Foreign Account Tax Compliance Act (FATCA)

Foreign Account Tax Compliance Act (FATCA) Definitions – Individuals
U.S. PersonMeans a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof.
US ResidentUS resident is a US citizen or a resident alien, which is an individual that is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.
Green Card“green card” recipient as an alien who has been granted “the status of having been lawfully accorded the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws, such status not having changed.”
Born in the USAA person born in the USA is considered as a ‘US person’ under FATCA unless the person has formally renounced his or her right to US citizenship.
Telephone NumberTelephone number(s) provided is a US telephone number.
Sanding InstructionsStanding instruction to periodically transfer funds to an account with US address.
Hold mail addressAddress for communication AND all mails are retained at the Company for physical collection by a representative of the customer.
Substantial Presence TestYou will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:   31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.
Foreign Account Tax Compliance Act (FATCA) Definitions – Entities
US Entities & US Financial InstitutionsSpecified US Person This classification covers a privately-owned US corporation; a US partnership; a US trust; an individual who is a US citizen; an individual who is not a US citizen but who is resident in the US for tax purposes; or the estate of either of the above-mentioned category of individual. Example: A privately-owned US corporation operating in the KSA pursuant to a license from the KSA Government, or the KSA branch of a privately-owned US corporation licensed in the KSA by the Saudi Arabian General Investment Authority (SAGIA). US Person who is not a Specified US Person This classification covers the US itself; any State or Territory of the US; the US Government; any wholly-owned agency of the US Government; a US bank; a US corporation whose stock is regularly traded on an established stock exchange; or a US regulated investment company.
Non-US Financial InstitutionsKSA Financial Institution or Financial Institution means (i) any Financial Institution organized under the laws of the Kingdom of Saudi Arabia, but excluding any branch of such Financial Institution that is located outside the Kingdom of Saudi Arabia, and (ii) any branch of a Financial Institution not organized under the laws of the Kingdom of Saudi Arabia, if such branch is located in the Kingdom of Saudi Arabia Participating Non-US Financial Institution
This classification is also known as a Participating Foreign Financial Institution or PFFI.
This classification covers a non-US financial institution that is organized in a country which has not entered into an intergovernmental agreement with the US regarding FATCA, but where the financial institution itself has entered into an agreement with the US IRS regarding FATCA. Deemed-Compliant Non-US Financial Institution
This classification is also known as a Deemed-Compliant Foreign Financial Institution or Deemed-Compliant FFI.
This classification covers a non-US financial institution that is organized in a country which has not entered into an intergovernmental agreement with the US regarding FATCA, but where: (i) the financial institution has registered itself with the US IRS to declare its status; or
(ii) the financial institution is not required to register with the US IRS and has certified itself accordingly.
The type of non-US financial institution described at item (i) above is a Registered Deemed-Compliant Non-US Financial Institution (also known as a Registered Deemed-Compliant Foreign Financial Institution or Registered Deemed-Compliant FFI).
The type of non-US financial institution described at item (ii) above is a Certified Deemed-Compliant Non-US Financial Institution (also known as a Certified Deemed-Compliant Foreign Financial Institution or Certified Deemed-Compliant FFI). Non-Participating Non-US Financial Institution
This classification is also known as a Non-Participating Foreign Financial Institution or Non-Participating FFI.
This classification covers a non-US financial institution that is organized in a country which has not entered into an intergovernmental agreement with the US regarding FATCA, where the non-US financial institution itself is not (i) a Participating Non-US Financial Institution, (ii) a Registered Deemed-Compliant Non-US Financial Institution, or (iii) a Certified Deemed-Compliant Non-US Financial Institution.
Excepted NFFEExcepted Non-Financial Non-US Entity
This classification is also known as an Excepted Non-Financial Foreign Entity or Excepted NFFE.
This classification covers an entity that meets the following criteria:
(i) it is not a US entity;
(ii) it is not a financial institution; and
(iii) it is classified as an ‘Excepted NFFE’ under US Treasury Regulations.
