Post by congregatio on Jan 5, 2017 9:31:36 GMT 4
Sponsoring entities had a deadline for Dec 31, 2016 to be registered via the IRS registration portal.
Entities that are treated as “sponsored entities”[1] for FATCA purposes and that are subject to the rules of a Model 1 Intergovernmental Agreement (Model 1 IGA)—such as fund entities organized in the Cayman Islands—will be required to obtain a global intermediary identification number (GIIN) by the later of (i) December 31, 2016 or (ii) 90 days after a “US Reportable Account” is first identified.
Sponsored entities subject to the rules of a Model 2 IGA or that are not located in an IGA jurisdiction must be registered by December 31, 2016.
Background
Under FATCA, a non-US financial institution is generally required to register with the IRS, obtain a GIIN, and satisfy certain due diligence, reporting, and (depending on the jurisdiction) withholding obligations. An entity can register with the IRS as a “sponsoring entity” that agrees to perform those obligations on behalf of another entity, in which case the sponsoring entity is issued the GIIN.
In the fund context, a sponsoring entity (such as a general partner entity) may act as a sponsoring entity for a number of non-US funds and related entities. Since registration became required in 2014, sponsored entities have not, until now, been required to obtain a separate GIIN and could have relied upon the GIIN issued to the sponsoring entity. Under the transitional relief provided by the IRS in Notice 2015-66,[2] a sponsored entity has not needed to obtain its own GIIN until December 31, 2016, and has not been required to register before that date. The IRS registration portal has since been updated to permit the registration of sponsored entities by their sponsors and issuance of GIINs to the sponsors to provide to sponsored entities.
Action Needed
Sponsoring entities should evaluate which of their sponsored entities should be registered. A sponsoring entity (and not the sponsored entity) must log into its account on the FATCA registration portal and add information regarding each sponsored entity that needs to be registered under the rules described above.
Per the IRS FATCA online registration user guide, information regarding multiple sponsored entities can be added at one time using a file upload. The sponsoring entity will be given a unique GIIN for each sponsored entity, which the sponsoring entity can distribute accordingly. Each sponsored entity should update its W-8 and self-certification forms to include the unique GIIN provided by its sponsoring entity.
The approaching deadline may be particularly relevant to investment funds that consolidated their FATCA compliance function for offshore entities (e.g., offshore blockers, offshore funds, and wholly owned controlled foreign company (CFC) subsidiaries of US regulated investment companies) into one or more sponsoring entities.