FATCA in the UK—pension schemes
Produced in partnership with Linklaters

The following Tax practice note produced in partnership with Linklaters provides comprehensive and up to date legal information covering:

  • FATCA in the UK—pension schemes
  • Assessing whether a pension scheme is an FFI
  • Definition of an FFI under the US FATCA Regs
  • When the UK:US IGA will apply
  • Definition of an FFI under the UK:US IGA
  • Registered pension schemes
  • Pension schemes as exempt beneficial owners
  • Retirement accounts and products
  • Unregistered pension schemes
  • Exempt beneficial owner exemption
  • More...

FATCA in the UK—pension schemes

At a very high level, certain provisions of the US Internal Revenue Code of 1986, as amended (the Code), commonly known as FATCA, seek to encourage foreign (ie non-US) financial institutions (FFIs) to provide certain information to the US tax authority, the Internal Revenue Service (IRS), regarding their account holders by imposing a 30% withholding tax on certain payments received by the FFI unless the FFI:

  1. enters into an agreement with the IRS (an FFI Agreement) to provide relevant information and withhold tax on certain payments made to persons that fail to provide the FFI information, consents and forms or other documentation that may be necessary for such FFI to determine whether such person is compliant with FATCA or otherwise exempt from FATCA withholding, or

  2. is otherwise deemed compliant with, or exempt from, FATCA

The definitions of an FFI and an account holder can include pension schemes (and trustees) and their members respectively.

In order to facilitate compliance with FATCA, the IRS has developed an approach based on the use of intergovernmental agreements with other jurisdictions (IGAs). An FFI in a jurisdiction that has entered into (or has agreed in substance to) an IGA is required to perform prescribed due diligence set forth in the applicable IGA (or domestic law implementing it) to identify their US accounts. Under the most common

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