FAQs
The regulation applicable to Spanish financial institutions is the Agreement between the Kingdom of Spain and the United States of America for the improvement of international tax compliance and the implementation of the Foreign Account Tax Compliance Act-FATCA, henceforth the Agreement, published in the Official State Gazette of 1 of July 2014, which is directly binding and of obligatory compliance.As a complement to the same, Order HAP/1136/2014, of 30 June, hereinafter, the Order, has been approved, which regulates certain issues related to the obligations to provide information and due diligence established in the agreement between the Kingdom of Spain and the United States of America for the improvement of international tax compliance and the application of American law on foreign account tax compliance and the annual financial accounts informative declaration for specific American individuals is approved, form 290.
Regardless of the foregoing, the regulation of the American Treasury may be applicable in specific cases, for example in those set out in article 1.2.2 and article 4 of the Order.
Likewise, article 37 bis has been incorporated recently in the General Regulation of the tax management and inspection actions and procedures and of the development of the common taxation procedure norms, approved by Royal Decree 1065/2007 of 27 July, which regulates financial institutions,' hereinafter FI, obligations to provide information on financial accounts.
Those set out in its article 4 and developed in article 3 of the Order.Therefore, if the financial institution (FI) is a Spanish FI obliged to communicate information and it determines that it does not have any American account subject to information communication after having applied the procedures of due diligence, it will not be obliged to submit form 290, however it is still subject to fulfilling the rest of duties and, particularly, that of being registered with the American Tax Administration.
The answer would be identical in the case of a Spanish FI obliged to communicate information that only had accounts considered to be exempt products according to the provisions of appendix II of the Agreement.
The registration referred to in Article 3(d) of the Order shall be carried out by telematic means on the website that the US Internal Revenue Service (IRS) has created for this purpose (https://sa.www4.irs.gov/fatca-rup/).
Registration, like the other obligations under Article 4 of the Agreement, is generally mandatory for all institutions that are considered to be Spanish financial institutions required to report information.If no such consideration is given, as for example in the case of real estate collective investment undertakings, there is no obligation to register.
Registration is also mandatory for small Spanish financial institutions with local clientele in Annex II of the Agreement that have reporting obligations, for sponsoring entities, sponsored investment entities, sponsored controlled foreign companies and, where applicable, sponsored investment vehicles with a small number of investors, as referred to in paragraphs C and D of section II of Annex II of the Agreement and under the terms provided for in that Annex, as well as for those entities that invoke their status or condition as a foreign financial institution considered compliant, when required by the applicable regulations issued by the United States Treasury.
With the above exceptions, the entities identified in Annex II to the Agreement, e.g. pension funds, as well as certain collective investment schemes that meet the requirements of the Agreement, are not required to register.
The deadline for registering and obtaining the corresponding Global Intermediary Identification Number (GIIN), although IFs are generally required to provide their GIIN to avoid withholdings being made on payments made from 1 July 2014, this deadline has been extended to 1 January 2015 for IFs from a country with which the USA has a model 1 FACTA Agreement in force, as is the case of Spain.
Entities that meet the requirements of the applicable U.S. Treasury regulations for consideration as an exempt beneficial owner, an exempt foreign financial institution, or a deemed compliant foreign financial institution, which, by application of the Agreement, are not considered to be a Spanish financial institution with reporting obligations.
No, it can be any type of entity as long as it has adequate procedures for due diligence compliance and document retention.
In the case of an investment fund, although it may be common for the management entity, as the representative of the fund and by application of Article 5.3 of the Agreement, to be responsible for the performance of the obligations under the Agreement, there is nothing to prevent the performance of the obligations through another entity, provided that the provisions of Article 6 of the Agreement are complied with.However, if the investment fund is eligible to qualify as a financial institution as in compliance for the purpose of being considered a financial institution that is not required to report information, both the fund and its sponsoring entity must comply with the requirements set out in Section II of Annex II to the Agreement.
