agent. 1.1471-3(c)(6)(iii)(A) Documentary Evidence Receipt Date on which documentary evidence is received by withholding agent or it's Date agent. 1.1471-3(c)(6)(iii)(A) 7

Sample Data Elements (cont d) Data Element Data Element Description Cite Exchange Name SIC/NAICS/Other Classification Code Substantial U.S. Owner Profile - Owner Legal Name Substantial U.S. Owner Profile - Percentage of Ownership Substantial U.S. Owner - Address Substantial U.S. Owner Profile - U.S. Taxpayer Identification Number Account Phone Number Name of exchange(s) on which the NFFE account holder is traded. To capture the relevant industry code designation for the account holder. Legal Name for profiles for substantial (10% or greater) U.S. owners of a passive NFFE (i.e., an investment company that invests in real estate). A Substantial U.S. owner's percentage ownership in the NFFE (i.e., an investment company that invests in real estate). Address for profiles for substantial (10% or greater) U.S. owners of a passive NFFE. TIN for profiles for substantial (10% or greater) U.S. owners of a passive NFFE. The phone number associated with the primary contact of a particular account and/or account holder of the account. There may be a need to hold multiple phone numbers for a particular account or account holder. Account Phone Number Country The country from which the phone number originates. Power of Attorney Name & Address 3 rd Party Signatory Name & Address Standing Instructions to Transfer Funds to Account in the U.S. I/C or Hold Mail Address indicator Change in Circumstance Indicator The address(s) of the individual or entity that maintains power of attorney for the account as designated by the account holder. The address(s) of the individual that maintains signatory authority on the account as assigned by the account holder. Indicates that the account holder has standing instructions to transfer funds from an offshore account to an account maintained in the U.S. Indicates that the sole address provided for the account holder is an in-care-of or hold mail address. Indicates change in data elements which require review to determine if there has been a change in circumstance. 1.1471-3(d)(11)(vi)(A) (2); 1.1471-3(d)(11)(vii)(A) (2) 1.1471-3(d)(11)(ix)(B) 1.1471-3(d)(12)(iii)(A) 1.1471-3(d)(12)(iii)(A) 1.1471-3(d)(12)(iii)(A) 1.1471-3(d)(12)(iii)(A) 1.1471-3(e)(4)(ii)(B); 1.1471-3(e)(4)(v)(A) (5) 1.1471-3(e)(4)(ii)(B); 1.1471-3(e)(4)(v)(A) (5) 1.1471-3(e)(4)(v)(A) (6) 1.1471-3(e)(4)(v)(A) (6) 1.1471-3(e)(4)(ii)(D); 1.1471-3(e)(4)(iv)(D); 1.1471-3(e)(4)(v)(A) (3) 1.1471-3(e)(4)(v)(A) (7) 1.1471-4(c)(2)(iii) 8

Changes in Circumstance Lots of new data elements, means lots of opportunities for changes in circumstance. FATCA provides for the shorter of a 90 day grace period or until a withholdable payment is made. Withholding agents will need to implement processes to: Monitor for changes in circumstance. Start clock for 90 day grace period. Determine if intervening withholdable payment and withhold accordingly. Maintain an audit trail of FATCA classification at time payment made. Distinguish between NRA withholding and FATCA and backup withholding and FATCA. Procedures must be in place to record when a change in circumstance occurs and systems must track the date a change in circumstance occurs so that the presumption rules can be applied in the event new documentation is not received. 9

Documentation General Issues TRANSITION RELIEF Reliance on a pre-fatca Forms W-8 Until January 1, 2017 a withholding agent may treat an account as a PFFI or registered DCFFI if the account holder has provided its GIIN (either orally or in writing). The account holder must indicate whether it is a PFFI or registered DCFFI and the withholding agent must verify the GIIN against the IRS portal. A withholding agent may also rely on a pre-fatca Form W-8 from reporting a Model 1 FFI as long as it indicates (either orally or in writing) that it is a RDCFFI and the country in which it is a reporting Model 1 FFI. A GIIN is not required but this transition relief is only good up until January 1, 2015. Prior to Janaury 1, 2016, a PFFI that is a sponsored FFI may provide the GIIN of its sponsoring entity or the Form W8 if the sponsored entity has not obtained a GIIN. Should a USWA re-solict their forms now? 10

