Offshore Investment after FATCA

by Aaron A Day on August 29, 2014

Limited Conditional IRS Form 8957 Foreign Account Tax Compliance Act Registration

The correct path is to first define if a US person or entity is part of a Foreign Financial Institution (FFI). Next is to decide if the FFI is in a Form 8957 jurisdiction that limits provision of information. If so, the correct FATCA registration is “limited conditional” which declares the FFI compliant with FATCA and therefore the FFI can sign the W-8 BEN-E.

If not so, the FFI such as a corporate trustee of family trusts or debenture trusts or mutual fund unit trusts, must register for a GIIN and therefore the FFI can sign the W-8BEN-E

To avoid FATCA registration reference: instruction for IRS Form 8957-Foreign Account Tax Compliance Act Registration. Read on page 1 ” Purpose” and ” Who is Eligible to Register”. Read on page 3 ”Limited Foreign Financial Institution”. When it has a FATCA status as a limited conditional it means that it is exempt from reporting because it is deemed to be compliant. To be deemed to be compliant is a good thing because restricted information secrecy laws are maintained

This is explicitly for authorized pension funds as exempt beneficial owners and also for administrators of FATCA identification number pension funds. Well, that answer is the whole point because this certain exempt FATCA status means that if there is a U.S. person or not becomes irrelevant.

What makes that significant is that effectively the only people who can efficiently deal in USD on behalf of US people are those who are FATCA compliant, have a FATCA Identification Number and are verified to sign a W8 BEN-E. That is why administratively this exempt beneficial owner is on firm ground. Administration of FATCA rules are simple when reporting to FATCA is eliminated.

Our specific recommended pension plan does not require a FATCA GIIN because of its ”limited conditional’ FATCA status. In fact, for an authorized pension fund to apply for a GIIN would be a criminal violation of the laws on Restricted Information (Secrecy Law).

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