This content is from: United States

Beneficial ownership form changes to take account of final FATCA rules

The new draft of Form W-8BEN-E, which non-US entities must complete for the purposes of the Foreign Account Tax Compliance Act (FATCA) and other US withholding tax rules, is substantially different from the previous version that came out a year ago, practitioners say.

This is because it needs to be aligned with the final FATCA regulations, which came out in January. The revised form was published by the Internal Revenue Service on May 22.

The overview to the form states that it is for an entity that wants to certify as to its status as beneficial owner or payee of a payment for purposes of chapters 3 - withholding tax rules for non-resident individuals and corporations, and 61 - information and returns, of the Internal Revenue Code, and its status under chapter 4, which contains FATCA, as a payee or account holder of a foreign financial institution (FFI).

  • Part I is for an entity to indicate its status under chapters 3 and 4
  • Part II is only to be completed by certain foreign financial institutions
  • Part III is to be completed only when a beneficial owner of a payment seeks to claim a reduced rate of withholding under an applicable treaty.
  • Parts IV to XXV includes specific certifications relating to the chapter 4 status identified by the entity in Part I. For this portion of the form, the entity is required to complete only that Part covering its applicable chapter 4 status.

Burt Staples & Maner, in Washington DC, point out some of the key changes in the new form:

  • New FATCA classifications from the final regulations and the intergovernmental agreements have been added to the form, and some of the old classifications have been reorganised or combined on line 5. The parts of the form that correspond to the various FATCA classifications also have been revised.
  • The form suggests that entities that provide a global intermediary identification number (GIIN) will not be required to provide a foreign tax identification number. This will have to be confirmed when the instructions are published.
  • New Part II of the form would be completed for a branch or disregarded entity of a foreign financial institution.
  • Passive non-financial foreign enterprises (NFFEs) no longer would be required to report the percentage ownership of their substantial US owners.
  • A beneficial owner would be required to update its form within 30 days of a change that would render a certification on the form incorrect.
  • The signer of the form would no longer be required to state their “capacity” or title on the form, but would be required to check a box certifying that he or she does have the capacity to sign the form.

FATCA became law in March 2010 and requires foreign financial institutions (FFIs) to provide certain information about their US account holders to the US authorities or face a withholding tax of 30%.

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