Documentation General Issues (cont.) Substitute Forms W-8 The final regulations permit a withholding agent to use a substitute form that is written in a language other than English CAVEAT: an English translation of the form and its contents must be made available to the IRS upon request Documentary Evidence Increased reliance on documentary evidence to validate FATCA statuses, particularly for offshore obligations. Some types of documentary evidence for certain account holders will have indefinite validity. CAVEAT: these rules are subject to monitoring for changes in circumstance and having no U.S. indicia 11

Implementation Considerations Onboarding procedures will need to be developed and updated: Systems need to be adapted to keep track of new data elements (e.g. Chapter 4 status, GIINs, US indicia, etc.) Systems will need to keep track of validity dates and a robust change in circumstance process needs to be in place Procedures / systems must be in place to verify GIINs against the IRS FFI list Due Diligence question Follow the FFI requirements or IGA? Core on-boarding systems will need flexibility to accept different types of documentation (withholding certificates, documentary evidence, self certifications, etc.) 12

II. Remediating Existing Clients

Remediating Existing Clients t General Points Different requirements depending on if USWA, FFI or IGA FI Inconsistency of the rules between IGAs and U.S. Regulations makes it difficult to manage global documentation efforts A Pre-FATCA Form W-8 (the current final forms) can be used to document foreign individuals, foreign governments or international organizations in lieu of collecting an updated version The Pre-FATCA Form W-8 may be used for other client types but it depends on the FATCA classification of the client and will require supplementary documentation depending on the type of FATCA classification USWA s are primarily focused on remediating entity clients and payees, while FFIs are focused on both individuals and entities FFIs have certain de-minimis exceptions based on account balance or value where documentation is not required, while USWAs do not Staggered documentation deadlines (detailed in a later slide) 14

Remediating Existing Clients t Requirements for a USWA Generally required to document and classify all entity account holders that are in existence as of December 31, 2013 Some exceptions to full documentation (e.g. pre-fatca Form W-8), but generally the rules require reaching out to clients for documentation or information Limited requirement to review documentation for a U.S. place of birth for preexisting individual account holders or payees if the USWA performs an AML/KYC refresh 15

Remediating Existing Clients t Requirements for an FFI under an FFI Agreement Generally required to document and classify all entity account holders that are in existence as of December 31, 2013 Some exceptions to full documentation (including using information currently on file) are provided however they are complicated and may depend on whether the income received on the account is U.S. source (generally U.S. source income will require more documentation) Exception for accounts with a balance or value of $250,000 USD or less (exception lost if the balance exceeds $1 million USD at the end of any subsequent calendar year) Required to perform U.S. Indicia search for all individual account holders that are in existence as of December 31, 2013 and document with a Form W-8, Form W-9 and other documentation depending on the type of indicia discovered Search not required for Depository Accounts with an aggregated account balance or value of $50,000 USD or less (exception lost if the balance exceeds $50,000 USD at the end of any subsequent calendar year) 16

Remediating Existing Clients t Requirements for an FFI under an FFI Agreement (cont.) Search not required for non-depository individual account holders with an aggregated balance or value of $50,000 USD or less (exception lost if the balance exceeds $1 million USD at the end of any subsequent calendar year) Only electronic search required for non-depository individual account holders with an aggregated balance or value of $1 million USD or less (exception lost if the balance exceeds $1 million USD at the end of any subsequent calendar year) Physical document search required to the extent U.S. indicia is not digitized for non-depository individual account holders with an aggregated balance or value exceeding $1 million USD Relationship manager inquiry of account holder s U.S. status also required Above de-minimus rules do not apply to insurance products Using the above de-minimis rules will require ongoing account balance monitoring for preexisting accounts Additionally, new accounts for the same account will generally require re-documentation of the pre-existing account under new account rules unless the FFI treats the accounts as a consolidated obligation 17