The date for determining whether an account is new, whether the account holder is a natural person or an entity, is 1 July 2014 in both cases.
Notwithstanding the above, Article 8(1) of the Order establishes that new accounts opened after 30 June 2014 by natural person customers who have one or more accounts open with the Spanish financial institution obliged to report information at that date may be considered as pre-existing accounts, provided that the requirements set out therein are met.
In the case of pre-existing accounts of natural persons that are lower value accounts, the review shall be completed by 30 June 2016.
In the case of pre-existing accounts of natural persons that are higher value accounts, the review shall be completed by 30 June 2015.
In the case of pre-existing accounts of natural persons that were not higher value accounts as at 30 June 2014 but at the end of 2015 or any subsequent calendar year had become such accounts, enhanced review procedures shall be completed within 6 months of the end of the relevant calendar year.
For pre-existing entity accounts with a balance or value exceeding USD 250,000 as at 30 June 2014, the review shall be completed by 30 June 2016.
In the case of pre-existing entity accounts whose balance or value as at 30 June 2014 did not exceed USD 250,000 but exceeds USD 1,000,000 as at 31 December 2015 or any subsequent calendar year, the review procedures shall be completed within six months of the end of the relevant calendar year.
Those pre-existing financial accounts which, in application of the aforementioned review procedures, are identified as reportable US accounts shall be included in Form 290 for the year in which such identification occurred.
In the case indicated, the Spanish financial institution obliged to communicate information should not include in form 290 the information related to exercising this option nor to the accounts that it affects, although it will have to preserve this information at the disposal of the Tax Administration.
Every Spanish financial institution obliged to report information must transfer to US dollars the thresholds expressed throughout Appendix I of the Agreement, applying the last exchange rate published in the calendar year prior to that in which the financial institution determines the said balance.
For example, the exchange rates which must be applied on 30 June 2014 to thresholds for application to pre-existing financial accounts whose balance or value is expressed in a different currency from the US dollar will be the exchange rates published corresponding to the last day of 2013.
In the case of joint accounts, both for the purpose of determining whether or not the thresholds set out in Annex I of the Agreement are exceeded and for the purpose of declaring the balance of the account on Form 290, the total balance or value of each financial account shall be attributed to each account holder.This rule is also applicable for the purposes of aggregation of balances.
However, the existence of a joint account subject to disclosure does not imply that the information relating to the other holders of the declared accounts in respect of which information is not required to be reported in application of the Agreement and its Implementing Order must be included in Form 290.
In the above case, the information relating to the specific US person that exercises control over the entity holding the reportable US account must be included on Form 290 in addition to the information relating to that entity holding the account.However, the balance or value declared financial account of which you are the holder the non-American entity will be the total amount corresponding to the same, but it is not subject to any type of distribution or assessment.
In this case, the US entity must be identified as the account holder, since it is that specific US person that holds the account ownership as provided for in Article 1(ee) of the Agreement.
The outline of the question is as follows:
Form 290 shall include the information relating to each reportable US account and, on the basis of that item, shall include the information relating to the account holders and, where applicable, the persons exercising control over such account holders and which determine that such account is subject to disclosure.
Therefore, in the above case, in addition to the account information, which will appear with the total balance or value of the account, both the two specific US persons and the non-US entity that is not an FI and is a passive entity will be identified as account holders.In addition, with respect to the non-U.S. entity, the nature of the non-U.S. entity must be indicated as set forth in number 17 of Annex I to the Order, and the specific U.S. person must be identified as the person exercising control over the non-U.S. entity.
No. As defined in Article 1(1)(nn) of the Agreement, controlling persons are those natural persons who directly or indirectly control the account holder.Therefore, an entity cannot be identified as a controlling person in the above scenario.
The term persons exercising control should be interpreted in a manner consistent with the Financial Action Task Force (FATF) Recommendations.In this case, a percentage of 25% could be used.
