On June 24, 2014 the IRS released an updated version of the FATCA FFI Agreement for Participating FFI and Reporting Model 2 FFI, just one week before FATCA withholding begins July 1st. The previous FFI agreement version was released January 13th as Revenue Procedure 2014-13 (see my article link).
The IRS has updated the FFI agreement make it consistent with the coordination temporary regulations under chapter 4 of the Code, chapters 3 and 61 of the Code, and section 3406, which were released on February 20, 2014. (link to my article on these US Withholding and Documentation Rules changes).
How Many FFIS are Impacted by this Change?
About 26% (19,960) of the registered FFIs are impacted by the FFI agreement changes, in addition to any new registrations from the current 9 Model 2 countries/jurisdictions and 171 countries/jurisdictions without an IGA.
77,353 financial institutions and their branches registered from 205 countries and jurisdictions, of a total of 250 countries and jurisdictions recognized by the USA.
Of this total registered, 71,219 FFIs (92%) registered from the 79 countries and jurisdictions that as of June 23rd have an IGA. 57,393 FFIs registered from Model I IGA jurisdictions probably either as a category of a Model 1 Deemed Compliant FFI or as a branch. However, 13,826 of these registered as Model 2 reporting FFIs or branches. At least these 13,826 are impacted by the FFI Agreement changes.
Model 2 IGAs – 9 (13,826 FFI Registered)
- Armenia (5-8-2014): 27
- Austria (4-29-2014): 2,978
- Bermuda (12-19-2013): 1,242
- Chile (3-5-2014): 324
- Hong Kong (5-9-2014): 1.539
- Japan (6-11-2013): 3,251
- Paraguay (6-6-2014): 17
- Switzerland (2-14-2013): 4,040
- Taiwan: 408
Non IGA Registrations (Participating FFI and other)
Only 6,134 FFIs registered from the remaining 171 countries and jurisdictions either as Participating FFIs or branches. These 6,134 are also impacted by the FFI agreement changes.
45 countries and jurisdictions did not have a single FFI or branch registration on the GIIN List. Presumably, FFIs and / or branches from these countries, such as Ukraine and Armenia, will find their way unto the July 1st GIIN list.
Meanwhile, 30% withholding on all withholdable payments to nonparticipating FFIs in the 171 non-IGA countries begins next week on July 1. Most commentators expect a rush of over 300,000 FFI registrations by the end of 2014. Some predict more than a half million entities must still register, based on the UK's HMRC estimate that 75,000 entities are impacted by FATCA within the United Kingdom (where less than 6,300 are currently registered on the GIIN list).
Updates to FFI Agreement
Practical Compliance Aspects of FATCA and GATCA
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters by 50 industry experts grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf
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