Remediating Existing Clients t Requirements for FFIs under an Intergovernmental Agreement Generally required to document and classify all entity account holders that are in existence as of December 31, 2013 Same de-minimis rules as the FFI Agreement Must review current information on file to determine if the entity is U.S. (e.g., U.S. country of incorporation) and if any is found, must obtain self-certification or use publically available information that reasonably indicates entity is foreign to treat the entity as foreign Must review current information to determine whether entity is a financial institution, and if so, must collect and validate its GIIN If the entity is financial, may treat as compliant if it is in an IGA country and a valid GIIN is collected If the entity is financial and not in an IGA country, may treat as non reportable account if a valid selfcertification is obtained or a valid GIIN is obtained If the entity is not identified as U.S. or financial, must determine whether entity has controlling persons (using current AML/KYC), whether the entity is a Passive NFFE (using a self-certification or publically available information), and whether any of the controlling persons are U.S (using current AML/KYC for accounts with a balance/value of 1M or less or self-certification for accounts over 1M). If a controlling person for a Passive NFFE is identified as U.S., must treat the account as a U.S reportable account 18

Remediating Existing Clients t Requirements for FFIs under an Intergovernmental Agreement (cont.) Required to perform U.S. Indicia search for all individual account holders that are in existence as of December 31, 2013 and document with a self certification and other documentation depending on the type of indicia discovered Same de-minimis exceptions as with the FFI agreement apply (including the <=50k depository account and cash value life insurance exceptions) Generally the same procedures for lower value (between 50k, or 250k for insurance, and 1M) and high value accounts (over 1M) Same requirement to go back and document accounts subject to the above exceptions that at the end of any subsequent calendar year exceed a balance of 1M (for the preexisting account exceptions) or 50k (for the depository account or cash value life insurance exceptions) Same requirement to monitor for any other change of circumstance such as the addition of U.S. indicia or the opening of a new account Main difference is the use of a self certification in lieu of a Form W-8 or W-9 19

Remediating Existing Clients t Timing of withholding versus documentation deadlines Preexisting Documentation Deadlines USWAs June 30, 2014: Prima Facie FFIs December 31, 2015: All other entities Participating FFIs outside IGA June 30, 2014: Prima Facie FFIs December 31, 2014: High value individual account holders (over 1M) December 31, 2015: All other account holders Reporting FFIs under IGA December 31, 2014: High value individual account holders (over 1M) December 31, 2015: All other account holders (no prima facie FFI concept) Withholding Deadlines January 1, 2014: Withholding on U.S. source FDAP income (except certain offshore U.S. source FDAP income) January 1, 2017: Withholding on gross proceeds, offshore U.S. source FDAP income, and foreign passthru payments (undefined but not U.S. source) 20

Remediating Existing Clients t Implications of withholding versus documentation deadlines Generally, preexisting accounts will not be subject to withholding until they are definitively classified If you are within the grace period AND have not yet classified the account holder or payee, the account holder or payee will NOT be subject to withholding HOWEVER, if the account holder or payee is classified before the deadline expires and is noncompliant, the account holder or payee will be subject to withholding even though the deadline has not expired Example: You have a Prima Facie FFI that has until June 30, 2014 to be documented and classified. Withholding begins on January 1, 2014 for U.S. source income payments. You make a payment on February 1, 2014: Withholding is not required if the entity has not yet been documented. On March 1, the entity provides you with a valid Form W-8BEN-E and checks off the Non-participating FFI status type. Because the form is valid, you definitively classify the entity as an NPFFI. On April 1, you make another withholdable payment. You must withhold 30% on the payment even though the grace period has not expired because you have documented and classified the entity. Practically speaking the above scenario is very unlikely for obvious reasons, so withholding will likely not begin until the grace period expires 21

Remediating Existing Clients t Withholding & Depositing Requirements If withholding is required, generally the withholding will not be done by the participating FFI unless it is a fully withholding qualified intermediary, withholding foreign partnership, or withholding foreign trust Residual withholding requirement if the upstream withholding agent fails to perform any required 30% FATCA withholding Requires active monitoring of the withholding to avoid any residual withholding or reporting requirements Requirement to withhold 30% on any U.S. source withholdable payment to a non-participating FFI, recalcitrant account holder, or non-compliant NFFE in the event the FFI is the direct payor of U.S. source withholdable payments (exception to withholding may apply before January 1, 2017) Requirement to deposit withhold amounts electronically according to a specific schedule 22

