U.S.A.: FATCA : Getting ready for FATCA implementation


We hereby inform Clearstream Banking1 customers of the actions, in relation to both the Foreign Account Tax Compliance Act (FATCA) and the Qualified Intermediary (QI) regimes, that are required to be performed on their side, according to their status, in preparation for the upcoming implementation of FATCA on 1 July 2014 and beyond.


The FATCA withholding tax regime was introduced in October 2009 but was eventually enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act on 18 March 2010.

FATCA adds a new chapter to Internal Revenue Code (IRC) Chapter 4 aimed at addressing perceived tax abuse by U.S. persons through the use of offshore accounts. The new rules require foreign financial institutions (FFIs) to provide the U.S. Internal Revenue Service (IRS), directly or indirectly, with information on certain U.S. persons invested in accounts outside of the U.S.A. and for certain non-U.S. entities to provide information about any U.S. owners.

The primary goal of FATCA is to gain information about U.S. persons but FATCA imposes a punitive withholding tax of 30% where the applicable documentation and reporting requirements are not met.

FATCA is far-reaching and can impact any U.S. or foreign persons to the extent that they are involved in making or receiving payments that fall within the scope of FATCA.

FATCA adds a new dimension to the current QI regime as it will operate as a parallel system to the existing withholding tax system (NRA and backup withholding). FATCA requirements come on top of the Chapters 3 and 61 requirements. In practice, the FATCA regime will be the first layer of rules to apply; should they be met or not be relevant, then, as a second layer, the rules of the QI regime will be applicable.

Clearstream Banking status under FATCA

Clearstream Banking S.A. (CBL) and Clearstream Banking AG (CBF) are incorporated in Luxembourg and Germany respectively, both of which countries have signed a Model I Intergovernmental Agreement (IGA) with the U.S.A.

As a consequence, both entities are registered on the IRS FATCA portal as "Registered Deemed Compliant FFI - Model I Reporting FI" and have been allocated a Global Intermediary Identification Number (GIIN), as follows:

Clearstream Banking S.A.:N1V1GJ.00000.LE.442
Clearstream Banking AG:N1V1GJ.00002.ME.276

Registration was performed before 5 May 2014 and the above-mentioned GIINs are, therefore, expected to be included in the first list of FATCA-compliant financial institutions, due to be published by the IRS on 2 June 2014.

In addition to being FATCA-compliant Model I Reporting FFIs, both CBL and CBF have renewed their QI agreements with the IRS, endorsing primary NRA and back-up withholding responsibilities along with 1042/1099 reporting obligations.

Impact on Clearstream Banking procedures

Note: Versions of the Withholding Statements mentioned below are provided, for CBL and CBF customers respectively, in the attached zip files.

FATCA takes effect as of 1 July 2014.

Clearstream Banking, in compliance with IGA rules, will be facing the following deadlines in relation to “pre-existing” accounts:

  • As of 1 July 2014, Clearstream Banking must withhold FATCA penalty tax on all withholdable payments credited to accounts that have been certified by customers as being FATCA non-compliant (whether for its own assets or for non-compliant third-party assets).
  • As of 1 July 2014 and until 30 June 2016, Clearstream Banking must complete the due diligence exercise and renewal of all account certification.
  • As 1 July 2016, Clearstream Banking must apply the FATCA presumption rule to all undocumented accounts, treat them as FATCA non-compliant and apply FATCA withholding tax on all withholdable payments.

In addition, with regard to the QI regime, all QI agreements currently in effect must be renewed by the 1 July 2014 through the IRS portal. Entities that have not renewed by this date will loose their QI status and be considered as a Non-QI. As a consequence, Clearstream Banking will request all its QI customers to provide a confirmation, no later than 30 June 2014, that their QI agreement renewal has been approved.

Impact on customers with regard to FATCA

Major instructions (such as for Forms 1042-S and W-8IMY) to determine the information that will have to be collected for reporting purposes are still not available and the documentation renewal exercise cannot, therefore, be performed yet for all type of accounts. Nevertheless, in order to meet the clear desire of both Clearstream Banking and its customers to start the FATCA certification exercise, Clearstream Banking has decided to proceed in collection phases based on the customer’s responsibilities with regard to FATCA and the availability of information from the IRS.

