I Have GIIN. Now What?

June 4, 2014Tax Alert

By now, if you are a "foreign financial institution" (FFI) for purposes of FATCA ("Foreign Account Tax Compliance Act"), you probably have registered with the IRS and are eagerly waiting your GIIN to be issued and for your name to be published in the first FFI List this week.

When you registered as an FFI on the IRS website, you should have been prompted to enter into an "FFI Agreement" with the IRS. An FFI agreement provides the ground rules for an FFI to conduct KYC (know-your-customer) due diligence, report applicable information to the IRS, and withhold as required under FATCA. There is only one version of the FFI Agreement. If you are located in a Model 2 Inter-Governmental Agreement ("Model 2 IGA") jurisdiction, you are still entering into an FFI Agreement with the IRS, but the FFI Agreement ground rules are modified by the applicable Model 2 IGA.

The effective date of the FFI Agreement is the date on which the IRS issues a GIIN to the FFI. For a participating FFI that receives a GIIN prior to June 30, 2014, the effective date of the FFI Agreement is June 30, 2014. An FFI Agreement expires on December 31, 2016, at the end of the FATCA transitional period but is subject to renewal thereafter through the IRS website.

In contrast, an FFI located in a jurisdiction that enters into a Model 1 Inter-Governmental Agreement with the U.S. (the "Model 1 IGA"), has until the end of 2014 to obtain a GIIN. If you are located in a Model 1 IGA jurisdiction, you do not enter into an FFI Agreement by registering with the IRS. Instead, you will follow the ground rules as laid out by the applicable IGA and the implementing legislation of the country where you are located.

To complicate this further, if you have a branch located in a jurisdiction different from that of your main office, the branch may be exposed to a different set of rules from those applicable to the main office, for example, because the two jurisdictions enter into IGAs of different models. A branch located in a Model 2 IGA jurisdiction may be required to follow its FFI Agreement, as modified by the applicable Model 2 IGA, while the main office in a Model 1 IGA jurisdiction will have to follow the Model 1 IGA and the local implementing legislation.

For more information on this and other tax matters, please contact:

Louis Tuchman at +1 212 592 1490 or [email protected]

To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax related matter(s) addressed herein.

Copyright © 2014 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for information purposes only.
Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.