III. Impact of Intergovernmental Agreements (IGAs)

IGA Models and Status t Purpose of IGAs: to facilitate FATCA compliance by enabling FIs to overcome legal barriers to compliance with FATCA under IGA country s laws and reducing compliance burdens t US Treasury has released two Model IGAs: Model 1 IGA IGA country tax authority responsible for issuing guidance to covered FIs and intermediating reporting to IRS; may include reciprocal obligation for US to provide information Model 2 IGA requires covered FIs to follow FATCA regulations (including entering into an FFI agreement) and report directly to the IRS Model 1 (nonreciprocal) and Model 2 IGAs available for jurisdictions without tax information exchange agreements or income tax treaties t As of 5/31/13, US has signed 8 IGAs; in discussion with more than 50 countries Slow pace of IGA finalization may complicate FI ramp-up to full FATCA compliance 24

Model IGA Provisions IGA is Plain English, Cliff Notes version of FATCA rules Contains several significant relaxations: carrot to induce countries to sign IGAs Governs all FIs (including branches and subsidiaries) in the IGA country, but not branches and affiliates outside that country Potential complexity of group compliance with multiple, slightly varying rules IGA provisions include: Mandatory compliance with FATCA by covered FIs Withholding on Nonparticipating FFIs (but only if withholding QI etc); no withholding on recalcitrant US accounts if reported Exchange of information, verification and enforcement IGA FIs become Nonparticipating FFIs only after extended significant noncompliance Annex I contains due diligence procedures for existing and new accounts Annex II lists and/or describes exempt beneficial owners, deemed-compliant FFIs and excluded accounts Initial IGAs tailored to specific types of entities and accounts in IGA country May 2013 revised Annex II standardizes the exemptions, generally following the regulations 25

Benefits of IGAs t t Enable FIs to overcome legal barriers to compliance with FATCA under IGA country s laws Provide a buffer (= IGA country s tax authority) between the FI and the IRS Model 1 IGA Reporting through foreign country Facilitate uniform reporting for FATCA-like requirements of other countries IGA country guidance may be more flexible than the FATCA regulations UK guidance says it overrides FATCA regulations Model 1 and 2 IGAs: IGA country s tax authority intermediates significant noncompliance issues t Relax FATCA rules in important respects; e.g. Permanent solution for limited branches and affiliates More favorable treatment of investment entities «Controlling person» threshold (generally 25% under FATF-AML/KYC rules) instead of 0% Investment entity is not an FFI if it is not managed by an outside entity (or itself is in an investment or management business); under FATCA regulations, it could be an FFI if an investment management entity manages any portion of the investment entity s portfolio Under latest Annex II, invesment advisor/manager of funds deposited with an FI that is not an NFFI are a deemed-compliant entity No responsible officer certification 26

Other IGA Commitments To develop a practical and effective approach to withholding on foreign passthru payments and gross proceeds International model for common reporting and automatic information exchange By January 1, 2017, FIs required to obtain and report US and foreign TINs Model 1 IGAs: US commits to adopt regulations and support legislation to achieve equivalent levels of automatic information exchange IRS finalizes non-resident alien bank deposit interest reporting regulations, effective for interest payments made on or after January 1, 2013 Obama Administration s 2014 budget seeks legislation authorizing reciprocal reporting of information in connection with the implementation of FATCA, including of information with respect to nonresident alien individuals, non-us entities and certain US entities held in substantial part by non-u.s. owners Implications for US FIs if these rules are adopted, and for continued effectiveness of IGAs if they are not adopted 27

IV. Examples and Practical Considerations

Documentation Example #1 Individual Account Holder US Financial Institution Form 1042-S IRS W-8BEN Form 1042-S Form W-8BEN content: Non-U.S. TIN (on draft form) Country of citizenship Perm. residence address Due diligence red flags : U.S. place of birth (new accounts) (new) Only U.S. telephone number (new) Other U.S. indicia (e.g., U.S. mailing address) Non-U.S. individual Form 1042-S to report the following income types: U.S. source dividends U.S. bank deposit interest (new for 2013) Other U.S. source interest (U.S. Gov t, U.S. Corp bonds) Other U.S. income Information may be subject to exchange with FATCA Partner Country under IGA (if Model 1 w/ reciprocity) 29

