US: Non-financial foreign entities (NFFEs) and FATCA agreements
Produced in partnership with Orrick, Herrington & Sutcliffe (Europe) LLP
US: Non-financial foreign entities (NFFEs) and FATCA agreements

The following Tax practice note produced in partnership with Orrick, Herrington & Sutcliffe (Europe) LLP provides comprehensive and up to date legal information covering:

  • US: Non-financial foreign entities (NFFEs) and FATCA agreements
  • What is a non-financial foreign entity?
  • What is an excepted NFFE?
  • Publicly traded corporations
  • Affiliates of a publicly traded corporation
  • Territory entities
  • Active NFFEs
  • Excepted non-financial entities
  • Exempt beneficial owners
  • Direct reporting NFFEs
  • More...

The Foreign Account Tax Compliance Act (FATCA) has three core elements:

  1. enhanced due diligence

  2. broader information reporting, and

  3. a potential withholding tax on US source payments

The main purpose of the FATCA provisions is to obtain information reporting on US-owned offshore accounts, and so imposes broad disclosure and reporting requirements on foreign financial institutions (FFIs) (and other foreign entities).

A major point of concern that the Internal Revenue Service (IRS) has identified in connection with under-reporting of income by US taxpayers is the use of foreign corporations to hold assets offshore.

This Practice Note examines:

  1. what a non-financial foreign entity (NFFE) is

  2. what an excepted NFFE is

  3. what foreign financial institutions (FFI) agreements are

  4. what an intergovernmental agreement (IGA) is, and

  5. the broad reporting and due diligence obligations under an IGA

For an analysis of the broad definition of what constitutes an FFI for the purposes of FATCA, and the obligations that arise as a result of falling within its scope, see: US: FATCA—foreign financial institutions (FFIs).

For a detailed introduction to FATCA generally, see Practice Note: US: Foreign Account Tax Compliance Act (FATCA)—what is FATCA?

What is a non-financial foreign entity?

FATCA requires foreign entities other than FFIs (ie non-financial foreign entities or 'NFFEs') to provide withholding agents with the name, address and taxpayer identification number of any substantial US owner. NFFE means a foreign entity that is not

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