Yes.The residency certificate referred to in article D.1 of section VI of the Agreement would be admissible, for example.
The account holder's entity identification number (Global Intermediary Identification Number, GIIN) verified in the list published for this purpose by the US Tax Administration Agency or based on other information that is public or available to the Spanish financial institution obliged to report information may be taken into consideration.
Sub-paragraph D.3(b).of Section IV of Annex I of the Agreement refers to the situation where, as a result of the procedure under Article 5(2) of the Agreement (material non-compliance), the Spanish FI or FI from another partner jurisdiction holding the account is treated by the US Internal Revenue Service as a non-participating FI.In such a case, the account will not be a reportable US account, but payments made to the account holder will be subject to reporting as provided for in Article 4(1)(b) of the Agreement.
It should be understood as referring to a certificate of residence issued by a State body authorised for this purpose, such as an administration or organ thereof, or a local authority in the country of the beneficiary's claimed residence.
In relation to this type of group life insurance, the Spanish reporting financial institution may treat it as a non-reportable account, until the date on which the corresponding benefit is payable to the employee or beneficiary, provided that it receives a certificate from the company that no employee covered by the insurance is a US person (not being obliged to review all documentation held by the company to determine whether the status of the account holder is incorrect or unreliable) and the following requirements are met:
The policyholder is the company and the insurance covers at least 25 employees.
Covered employees are entitled to receive the corresponding benefit and to designate beneficiaries in the event of death.
The total amount payable to the employee or beneficiary does not exceed one million dollars.
As stated in Order HAP/1136/2014, in the event that the person submitting the declaration acts in the capacity of sponsoring entity in accordance with the provisions of Article 1(2) thereof, the information referred to in paragraphs 1 to 6 of the Annex to said Order must be provided both with respect to the sponsored investment entity and the entity acting as sponsoring entity.
With respect to the date of birth of the financial account holder (or, where applicable, the persons exercising control), if this field is not completed and left blank, a warning message will be displayed indicating this, so the appropriate actions can be taken to try to obtain this information.This notice shall be displayed irrespective of whether or not the US NIF is filled in.
Please note that in order to benefit from the flexibility allowed following the publication by the IRS of Notice 2023-11, the date of birth of the natural person or controlling person is required.
Yes, the US TIN (NIF) is mandatory as per Royal Decree 1021/2015, Additional Provision Three, so every effort should be made in accordance with Due Diligence to obtain it.
Accordingly, the US TIN of the Account Holder or, where applicable, of the Substantial Owners of the financial account must be reported.
The Account Holder's or Substantial Owner's TIN must follow the US format.If you do not have one, you must insert the "TIN" tag in the XML and fill in the TIN with any of the numerical codes provided by the IRS (Internal Revenue Service) if the reason for your absence corresponds to one of the circumstances indicated thereby (see the question: How do I fill in the TIN field if I do not have one?)
In this regard, we recommended that you consult FAQ Q3 and Q6 published by the IRS (FATCA-FAQs General-Reporting), at the following links:
US TIN format
The content of the TIN label when it is US shall conform to the following formats:
Nine consecutive digits without hyphens or other separations (i.e. "123456789")
Nine digits with two hyphens, one hyphen after the third digit and one hyphen after the fifth digit (e.g., "123-45-6789").
Nine digits with a hyphen after the second digit (e.g. "12-3456789")
It shall not be admissible if it is completed as follows:000000000 or when certain numeric patterns are entered such as 123456789 and 987654321.
Consequences of failing to introduce the code
Regarding the consequences (FAQ Q3 published by the IRS (FATCA-FAQs General-Reporting), failure to complete the US TIN does not automatically lead to a finding of material non-compliance with FATCA;However, the IRS will take into account the facts, circumstances and causes for the non-compliance with the TIN, and whether the financial institution has adequate procedures and efforts in place to obtain such information.
