FATCA and CRS Alert issue 2016-03 | KPMG | BH

FATCA and CRS Alert issue 2016-03

FATCA and CRS Alert issue 2016-03



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Draft Form W-8BEN-E and Instructions Released for Industry Review and Comment

The IRS has posted draft Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) to its website. The draft form and its instructions are noted as early release drafts and comments can be submitted on the Comments on Tax Forms and Publications page on IRS.gov. Draft changes of note include:


Claim of Tax Treaty Benefits - Limitations on Benefits

In order to claim treaty benefits, an entity must satisfy three requirements:

  1. Be a resident the treaty country and identify that country on Line 14a.
  2. Derive and beneficially own the item of income and indicate such by checking the box on Line 14b.
  3. Satisfy the limitation of benefits (LOB) article of the treaty and indicate how it meets those requirements by checking the appropriate LOB box delineated on the new form.

Specific to this, Part III of Form W-8BEN-E (on page 2 of the form) has been updated by adding ten checkboxes for each of the main tests that can be met to satisfy an LOB provision. The entity completing the form must check the relevant box associated with the LOB test that it meets.

KPMG Observation:
While the draft instructions provide a general overview of each of the ten new boxes listed on the form (i.e., the general requirements needed to meet each particular LOB provision), it is nevertheless anticipated that the new requirement will result in a high level of failed treaty claims. Given the complexities of the new Form W-8BEN-E in general, this added requirement will undoubtedly result in further frustration by both the beneficial owner completing the form and the withholding agent receiving it.

Nonfinancial Accounts

For accounts that meet the FATCA exceptions to financial accounts, a new check box has been added to Line 5, Chapter 4 status. A financial account does not include:

  • Certain savings and retirement accounts that are tax-favored.
  • Certain term life insurance contracts.
  • Account held by an estate.
  • Certain escrow accounts.
  • Certain annuity contracts.
  • Account or product excluded under an intergovernmental agreement.


Nonreporting FIs of IGAs

The Instructions to Form W-8BEN-E have been updated to provide coordination between the FATCA regulations and the Intergovernmental Agreements (IGAs) for financial institutions (FIs) that are classified as nonreporting under an IGA. Specifically, the instructions provide that a financial institution (FI) that meets the requirements of both a Nonreporting IGA FI under its IGA and a deemed-compliant FFI under the regulations, should certify its status as a nonreporting IGA FI on the Form W-8BEN-E. However, if such entity meets the requirements for owner-documented FFI status for payments associated with the Form W-8BEN-E, it should instead certify to that status under the regulations only by completing Part X.

Passive NFFEs (Owner Certification)

Finally, the draft Form W-8BEN-E includes new language in Part XXIX to accommodate the IGAs. Specifically, the language now provides that the owner section can also be used by a Passive NFFE that is disclosing Controlling Persons pursuant to an IGA.


For Your Reference

For further information, please do not hesitate to contact us.







The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2018 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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