Throughout the last few months the Department of Treasury and the IRS have been busy implementing new changes and processes:
30 December 2016: Final and temporary regulations were issued in regards to the withholding of tax on certain US source income paid to foreign persons, information reporting and backup withholding with respect to payments made to certain US persons. This followed the release of a new FATCA Online Registration User Guide making it easier for foreign financial institutions to comply with FATCA;
6 January 2017: Regulations (REG-103477-14) were published setting forth verification and certification requirements for certain entities under Chapter 4 in the Federal Register; and
27 June 2017: The IRS released a revised version of the Form W-8IMY (see below for updates to the form).
FATCA Regulations contain a six-month sunset period for new tax forms, thus the previous 2016 W-8IMY can be used until the end of December 2017. 2016 W-8IMYs submitted by new clients from January 2018 onwards should not be accepted (see Regulations sections 1.1441-1(e)(4)(ii) and (vii)(C)).
Therefore the 2016 W-8IMY can continue to be submitted until the end of December 2017. It is each individual businesses responsibility to ensure correct tax advice is taken for the completion of the W-8IMY.
Please note, W-8IMYs remain valid indefinitely once signed and the account is documented unless there is a change of circumstance. For that reason 2017 W-8IMYs will only be required from or for new clients.
The indefinite validity does not extend to the underlying Beneficial Owner tax forms. For example a Form W-8BEN-E will remain valid for purposes of both chapters 3 and 4 for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect.
Updates to Form W-8IMY (Rev. June 2017)
Limited foreign financial institutions (FFIs) and limited branches: Limited FFI and limited branch statuses expired on 31 December 2016 and have been removed from the form and accompanying instructions.
Sponsored FFIs and sponsored direct reporting non-financial foreign entities (NFFEs) (sponsored direct reporting NFFEs): A sponsored FFI that is a registered deemed-compliant FFI or sponsored direct reporting NFFE is required to obtain its own GIIN and can no longer provide its sponsoring entity’s GIIN.
Nonreporting IGA FFIs: Nonreporting IGA FFIs that are sponsored entities should provide their own GIIN and not the sponsoring entity’s. A trustee of a trustee-documented trust that is a foreign person should provide the GIIN it received when it registered as a participating FFI or reporting Model 1 FFI.
Qualified derivatives dealers (QDDs): A QDD that receives payments for which they are entitled to a reduced rate of withholding under an income tax treaty can now certify its status as a qualified intermediary acting as a QDD and claim treaty benefits.
U.S. branch certification: Certification is required from U.S. branches of FFIs that are not treated as U.S. persons. FFIs that are treated as U.S. persons no longer have to be branches.
The revised form and instructions can be found using the below links:
W-8IMY - https://www.irs.gov/pub/irs-pdf/fw8imy.pdf
Instructions for the W-8IMY - https://www.irs.gov/pub/irs-pdf/iw8imy.pdf
Grant Thornton UK LLP Financial Services Tax team