However, if such a situation is ultimately found to constitute a material non-compliance with FATCA, and such errors are not remedied before the IRS takes appropriate action, such as withdrawal of the financial institution's Global Intermediary Identification Number (GIIN) from the IRS, the 30 per cent withholding tax will thereafter apply to US source payments made to the financial institution.
In May 2021 the IRS (US Internal Revenue Service) published the Q6 Reporting FAQ, including a list of codes detailed below.
As of January 2023, this FAQ has been amended by updating the above-mentioned list of codes, which are also included in this FAQ.
Without prejudice to the detail explained below, it should be noted that, with regard to the codes to be used to complete the TIN label:
- During the year 2023, submissions using both the codes prior to Notice 2023-11 (published in May 2021 FAQ 6 Reporting) and those updated after Notice 2023-11 (published in January 2023 FAQ 6 Reporting update) will be accepted.
- From 01/01/2024 only submissions with codes updated after Notice 2023-11 (published in January 2023 update FAQ 6 Reporting) will be accepted.
In the event that a US TIN cannot be obtained from the account holder or substantial owner, and the TIN is required, the following numerical codes provided by the IRS may be used to complete the TIN tag, provided that any of the following circumstances apply:
1.2.1 Pre-existing Accounts:
Pre-existing account of natural person whose indicia of U.S. citizenship are only the U.S. place of birth:"222222222"/ "222-22-2222" / "22-2222222".
Pre-existing account of a legal or natural person whose indications of being a U.S. person are other than those indicated in the previous paragraph:“444444444“ / “444-44-4444“ / “44-4444444“, coinciding with one of the following additional circumstances:
There has been a change in circumstances that means that the self-certification or other documentation initially obtained is no longer considered correct or valid, and no new self-certification or other documentation has been obtained.
The account did not initially exceed the tax return threshold and then exceeded it, and no new self-certification or other documentation has been obtained.
Specific cases for pre-existing accounts:
Pre-existing account with a balance in excess of USD 1,000,000 from whose holder ENFP has not obtained US self-certifications or evidence in relation to its Controlling Persons."666666666" / "666-66-6666" / "66-6666666"
dormant or inactive pre-existing account:This is the case for pre-existing accounts where no TIN is available and the account has been dormant or inactive, but is still above the reporting threshold "7777777777777" / "777-77-777777" / "77-77777777777".
1.2.2 New Accounts:
New account of a natural person whose only indication of US citizenship is the place of birth United States:“333333333“ / “333-33-3333“ / “33-3333333“, coinciding with one of the following additional circumstances:
There has been a change in circumstances that means that the self-certification initially obtained when opening the account is no longer considered correct or valid, and no new self-certification has been obtained.
When opened, the account did not exceed the tax return threshold and then exceeded it, and no new self-certification has been obtained.
New account of a legal or natural person whose indications of being a U.S. person are other than those indicated in the previous paragraph:“555555555“ / “555-55-5555“ / “55-5555555“, coinciding with one of the following additional circumstances:
There has been a change in circumstances that means that the self-certification or other documentation initially obtained is no longer considered correct or valid, and no new self-certification or other documentation has been obtained.
When opened, the account did not exceed the tax return threshold and then exceeded it, and no new self-certification or other documentation has been obtained.
The use of these numerical codes provided by the IRS does not exempt the institution from continuing to make the necessary efforts to obtain the US TIN, in particular, the account holder must be contacted on a yearly basis to request the US TIN.
In all other cases, the code "YYYYYYYYY" may be used.
In addition, the entry of any of the above codes will not prevent the IRS from reporting an error indicating that the value entered is invalid with respect to a particular record, as the US TIN will still not be properly completed.
