As previously reported (Link-Blog), on 13 February 2019, the U.S. Internal Revenue Service (“IRS”) released the text of an amendment, changing Annex II of the Agreement between the United States and the United Kingdom to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (“FATCA”). The change includes additional new subsections “E” and “F” to Section II (Deemed-Compliant Financial Institutions) of Annex II of the IGA to include additional entities as Non-Reporting United Kingdom Financial Institutions that are treated as deemed-compliant FFIs for purposes of section 1471 of the Internal Revenue Code.
To provide more detailed information on this topic, PwC in the U.S. released a March 2019 Tax Insights (Link) with the following takeaway:
The updates to Annex II of the US-UK IGA are welcome as the 31 March 2019 due date for FATCA Certifications approaches. The Annex II updates provide that sponsored entities registered under the US-UK IGA are now considered Non-Reporting UK Financial Institutions. Therefore, sponsoring entities are not required to submit the FATCA certifications on their behalf, although the Responsible Officers (“ROs”) still should confirm the classification on the IRS FATCA portal. We anticipate that the existing nine jurisdictions will attempt to follow the UK’s lead and renegotiate their Annex II with the United States.
Until such action is taken, sponsoring entities should prepare to submit a certification to the IRS on behalf of sponsored entities located in Model 2 IGA, non-IGA, and Model 1 IGA jurisdictions that do not include provisions for sponsored entities in Annex II for the period ending 31 December 2017 by 31 March 2019. Moreover, all ROs are encouraged to review and confirm the classifications in the IRS FATCA portal for all entities, regardless of where they are located.