Exempt EntitiesExempt Beneficial Owner
This classification covers a governmental entity (other than a US governmental entity); an international organization; a central bank (other than the US Federal Reserve); a non-US retirement fund; or a non-US investment entity that is wholly-owned by any of the aforementioned
Active NFFEActive Non-Financial Non-US Entity
This classification is also known as an Active Non-Financial Foreign Entity or Active NFFE.
This classification covers an entity that meets the following criteria:
(i) it is not a US entity;
(ii) it is not a financial institution; and
(iii) it meets any one of the following further criteria:
(1) It holds less than 50% of its assets in shares, properties, bonds or similar investment assets, and it derives less than 50% of its gross income from the distribution of dividends, rental income, interest or other investment income; or
(2) It is a listed company whose stock is regularly traded on an established securities market, or it is related to an entity whose stock is regularly traded on an established securities market; or
(3) It is organized in a US Territory, and all of its owners are bona fide residents of that US Territory; or
(4) It is a government (other than the US Government); a government of a US Territory; an international organization; a central bank of issue (other than of the US); or an entity wholly owned by one or more of the above; or
(5) Its activities consist substantially of holding shares of, or providing financing to, subsidiaries that engage in trades or businesses other than the business of a financial institution; and it does not function (or hold itself out as) an investment fund; or
(6) It is in its set-up phase (with no prior operating history), is investing capital into assets with the intention of operating a business other than the business of a financial institution, and less than twenty-four (24) months have passed since it was initially organized; or
(7) It was not a financial institution in the past five (5) years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a financial institution; or
(8) It engages primarily in financing and hedging transactions with or for related entities that are not financial institutions, and it does not provide financing or hedging services to any entity to which it is not related; or
(9) It meets all of the following criteria:
(i) It is established in its country of residence exclusively for religious, charitable, scientific, artistic, cultural, or educational purposes; or it is a professional organization, chamber of commerce or labor organization; and
(ii) It is exempt from income tax in its country of residence; and
(iii) It has no shareholders who have a proprietary or beneficial interest in its income or assets; and
(iv) The laws of its country of residence or its formation documents do not permit:
(a) any of its income or assets to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of its charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which it has purchased; and
(b) upon its liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organization, or escheat to the government of its country of residence or any political subdivision thereof.
Passive NFFEPassive Non-Financial Non-US Entity
This classification is also known as a Passive Non-Financial Foreign Entity or Passive NFFE.
This classification covers an entity that meets the following criteria:
(i) it is not a US entity;
(ii) it is not a financial institution; and
(iii) it does not meet the criteria to be either an Excepted NFFE or an Active NFFE.
Direct Reporting NFFEA Passive NFFE can elect to directly report to the IRS information about its direct or indirect Substantial US Owners. These types of Passive NFFEs are known as Direct Reporting NFFEs. In order to report directly to the IRS, Direct Reporting NFFEs will be required to register with the IRS to obtain a Global Intermediary Identification Number (GIIN).
Sponsored Direct Reporting NFFEAn Entity will be allowed to sponsor one or more Direct Reporting NFFEs, this entity will be known as a Sponsored Direct Reporting NFFE
Global Intermediary Identification Number (GIIN)A GIIN is the identification number used to identify the FFI for FATCA registration purposes and U.S. information reporting purposes
Intergovernmental Agreement (IGA)Intergovernmental agreements are intended to enable FFIs to identify and report to the IRS U.S. persons that hold assets abroad and for certain non-financial foreign entities (NFFEs) to identify their substantial U.S. owners. In order to comply with the rules, FFIs are required to enter into an FFI agreement with the U.S. Treasury or comply with intergovernmental agreements (IGAs) entered into by their local jurisdictions. U.S. withholding agents (USWAs) must document all of their relationships with foreign entities in order to assist with the enforcement of the rules
Non-financial foreign entity (NFFE)The term NFFE means a foreign entity that is not a financial institution (including a territory NFFE). The term also means a foreign entity treated as an NFFE pursuant to a Model 1 IGA or Model 2 IGA
COMMON REPORTING STANDARD (CRS) DEFINITIONS
Account HolderAccount Holder means the person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. A person, other than a Financial Institution, holding a Financial Account for the benefit or account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account for purposes of the Common Reporting Standard, and such other person is treated as holding the account.