NEW fiscal years 2023 and subsequent years:
The IRS in its recent Notice (Notice 2023-11) offers a relaxation to Financial Institutions, which have not been able to obtain the US TIN, in relation to certain pre-existing accounts that are US reportable accounts, if the procedures outlined in the Notice are followed.(See questions What is the purpose of Notice (Notice 2023-11) issued by the IRS?Does it apply to all types of accounts? And What obligations must a financial institution meet in order to benefit from the flexibility allowed by Notice 2023-11 issued by the IRS?)
In addition, the IRS has updated in January 2023, FAQ Q 6 Reporting, with updated numerical codes to be completed on the TIN label.
- During the year 2023, submissions using both the codes prior to Notice 2023-11 (published in May 2021 FAQ 6 Reporting) and those updated after Notice 2023-11 (published in January 2023 FAQ 6 Reporting update) will be accepted.
- From 01/01/2024 only submissions with the updated codes following Notice 2023-11 (published in January 2023 update FAQ 6 Reporting) will be accepted, which are detailed below.
The use of these codes will allow the IRS to better understand the facts and circumstances underlying the failure to complete the US TIN.The update of the TIN (US TIN) field codes and their requirements and conditions are as follows:
1.2.1 Pre-existing Accounts:
"222222222"/ "222-22-2222" / "22-2222222": Pre-existing account of natural person whose indication of US citizenship is only the place of birth United States, other than an account reported under code "000222111". This code takes precedence if any other code (other than 000222111) would also be applicable.
"000222111" / "000-22-2111" / "00-0222111": Pre-existing account of natural person depositary whose only indication of US citizenship is the US place of birth.In addition, the FI should determine that the account holder is a resident of the jurisdiction where the account is maintained for tax and anti-money laundering purposes.For reference, "deposit account" is defined in the Agreement between the Kingdom of Spain and the United States of America (FATCA (BOE-A-2014-6854)).This code takes precedence if any other code would also be applicable.
"444444444" / "444-44-4444" / "44-44444444":Pre-existing account of a legal or natural person whose indicia of U.S. citizenship are other than the U.S. place of birth and one of the following is also present:
There has been a change in circumstances that has resulted in one or more US indicia being associated with the account or that the self-certification or other documentation initially obtained is considered incorrect or unreliable, and no valid self-certification or other documentation has been obtained subsequent to the change in circumstances.
The account did not exceed the reporting threshold at the date of determination provided for in the FATCA Agreement between the Kingdom of Spain and the United States of America (FATCA) and developed in the Order creating Form 290, and has subsequently exceeded it, and no self-certification or other documentation has been obtained.
Specific cases for pre-existing accounts:
"6666666666666" / "666-6666-666666" / "66-66666666666:Pre-existing legal entity account with foreign ENFP holder with one or more controlling persons for which no self-certifications have been obtained, and no US indicia have been identified in relation to any of the controlling persons.
"777777777" / "777-77-7777" / "77-7777777": Inactive or "dormant" pre-existing account. A pre-existing account on which a TIN is not available and which has been dormant or "dormant" but remains above the reporting threshold, also known as a "dormant" account. A "dormant account" is one that meets the definition set forth in US Treasury Regulation §1.1471-4(d)(6)(ii) and has had no financial activity for three years, other than the posting of interest.If more than one TIN code is applicable to an account, the other applicable TIN code shall take precedence.
1.2.2 New Accounts:
"333333333" / "333-33-3333" / "33-3333333": New account of a natural person whose US citizenship is indicated by his or her place of birth in the United States, and by one of the following facts:
There has been a change in circumstances which means that the self-certification initially obtained when the account was opened is considered incorrect or unreliable, and a new self-certification has not been obtained.
The account at the time of opening did not exceed the declaration threshold and has subsequently exceeded it, and no self-certification has been obtained.
"555555555" / "555-55-5555" / "55-5555555": New account of a legal or natural person whose evidence of U.S. citizenship is other than the U.S. place of birth, and one of the following facts is also present:
There has been a change in circumstances that determines that the self-certification or other documentation initially obtained is considered incorrect or unreliable, and a new self-certification or other documentation has not been obtained.
