On May 24, 2017, the Internal Revenue Service (IRS) released a cover sheet that accompanies the 2016 version of the Form W-8BEN-E.
The cover sheet highlights some of the modifications made to the Forms W-8BEN-E due to the issuance of both the final and temporary regulations (under Internal Revenue Code chapters 3 and 4) in January 2017. In particular, the cover sheet highlights modifications and incorporates elements of the regulations that foreign persons should be aware of when completing the form. Note, these items will be included in the next issuance of the form W-8BEN-E and instructions, as well as the instructions for the requester of forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY.
The modifications, summarized below, include:
Account holders of financial accounts held at a U.S. office of a financial institution (including accounts held at U.S. branches of foreign financial institutions) who receive U.S. source income reportable on a Form 1042-S, must provide their taxpayer identification number (TIN) on line 9b, unless:
If the account holder falls within one of the aforementioned exceptions to the rule, then the account holder must provide the withholding agent with a reasonable explanation as to why the account holder was not issued a TIN. Account holders should attach the explanation to the form or write it within the margins of the form.
As of January 1, 2017, Sponsored FFIs that are registered deemed-compliant FFIs and sponsored direct reporting NFFEs must obtain their own GIIN and report it on Line 9a of the Form W-8BEN-E. The GIIN of the sponsoring entity is no longer required to be reported on Line 16 or 42 (as applicable).
Moreover, the following Nonreporting IGA FFIs are no longer required to provide in Part XII, the GIIN of their sponsoring entity or the GIIN of the trustee (for trustee documented trusts) if the entity is a:
This appears to be a welcomed change as it was unclear why the IRS previously required the GIIN of the Sponsoring Entity if the Sponsored Entity is required to obtain their own GIIN.
Reminder: Luxembourg sponsored investment funds generally should qualify as Nonreporting IGA FFI under Annex II of the Luxembourg IGA. Therefore, they should fill-in the W-8BEN-E as Nonreporting IGA FFI and not as Sponsored FFI.
The limited FFI and limited branch classification applied to FFIs that, due to local law restrictions, were prohibited from complying with the terms of an FFI agreement, or were unable to be treated as a Participating FFIs (PFFIs or Registered Deemed Compliant FFIs (RDC FFIs). Theses FFIs satisfied certain obligations in order to obtain the chapter 4 status of limited FFI or limited branch status.
On December 31, 2016, these statuses expired. Therefore, as of January 1, 2017 limited branches or limited FFIs that failed to become FATCA compliant are treated as a nonparticipating FFIs. Foreign persons should to disregard the reference to limited FFIs on line 5 and to substitute the phrase “branch treated as nonparticipating FFI” for “limited branch” on line 11.
The chapter 4 status “certified deemed-compliant investment advisors and investment managers” has been renamed to “certain investment entities that do not maintain financial accounts.” However, it is important to note that the substantive requirements for this status located at Part IX of the Form remains the same.
Pursuant to a temporary regulation issued under chapter 3, withholding agents may now accept a withholding certificate with an electronic signature if the withholding agent “reasonably demonstrates” that the person identified on the form has signed it electronically (or a person authorized to sign for the person identified on the form). An example of such demonstration is a signature block that contains the name of the beneficial owner, a time and date stamp, and a statement that the document had been signed electronically.
To access the cover sheet and accompanying Form W-8BEN-E click here (PDF | 306KB).
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