Tax ResidencyTax residency is the country where you are resident/registered for tax purposes. Each country has its own rules for defining tax residence. For more information on tax residence, please consult your tax advisor or check the OECD information readily available on the internet.
EntityThe term “Entity” means a legal person or a legal arrangement, such as a corporation, organization, partnership, trust or foundation. This term covers any person other than an individual (i.e. a natural person).
Financial InstitutionThe term “Financial Institution” means a “Custodial Institution”, a “Depository Institution”, an “Investment Entity”, or a “Specified Insurance Company”. Please see the relevant domestic guidance and the CRS for further classification definitions that apply to Financial Institutions
Depository InstitutionThe term “Depository Institution” means any Entity that accepts deposits in the ordinary course of a banking or similar business.
Custodial InstitutionThe term “Custodial Institution” means any Entity that holds, as a substantial portion of its business, Financial Assets for the account of others. This is where the Entity’s gross income attributable to the holding of Financial Assets and related financial services equals or exceeds 20% of the Entity’s gross income during the shorter of: (i) the three-year period that ends on 31 December (or the final day of a non-calendar year accounting period) prior to the year in which the determination is being made; or (ii) the period during which the Entity has been in existence.
Controlling Person(s)“Controlling Persons” are the natural person(s) who exercise control over an entity. Where that entity is treated as a Passive Non-Financial Entity (“Passive NFE”) then a Financial Institution is required to determine whether or not these Controlling Persons are Reportable Persons. This definition corresponds to the term “beneficial owner” described in Recommendation 10 and the Interpretative Note on Recommendation 10 of the Financial Action Task Force Recommendations (as adopted in February 2012). In the case of a trust, the Controlling Person(s) are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(is) or class(es) of beneficiaries, or any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership). Under the CRS the settlor(s), the trustee(s), the protector(s) (if any), and the beneficiary(ies) or class(es) of beneficiaries, are always treated as Controlling Persons of a trust, regardless of whether or not any of them exercises control over the activities of the trust.
Where the settlor(s) of a trust is an Entity then the CRS requires Financial Institutions to also identify the Controlling Persons of the settlor(s) and when required report them as Controlling Persons of the trust. In the case of a legal arrangement other than a trust, “Controlling Person(s) means persons in equivalent or similar positions FATF Recommendations on Controlling Persons:
Identify the beneficial owners of the customer and take reasonable measures to verify the identity of such persons, through the following information. For legal persons: The identity of the natural persons (if any – as ownership interests can be so diversified that there are no natural persons (whether acting alone or together) exercising control of the legal person or arrangement through ownership) who ultimately have a controlling ownership interest in a legal person; and to the extent that there is doubt under (a) as to whether the person(s) with the controlling ownership interest are the beneficial owner(s) or where no natural person exerts control through ownership interests, the identity of the natural persons (if any) exercising control of the legal person or arrangement through other means. Where no natural person is identified under (a) or (b) above, financial institutions should identify and take reasonable measures to verify the identity of the relevant natural person who holds the position of senior managing official.
Active NFEAn NFE is an Active NFE if it meets any of the criteria listed below. In summary, those criteria refer to: active NFEs by reason of income and assets; publicly traded NFEs; Governmental Entities, International Organizations, Central Banks, or their wholly owned Entities; holding NFEs that are members of a nonfinancial group; start-up NFEs; NFEs that are liquidating or emerging from bankruptcy; treasury centers that are members of a nonfinancial group; or non-profit NFEs.