The account at the time of opening did not exceed the declaration threshold and has subsequently exceeded it, and no self-certification or other documentation has been obtained.
1.2.3 Cases other than the above:
- "999999999" / "999-99-9999" / "99-9999999": This code shall be used for any account for which the FI is unable to obtain the TIN and none of the other codes described above are applicable.The use of this code implies that the FI has completed its review of non-US TIN accounts and has in good faith applied TIN codes to records where appropriate.
The use of these numerical codes provided by the IRS does not exempt the entity from continuing to make the necessary efforts to obtain the US TIN.
In addition, the entry of any of the above codes will not prevent the IRS from reporting an error indicating that the value entered is invalid with respect to a particular registration, as the US TIN will still not be properly completed.
The notification of error will provide 120 days to correct the issues, in accordance with Article 5.1 "Minor errors and clerical errors" of the Agreement between the Kingdom of Spain and the United States of America (FATCA) (section 4.2.2 of the Competent Authorities Agreement between the United States and Spain).Consistent with the FATCA Agreement (and the ACC if applicable), if the TIN is not provided within 120 days, the United States will assess the data received (including whether the FI complies with the conditions set out in Notice 2023-11) and whether there is material non-compliance based on the facts and circumstances (See Reporting FAQ #3 for the material non-compliance procedure).
In case the account holder legal person type is FATCA101, FATCA102 or FATCA103 (AccountHolderType XML tag) the account holder must not be a US citizen.
In this case, the non-US TIN in the format of the issuing country as well as the issuing country in the tag "Issuedby" must be filled in the XML tag "TIN".
In the case of FATCA104 account holder type, the account holder is always a US person.
Thus, we distinguish between the following cases:
In case the account holder is a legal entity FATCA 101 or FATCA 102.In this case, the holder may not be American, but the person exercising control must be (substantial owner).
For the non-US account holder, you must complete the non-US TIN in the format of the country that issued it, as well as the country that issued it.If you do not have this information, you must fill in the value "NA" (Not Available) as TIN and in issuing country ES.
For the substantial owner, should complete the US TIN.If you do not have one, you can justify your absence using any of the numerical codes provided by the IRS, insofar as any of the circumstances indicated by the IRS apply to you.
In case the account holder is a FATCA103 legal entity.In this case, the holder must not be a US citizen.For the account holder, the non-US TIN must be completed in the format of the country that issued it, as well as the country that issued it.If you do not have this information, you must fill in the value NA as TIN and ES as issuing country.
In case the account holder is a FATCA104 legal entity , the US TIN of the account holder must be completed.If you do not have one, you can justify your absence using any of the numerical codes provided by the IRS, insofar as any of the circumstances indicated by the IRS apply to you.
Reminder for the case of Cancellation Submission Messages.DocTypeIndic FATCA3:
It is important to note that the above only applies to FATCA1, FATCA2 and FATCA4 registrations.The FATCA3 record must contain exactly the same data as originally submitted, otherwise you will receive a notice from the IRS for non-identical deletion.Therefore, in case of FATCA3, the TIN will be resubmitted in exactly the same form as it appears in the record to be deleted.
More information on the correct structure of the US TIN can be found at the following link on the AEAT website:
With respect to the date of birth of the financial account holder (or, where applicable, the persons exercising control), if this field is not completed and left blank, a warning message will be displayed indicating this, so the appropriate actions can be taken to try to obtain this information.This notice shall be displayed irrespective of whether or not the US TIN is filled in.
In the case of units marketed by means of a system of recording in global accounts on behalf of third parties, the provisions of paragraph 2 of this point shall apply.Therefore, the investment fund will be considered as a Spanish financial institution not obliged to report information if the requirements set out in Annex II of the Agreement are fulfilled, with the obligations falling on the marketer in whose name the units are registered.
In the case of units which are entered in the register of the management company in the name of the unit-holder, the provisions of paragraph 1 of the aforementioned letter shall apply.
