(January 29, 2015) 

On December 18, 2013 The Netherlands and the United States signed an Agreement to Improve International Tax Compliance and to Implement FATCA. This FATCA Agreement is a so-called Model 1 IGA. On January 22, 2015 the Dutch Ministry of Finance published a Guideline containing a technical explanation regarding the FATCA Agreement, which was issued on January 12, 2015. The Guideline has been given retroactive force to January 1, 2015.

 

The Ministry states that in practice questions have arisen regarding the interpretation of this IGA. According to the Ministry the Guideline aims to answers these questions.

 

The Guideline discusses amongst others the following subjects:

 

Article 1 of the IGA (Definitions) 

·       Qualification holding and treasury centre as (lead) FI instead of as an NFFE (1.1.g);

·       Activity test for a Depository Institution (1.1.i);

·       Accepting deposits (1.1.i);

·       Activity test for an Investment Entity (1.1.j);

·       Specified Insurance Company (1.1.k);

·       Double residency of a Financial Institution (1.1.l);

·       Regularly traded (1.1.s);

·       Swap agreement and securities lending agreement no ‘debt-interest’ in an Investment entity (1.1.s);

·       Exceptions to the concept Financial Account (1.1.s);

·       Custodial Account (1.1.u);

·       The concept U.S. Person in relation to American territory (1.1.ee);

·       Further explanation of the concept ‘value’ (1.1.jj);

 

Article 2 of the IGA (Obligations to Obtain and Exchange Information with Respect to Reportable Accounts) 

·       Account balance of an account closed during such year (2.2.a.4);

·       Further explanation of the concept ‘interest’ (2.2.a.5. & 2.2.a.6);

·       Special explanation of the term gross proceeds in relation to clearing organizations (2.2.a.5.B);

 

Article 3 of the IGA (Time and Manner of Exchange of Information) 

·       Period of validity of the Self-certification Form and the W-8 and W-9 Forms (3.4);

 

Article 4 of the IGA (Application of FATCA to Netherlands Financial Institutions) 

·       Interpretation of the term ‘payment’ (4.1.-b);

·       (No) Registration obligation for non-reporting Financial Institutions (4.1.c);

·       No legal basis for withholding by Primary Withholding Qualified Intermediary (QI) (4.1.d);

·       Obligations of Financial Institutions that are not Primary Withholding Qualified Intermediary (4.1.e);

·       Existing client with a new account (4.7.);

 

Article 5 of the IGA (Collaboration on Compliance and Enforcement) 

·       Third Party Service Providers (5.3);

·       Consequences no self-certification requested by a third party service provider (5.3);

 

Part I of Annex I (General) 

·       Client identification in case of multiple sub-funds (I.A);

·       Valuation of insurance policies with a monetary value (I.B.3);

·       Date threshold (I.B.3);

·       More favorable identification procedure from the Final Regulations (I.C);

 

Part II of Annex I (Preexisting Individual Accounts) 

·       Explanation of the term ‘reporting or withholding’ (II.A.3);

·       Always offering the possibility to counter-prove to the account holder (II.B.3);

·       Deceased account holder (II.C.3);

·       Empty field in electronic database (II.D.3.);

·       Term ‘Relationship Manager’ (II.D.4);

 

Part III of Annex I (New Individual Accounts) 

·       Obtaining a US TIN in case of self-certification (III.B.1);

·       Consequences if a Financial Institution does not obtain a completed self-certification form (III.B.1);

 

Part IV (Preexisting Entity Accounts) 

·       Two indicators for identifying preexisting entity accounts as American person (IV.D.1.a);

·       Taking into account Annex II status in FATCA partner state (identification of account holders with foreign exempted status) (IV.D.3);

·       Direct Reporting NFFE (IV.D.4);

·       Identification passive NFFE (‘presumption rule’) (IV.D.3.a & IV.D.4.b & IV.D.4.c.1);

·       Ultimate beneficiary of a passive NFFE with an account balance or value $ 1,000,000 (IV.D.4.c.2);

 

Part V (New Entity Accounts) 

·       Qualified credit card issuers (V.A.);

·       Consequences if a Financial Institution does not obtain a completed self-certification form (V.B.3);

 

Part VI Special Rules and Definitions 

·       Explanation of the term ‘reason to assume that’ (VI.A);

·       Relying on the qualification of accounts that were taken over (VI.A);

·       Shared account system (VI.A.);

·       NFFE with the intention to become a Financial Institution (VI.B.4);

·       Explanation of the term ‘substantial part of the activities’ (VI.B.4.e);

·       Treasury centre within a non-financial group (VI.B.4.i);

·       Existing accounts (VI.B.5);

·       Applicability of Aggregation Rules (VI.C);

·       Different accounts with the same account number (VI.C.1);

·       Specific aggregation rules for relationship managers (VI.C.3);

·       Currency translation (VI.C.4);

·       Driving license can qualify as a valid identification document (VI.D.2)

 

Annex II 

·       Exempted Investment Entity Wholly Owned by Exempt Beneficial Owners (I.E.);

·       Exempted group pension agreements (III.A);

·       Exempted insurance products and legal predecessors (III.B).

 

For the text of the FATCA Agreement as concluded between The Netherlands and the U.S. click here to be forwarded to the (English text) as published on the website of the U.S. Department of the Treasury.

 

For the text of the Guideline as published on the website of the Dutch Government click here. (The guideline is in Dutch)

  

 

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