An entity will be classified as Active NFE if it meets any of the following criteria:
a) less than 50% of the NFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50% of the assets held by the NFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;
b) the stock of the NFE is regularly traded on an established securities market or the NFE is a Related Entity of an Entity the stock of which is regularly traded on an established securities market;
c) the NFE is a Governmental Entity, an International Organization, a Central Bank, or an Entity wholly owned by one or more of the foregoing;
d) substantially all of the activities of the NFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an Entity does not qualify for this status if the Entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
e) the NFE is not yet operating a business and has no prior operating history, (a “ start-up NFE”) but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFE does not qualify for this exception after the date that is 24 months after the date of the initial organization of the NFE;
f) the NFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a Financial Institution;
g) the NFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution; or
h) the NFE meets all of the following requirements (a “non-profit NFE”):
i) it is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labor organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare; ii) it is exempt from income tax in its jurisdiction of residence;
iii) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
iv) the applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and
v) the applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents require that, upon the NFE’s liquidation or dissolution, all of its assets be distributed to a Governmental Entity or other non-profit organization, or escheat to the government of the NFE’s jurisdiction of residence or any political subdivision.
Note: Certain entities (such as U.S. Territory NFFEs) may qualify for Active NFFE status under FATCA but not Active NFE status under the CRS.
Related Entity – An Entity is a “Related Entity” of another Entity if either Entity controls the other Entity, or the two Entities are under common control. For this purpose, control includes direct or indirect ownership of more than 50% of the vote and value in an Entity.
Passive NFEUnder the CRS a “Passive NFE” means any NFE that is not an Active NFE. An Investment Entity located in a Non-Participating Jurisdiction and managed by another Financial Institution is also treated as a Passive NFE for purposes of the CRS.
Specified Insurance CompanyThe term “Specified Insurance Company” means any Entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.
Participating Jurisdiction Financial InstitutionThe term “Participating Jurisdiction Financial Institution means (i) any Financial Institution that is tax resident in a Participating Jurisdiction, but excludes any branch of that Financial Institution that is located outside of that jurisdiction, and (ii) any branch of a Financial Institution that is not tax resident in a Participating Jurisdiction, if that branch is located in such Participating Jurisdiction.
Non-Reporting Financial InstitutionA “Non-Reporting Financial Institution” means any Financial Institution that is: a Governmental Entity, International Organization or Central Bank, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution; a Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; a Pension Fund of a Governmental Entity, International Organization or Central Bank; or a Qualified Credit Card Issuer; an Exempt Collective Investment Vehicle; or a Trustee-Documented Trust: a trust where the trustee of the trust is a Reporting Financial Institution and reports all information required to be reported with respect to all Reportable Accounts of the trust; any other defined in a countries domestic law as a Non-Reporting Financial Institution.
Related EntityRelated Entity means an entity related to another entity because (i) either entity controls the other entity; (ii) the two entities are under common control; or (iii) the two entities are Investment Entities are under common management, and such management fulfils the due diligence obligations of such Investment Entities. For this purpose, control includes direct or indirect ownership of more than 50 % of the vote and value in an Entity.
COMMON FATCA & CRS DEFINITIONS
TAX Identification Number (TIN)A Taxpayer Identification / Information Number (TIN) is a unique combination of letters and/or numbers assigned to the person or you/your entity. Some countries do not issue a TIN, but may rely on other issued numbers such as social security/insurance numbers or company registration numbers for entities. You may need to provide these if requested. The OECD has published a list of the acceptable Taxpayer Identification Number (TIN) formats and their alternatives.
For US Persons and/or tax residents, a US TIN can be one of the following: Social Security Number (SSN) Individuals Tax Identification Number (ITIN) Tax Identification Number for Pending US Adoptions (ATIN)
Beneficial OwnerThe term beneficial owner means the person who is the owner of the income for tax purposes and who beneficially owns that income. Thus, a person receiving income in a capacity as a nominee, agent or custodian for another person is not the beneficial owner of the income.
Change in CircumstanceA change in circumstance is one that either results in the change of or conflicts with a person’s current status. These circumstances can include a change in the account holder’s status, account, or any other related account.
Self-Certification FormsA completed self-certification form is used to confirm your FATCA classification & Tax residency status under the CRS.