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FATCA & CRS Alert 2020-02

FATCA & CRS Alert 2020-02

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U.S. tax compliance — reminder of key deadlines

The U.S. Internal Revenue Service (IRS) is increasing its efforts to ensure that non-U.S. entities, including Luxembourg investment funds, comply with U.S. tax rules.  Below is a reminder of the key deadlines for various U.S. tax compliance obligations:

 


Key deadlines
 

1. Making U.S. investments may require complying with U.S. tax obligations:

  • A company claiming treaty benefits must not only be a resident of the tax treaty partner but must also satisfy the limitation on benefits (LOB) provision of most U.S. income tax treaties. Therefore, the appropriate LOB analysis should be made before claiming treaty benefits.
  • In the case of a partnership (e.g. SCSp), you may need to assess the possibility of making a check-the-box election — to simplify documentation requirements — or issuing K-1 statements to your U.S. and non-U.S. investors.

 


 

Valid documentation should be on file upon payment.

The entity classification election cannot take effect more than 75 days before filing.

 

The standard deadline for filing Form 1065 is 15 March 2020.

  • Generally, non-U.S. persons are not required to file a tax return to obtain WHT refunds — but rather can obtain them from the withholding entity/Qualified Intermediary (QI). However, if your bank/QI was unable to reclaim the amount, you must initiate the reclaim by filing the relevant U.S. tax return on Form 1120-F.

By 15 April 2020 but automatic extension until 15 June for non-residents.

2. In the case of a corporate investment fund (e.g. SICAV-S.A.) that is a Passive Foreign Investment Corporation (PFIC), you may need to provide your investors with PFIC statements for their tax returns. As a PFIC is an entity that meets either the income test (75% passive income) or asset test (50% passive assets), this may concern all Luxembourg corporate investment funds with U.S. investors.

Should be attached to the U.S. tax return i.e. by 15 April 2020 but automatic extension until 15 June for non-residents.

3. All Luxembourg entities including SCSp and GPs — irrespective of their activities or shareholding structure — must comply with FATCA classification and, in certain cases, reporting requirements. Also, the Luxembourg tax authorities have issued letters to many Luxembourg Reporting FIs to verify that FATCA/CRS due diligence procedures and reporting processes are in place.

FATCA reporting should be done by 30 June 2020.

Our U.S. tax experts remain at your disposal for further guidance on these developments and support with U.S. tax rules analysis and compliance.

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.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 endeavour 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.

© 2020 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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