Documentation Example #2 Entity Account Holder US Financial Institution Form 1042-S IRS W-8BEN-E Form W-8BEN-E possibilities: 1. Passive NFFE cert. on W-8BEN-E, plus rep there is no U.S. ben owner 2. Owner documented FFI cert. on W-8BEN-E, plus ben owner documentation (is passport or similar KYC acceptable in lieu of W-8BEN?) and owner reporting statement Due diligence red flags : Only U.S. telephone number (new) Other U.S. indicia (e.g., U.S. mailing address) Conflicting information regarding FATCA status Offshore Corp. Non-U.S. individual (shareholder) Form 1042-S Form 1042-S to report following income: U.S. source dividends U.S. Gov t, U.S. Corp. interest Other U.S. income Bank deposit interest not reported (account holder is not an individual) 30

Documentation Example #3 Entity Account Holder US Financial Institution Form 1042-S IRS W-8BEN-E Form W-8BEN-E possibilities: 1. Passive NFFE cert. on W-8BEN-E, plus rep there IS a U.S. ben owner 2. Owner documented FFI cert. on W-8BEN-E, plus ben owner documentation (Form W-9) and owner reporting statement Offshore Corp. Form 1042-S (to Corp.) Form 1042-S to report following income: U.S. source dividends U.S. Gov t, U.S. Corp. interest Other U.S. income Bank deposit interest not reported (account holder is not an individual) Due diligence red flags (w/r/t Corp): Only U.S. telephone number (new) Other U.S. indicia (e.g., U.S. mailing address) Note that NRA withholding still applies to payments to Offshore Corp, even though a U.S. person is the sole shareholder Conflicting information regarding FATCA status U.S. individual (shareholder) Form 8966 also to be filed by USFI, reporting information about the U.S. shareholder. 31

Documentation Example #4 Foreign P ship (PFFI) with US Income Docs: Form W-8IMY (w/ GIIN) required from Cayman Partnership, PLUS: Form W-8BEN-E from BVI co.; AND Form W-9 from US P ship; AND FFI withholding statement Withholding: Reporting: W-8BEN-E US Withholding Agent W-8IMY Cayman Partnership (NWFP and PFFI) W-8BEN-E W-9 (?) FFI W/h Stmt W-9 } Copies of originals FFI withholding statement must include: Allocation information with respect to each payee with the payee s FATCA status. Each intermediary or flowthrough entity that receives a payment on behalf of a payee, with such entity s FATCA status and GIIN, when applicable. BVI Co. US P ship 32

Documentation Example #5 QI (non-primary) with US Income Docs: US Withholding Agent W-8IMY W-9 (?) } Copy of original FFI withholding statement must include pooled information that indicates the portion of the payment attributable to: US persons; Recalcitrant account holders (A and B?); Form W-8IMY (claiming QI/PFFI status) FFI withholding statement (No forms to QI) W-8BEN-E QI and PFFI (non-primary) FFI W/h Stmt W-9 NPFFIs (NPFFIs 1 and 2?); Other class of payees not subject to FATCA w/h; Each intermediary or flowthrough entity that receives a payment on behalf of a payee, with such entity s FATCA status and GIIN, when applicable. NPFFI-1 BVI Co. (No forms to QI) NPFFI-2 U.S. individual (disclosed) U.S. individuals (A & B) (recalcitrant / undisclosed) 33

Practical considerations t Renewing Forms W-8BEN during 2013 Withholding agents may want to renew forms expiring end of 2013 and 2014 t Forms W-8BEN-E certifications from passive NFFEs Potentially unstable certification depending on potential for professional management (which indicates FFI status) May want to consider using ODFFI procedures t Potential for FATCA withholding on bank deposit interest Such payments are exempt from NRA withholding under current law, so FATCA withholding may require system enhancements 34