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FATCA & CRS Alert 2017-06

FATCA & CRS Alert 2017-06



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Renew FFI Agreements by July 31, 2017

As a reminder, as a result of the Internal Revenue Service (IRS) releasing a new foreign financial institution (FFI) agreement on December 30, 2016 in Rev. Proc. 2017-16 (PDF | 226KB), all financial institutions (FIs) that had a previous version of the FFI agreement in effect must renew their FFI agreement by July 31, 2017 to retain their Global Intermediary Identification Numbers (GIINs). The FFI agreement can be renewed through the IRS’s FATCA FFI Registration webpage.

FIs that renew their FFI agreement will be treated as having the new FFI agreement in effect as of January 1, 2017. FIs that do not renew their FFI agreement by July 31, 2017 risk having their GIINs removed from the IRS’s FFI list and being treated as non-FATCA compliant from January 1, 2017 until they renew their agreement.

Issue Number 2017-06 provided a summary of the changes made to the FFI agreement, and is attached for your reference.

The IRS issued the following chart which is meant to assist FI’s in determining whether an FFI agreement must be renewed:

Renewal of FFI Agreement
Financial Institution’s FATCA Classification in its Country/Jurisdiction of Tax Residence Type of Entity FFI Agreement Renewal Required?
Participating Financial Institution not covered by an IGA; or a Reporting Financial Institution under a Model 2 IGA Participating FFI not covered by an IGA Yes
Reporting Model 2 FFI Yes
Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA)
Reporting Model 1 FFI operating branches outside of Model 1 jurisdictions Yes, on behalf of branches operating outside of Model 1 jurisdictions (other than related branches)
Reporting Model 1 FFI that is not operating branches outside of Model 1 jurisdictions No
Registered deemed-compliant FFI (regardless of location) No
None of the above Sponsoring entity No
Direct reporting NFFE No
Trustee of Trustee-Documented Trust No

KPMG Observations

If an FFI does not register by July 31, 2017, their GIIN will be removed from the IRS FFI list. Accordingly, during a withholding agent’s annual GIIN check, it is possible that a GIIN will be removed and the withholding agent will be required to treat the entity as a Nonparticipating FFI subject to 30 percent FATCA withholding if a new form is not obtained.

FFIs should renew their FFI agreements on the FATCA FFI Registration by clicking on a new “Renew FFI Agreement” link on the registration system homepage and complete the application. The IRS indicated that this renewal feature will be available in a forthcoming release in the “near future,” but the IRS has yet to introduce this feature.

Being Model 1 IGA FFIs, Luxembourg Financial Institutions should only be required to renew the FFI Agreement if they have branches outside of Model 1 jurisdictions.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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