CACEIS NEWS 35

REGULATION

6 caceis news - No. 35 - October 2013

New timelines for FATCA compliance

focus

FATCA requires foreign financial institutions to report directly to the information about financial accounts held by US taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest IRS. More information is available on the IRS website: Foreign Account Tax Compliance Act (FATCA) . FATCA’s current status timeline 18 March 2010 FATCA Law. January 2013 Dissemination of IRS’s final regulations. 1 January 2014 Information entered into the Portal before 1 January 2014 will not be treated as a final submission. FFIs may finalise their registration information beginning on or after 1 January 2014. The first IRS FFI List will be posted by 2 June 2014 and will be updated monthly thereafter. To ensure inclusion on the initial list, FFIs must finalise their registration by 25 April 2014. No GIINs will be issued in 2013. Verification of a reporting Model 1 FFI’s GIIN is not required for payments made before 1 January 2015. 30 June 2014 The Notice provides that for withholding agents, registered deemed-compliant FFIs and FFIs whose FFI agreements become effective on 30 June 2014. 1 July 2014 FATCA withholding on new accounts will become effective 1 July 2014. Accounts opened before 1 July 2014 will be considered to be “preexisting accounts” (delayed six months from 1 January 2014). 31 December 2014 Remediation for high value accounts must be completed by this date. 31 March 2015 Basic report to the IRS. 31 December 2015 Remediation for all accounts must be completed. 31 March 2016 Intermediary report to the IRS. 1 January 2017 Entry into force of the FATCA tax on foreign passthrough payments and on gross proceeds from sales of US assets. 31 March 2017 Full report to the IRS ■

Notice 2013-14 released by the IRS on 12 July 2013 revises timelines but has not affected the core principles of CACEIS’s FATCA implementation project.

T he FATCA project was entering its fin- ishing stages when the Internal Revenue Service (IRS) issued its last notice ex- tending the main deadlines for the tax collabo- ration project. The day before the portal was scheduled to open, the IRS announced that the timelines set out by the final regulations and IGAs have been extended by six months. The IRS states that this latest extension is due to certain comments made by foreign financial institutions (FFIs) and US tax agents concern- ing the practical difficulties encountered in im- plementing FATCA requirements, as well as the numerous negotiations still ongoing between the IRS and a number of countries wanting to sign an IGA. The new FATCA implementation schedule now sets an initial deadline for application of the new regulation of 1 July 2014. This new date applies to: ▷ New relationships, ▷ Due diligence on pre-existing accounts, ▷ Application of withholding tax. As regards registration, the portal is opened since 19 August 2013. However, a transitional period has been created during which any FFIs needing to register can start their registration on the portal. This information will remain avail- able on the IRS’s website and may be changed until 31 December 2013. During this period, no finalised registrations will be taken into account. Furthermore, no GIIN (Global Intermediary Identification Numbers) will be issued until the start of 2014. From 1 January 2014, each FFI should finalise their previously created registration in order for it to be finally confirmed. Any FFI that has submitted their registration before 25 April 2014 will be guaranteed to be in- cluded in the first list of FFIs issued by the IRS at the start of June 2014. It should also be noted that an FFI wanting to register on the portal have need two essential prerequisites: ▷ The GIIN of the lead FFI if the FFI is a mem- ber of an Expanded Affiliated Group, ▷ The signature of the IGA of its country of incorporation in order to be able to claim the more favourable reporting status of an FFI un- der an IGA. Lastly, reporting dates are maintained. The pro-

Françoise Hommel, Senior Project Manager, CACEIS

duction date for the first reports has been set for 31 March 2015 for 2014 data. CACEIS is continuing with the implementation of FATCA requirements. Notice 2013-43 has changed the deadlines for the project. However, the provisions defined since the final regulations of January 2013 and the new IGAs issued in May this year are not called into question. Thus CACEIS is continu- ing to move forward efficiently with the imple- mentation of a FATCA compliant system that fully meets the requirements of the regulations within the Group’s various business units. CACEIS in position to better serve its clients As FATCA requirements apply to the majority of its clients, notably the mutual funds, CACEIS has enhanced its entire range of ser- vices to allow its clients to fulfil their obligations. As a reminder, obligations that have to be met by financial institutions considered as Foreign Financial Institutions (FFIs) are: ▷ Analysis of pre-existing clients and measures to bring documentation into compliance, ▷ New relationships according to FATCA rules with effect from 1 July 2014, ▷ Follow-up of circumstantial changes in the accounts (monitoring of indicators of US resi- dence),

▷ Withholdings (not before 2017 for investment funds), ▷ Reports on US clients, recalcitrant account holders and payments to Non-Participating FFIs (starting March 2015). In its capacity as a transfer/centralising agent, CACEIS provides its fund and management company clients with a range of services to meet their obligations under FATCA from 1 st July 2014. Your usual contacts remain at your disposal for any further information ■ The Foreign Account Tax Compliance Act, better known as FATCA, was signed into law in March 2010 by President Obama. Its aim is to increase efforts undertaken by the United States to crack down on tax evasion by US taxpayers in foreign countries. These measures require foreign (non-US) financial institutions to contribute to these efforts by disclosing to the US Treasury information on American citizens’ income and assets. Within the meaning of FATCA, all financial institutions are required either to apply a 30% withholding tax on the income of those persons who do not agree to have the information disclosed to the IRS.

Timeline

UCITS VI Consultation by the Commission services launched on 26 July 2012. Deadline to reply: 18 October 2012, adoption of legislative proposals expected by October 2013.

MiFID and MiFIR Trialogue: Negotiations started in July and an agreement is foreseen by end 2013.

Securities Law Regulation Commission: Proposal expected for autumn 2013.

october

november

december

2014

UCITS V The trialogue discussions between the European Council, the parliament and the European Commission on Ucits V could be pushed back until after the European elections and the second half of 2014.

Central Securities Depositories Regulation

Packaged Retail Investment Products (PRIPs) European Parliament: Vote in Plenary expected for 18 November 2013.

European Parliament: Draft report adopted in ECON on 4 February 2013. Plenary sitting date expected for 9 December 2013.