Consequently, Clearstream Banking will request, in the first phase, the following customers to provide new FATCA certification documents2 as indicated:

Foreign account holder (own assets) being FATCA-compliant or FATCA-exempt

The Clearstream Banking customer is foreign, FATCA-compliant or FATCA-exempt, and holding on its account U.S. securities of which the customer is the beneficial owner.

The customer will have to provide:

  • Withholding Statement Participating FFI / Exempted Beneficial Owner Own Account3 - a new withholding statement confirming the elected account structure and its FATCA compliance;
  • An IRS Form W-8 (2014 revised version), providing all mandatory information.

U.S. account holder

The Clearstream Banking customer is a U.S. Financial Institution; it may hold all U.S. securities (own as well as third-party assets) in an omnibus account.

The customer will have to provide:

  • Withholding Statement U.S. Financial Institution3 - a new withholding statement confirming the elected account structure and the customer’s responsibilities;
  • An IRS Form W-9 (2014 revised version), providing all mandatory information.

Qualified Intermediary type A

The Clearstream Banking customer is FATCA-compliant and a QI assuming primary NRA withholding responsibility and backup withholding and 1099 reporting responsibilities with respect to all U.S. securities held in the account.

All securities can be held in the same account (omnibus account) and no allocation information is required. For all accounts for which the customer is acting in this capacity, the customer must provide:

  • Withholding Statement Qualified Intermediary assuming primary Non-Resident Alien (NRA) withholding responsibility and 1099 reporting and backup withholding responsibility3 - a new withholding statement confirming the customer's responsibilities;
  • An IRS Form W-8IMY (2014 revised version) confirming that the customer is FATCA-compliant and a QI with primary NRA withholding and backup withholding and 1099 reporting responsibilities;
  • Its Global Intermediary Identification Number (GIIN), whenever applicable, as well as its QI Employee Identification Number (QI EIN) issued by the IRS.

Customers whose accounts do not fall in the above described categories will be requested to renew their certification in a second phase. Further information will be provided to them as soon as the IRS releases the awaited instructions.

Impact on customers with regard to QI – NRA withholding tax

As indicated above, all QI agreements will expire on 30 June 2014, even if they were scheduled to remain in effect for a longer period. Therefore, customers that want to retain their QI status will have to renew their QI agreements via the IRS registration web portal, thereby obtaining a GIIN.

As a consequence, Clearstream Banking must obtain confirmation, from all its customers that currently act as QIs, that their QI status has been renewed and approved and is to be taken into consideration for all income payments falling under Chapters 3 and 61 of the IRC (NRA and backup withholding tax, 1042S and 1099 reporting).

In these circumstances, all customers currently acting as QIs are requested to send a SWIFT MT599 / MT568 addressed to the TAX DEPARTMENT:

  • Confirming their QI status as of 1 July 2014 with accompanying responsibilities (endorsing NRA withholding tax or not, backup and 1099 reporting responsibilities or not); and
  • Providing their GIIN; and
  • Indicating their FATCA status (Participating FFI, registered deemed complaint FI under Model I IGA etc.).

If such confirmation is not received via SWIFT before 30 June 2014, Clearstream Banking will be obliged to consider the customer status under Chapter 3 as Non-QI and take all related necessary actions (full certification request, application of NRA withholding whenever applicable). Therefore, in order to enable smooth handling of their payments as of 1 July 2014, customers are strongly recommended to provide the requested information not later than 25 June 2014.

Further information

For more about FATCA, please see our About FATCA webpage or customers may address their queries to fatca@clearstream.com.

For further information about procedures, customers may contact the Clearstream Banking Tax Help Desk on:

Telephone:+352-243-32835+49-(0) 69-2 11-1 3821+65-6597-1665
Fax:+352-243-632835+49-(0) 69-2 11-61 3821

or Clearstream Banking Client Services or their Relationship Officer.

1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
2. In the unlikely event that the IRS should publish instructions that would imply amendments to the new FATCA certification set, Clearstream Banking reserves the right to request customers to provide any additional required information or, as the case may be, to renew the certification again.
3. The CBL or CBF version, as appropriate, but note that, in either case, the completed statement must be sent to Clearstream Banking S.A., Attn. OTL - Tax Services, 42 avenue John F. Kennedy, L-1855 Luxembourg.

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