FATCA And CRS Alert Issue 2016-05 / Qualified Intermediary News Issue 2016-02

The IRS has posted revised Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) to its website. The Form and its Instructions are final and reflect those revisions indicated in the draft released in January (see e-Alert 2016-03) along with a number of examples added to the Instructions. The revision date is April 2016.

Highlights of updates are as follows.

Part I: Identification of Beneficial Owner

Chapter 3 Status (Line 4): addition of box for International organization Chapter 4 Status (Line 5): Nonparticipating FFI (NPFFI): addition of exempt beneficial owner as a type of entity not included in definition of NPFFI Registered deemed-compliant FFI (RDCFFI): addition of nonreporting IGA FFI as a type of entity not included in definition of RDCFFI Sponsored FFI: addition of status Account that is not a financial account: addition of status. A financial account does not include: Certain savings and retirement accounts that are tax-favored. Certain term life insurance contracts. Account held by an estate. Certain escrow accounts. Certain annuity contracts. Account or product excluded under an intergovernmental agreement. Formatting change: Line 10 moved to separate line below its former shared line with Lines 8, 9a and 9b Part III: Claim of Tax Treaty Benefits - Limitations on Benefits (LOB)

As provided in the draft form, in order to claim treaty benefits, an entity must satisfy three requirements:

Be a resident of the treaty country and identify that country on Line 14a. Derive and beneficially own the item of income and indicate such by checking the box on Line 14b. Satisfy the LOB article of the treaty and indicate how it meets those requirements by checking the appropriate LOB box delineated under Line 14b. KPMG Observation:

While the instructions provide a general overview of each of the ten new boxes listed on the form (i.e., the general requirements needed to meet each particular LOB provision), it is nevertheless anticipated that the new requirement will result in a high level of failed treaty claims. Given the complexities of the new Form W-8BEN-E in general, this added requirement will undoubtedly result in further frustration by both the beneficial owner completing the form and the withholding agent receiving it.

Part IV: Sponsored FFI

Formerly entitled, "Sponsored FFI that has not obtained a GIIN," the part has been renamed as sponsored entities are able to obtain a...