IN-SUBSTANCE I.G.A. JURISDICTION STATUS EXTENDED & AFFECTED F.F.I.’S MUST OBTAIN G.I.I.N.’S
Foreign financial institutions (“F.F.I.’s”) that are based in jurisdictions that have (or are treated as having) entered into a Model 1 Intergovernmental Agreement (“I.G.A.”) with the U.S. must register and obtain a Global Intermediary Identification Number (“G.I.I.N.”) as part of the process to properly certify its status as an F.F.I. that complies with F.A.T.C.A. Withholding for residents of Model 1 jurisdictions who do not comply with F.A.T.C.A. started on January 1, 2015.
Jurisdictions which are treated as having entered into a Model 1 I.G.A. include countries which have not yet signed, but have reached an agreement in principle to sign, a Model 1 I.G.A. Those countries are referred to as having an “in-substance I.G.A.” with the U.S. In early 2014, the I.R.S. announced that such in-substance I.G.A.’s can be treated as in effect and relied upon through the end of 2014. The I.R.S. F.A.T.C.A. webpage has a list of these in-substance I.G.A.’s. Announcement 2014- 38 provides that a jurisdiction that is treated as if it has an I.G.A. in effect (i.e., an in-substance I.G.A. country) but that has not yet signed an I.G.A. retains such status beyond December 31, 2014, provided that the jurisdiction continues to demonstrate firm resolve to sign the I.G.A. that was agreed in substance.
Announcement 2014-38 does not change the F.A.T.C.A. requirements relating to payments made on or after January 1, 2015. Therefore, F.F.I.’s subject to an in-substance I.G.A. will still need to meet the registration requirements and all due diligence and reporting requirements under F.A.T.C.A. to avoid withholding on payments received starting January 1, 2015.
F.A.T.C.A. INTERNATIONAL DATA EXCHANGE SERVICE WEB PAGES
The I.R.S. has added an additional web page to the F.A.T.C.A. International Data Exchange Service (“I.D.E.S.”). The I.D.E.S. system allows for the U.S. to securely exchange data with foreign tax authorities and F.F.I.’s. The I.D.E.S. enrollment process may be different based on the relevant I.G.A., but will generally entail the following steps:
- Create a sender payload;
- Encrypt an A.E.S. key;
- Create a metadata file; and
- Create a transmission archive.