Yes.The marketer's obligation in this case is independent of whether or not the country where the foreign collective investment institution is established has signed a FATCA Agreement with the United States of America.
This type of entities should be included in the category of "Non-American Organisation other than a foreign Financial Institution" and due to its own nature it can be understood that they fulfil the requirements set out in subsection B.4.a) of Section VI of Appendix I of the Agreement, and therefore could be considered to be assets.
Both types of companies conduct insurance activity.Therefore, according to the provisions of Article 1.1 of the Agreement and of Article 2.3 of the Order, they shall be considered financial institutions (Specific Insurance Company) only in the case that they offer products that, according to the Agreement, could be considered insurance contracts with a cash value or an annuities contract, or if they are required to make payments in relation to said contracts.
Furthermore, and notwithstanding the provisions of letter q), Paragraph 1 Article 1 of the Agreement, Section I.C.2. of Appendix II of the Agreement states that mutual insurance companies whose members are all employees and whose protection partners or promoters are companies, institutions or sole proprietors in which they provide their services and the services they provide are only a result of insurance agreements among the former and that latter, that is, business mutual insurance companies, are considered Spanish financial institutions not required to communicate information, with the status or condition of exempt effective beneficiary.The foregoing can be considered applicable, mutatis mutandis, to voluntary social insurance organisations considered comparable.
As for the requirement to register, mutual insurance companies and voluntary social insurance organisations are not required to register with the US Tax Administration if they do not have the status of specific Insurance Company for the purposes of the Agreement, or if, despite having this status, meet the requirements to be considered Spanish financial institutions not required to communicate information based on what is stated in the previous paragraph.
With regard to EPSV pension plans, it should be considered that they are included in Paragraph C.1 Section I of Appendix II of the Agreement, with the status or condition of exempt effective beneficiary.
Article 7(6) of the Order states that documentary evidence, declarations by the holder and other information used in the application of the due diligence precepts must be made available to the tax administration.
For this purpose, the original, a certified copy or a photocopy (including a microfiche, scanned copy or other similar means of electronic storage) may be retained.
Any documentation that is stored electronically must be made available to the tax administration in paper format.
The requirement states that the financial institution may not have a fixed place of business outside Spain.For this purpose, premises outside Spain that are used exclusively for administrative functions and are not advertised to clients are not considered a fixed place of business outside Spain.
An account whose sole ownership is vested in a deceased person's estate will not be considered as a financial account if the Spanish financial institution where it is opened holds a copy of the will or death certificate of the deceased.
The partial exemption applicable to entities can be considered to meet the requirement of sub-section ii of section VI.B.4(i) of Annex I of the US-Spain FATCA Agreement.
These terms are defined in Article 1(1)(l) and (m).The Agreement, comprising both reporting and non-reporting financial institutions.
Therefore, the provisions of Section V.B of Annex I to the Agreement would also apply in respect of those financial institutions not required to report information because they are identified as such in Annex II to the Agreement or are so identified under the applicable laws of the jurisdiction concerned.
With respect to pre-existing accounts held by a non-US entity other than a foreign financial institution, Article 8(2)(c) of Order HAP/1136/2014 provides that the Spanish reporting financial institution may choose to first apply any of Annex I, Section IV(D)(4)(a), (b) or (c) of Annex I, Section IV(D)(4) of the Agreement.
Based on the foregoing, the Financial Institution may first reasonably determine that the Account Holder is a non-U.S. entity other than a Foreign Financial Institution that is an active entity based on information available to it or publicly available to it, in which case it need not take any of the other actions set forth in such section IV.D 4, and the Account is not considered a Reportable U.S. Account.
Alternatively, the financial institution may first determine that none of the Controlling Persons is a U.S. citizen or tax resident based on the information obtained and that it maintains under the procedures at knows its customer under anti-money laundering legislation, in which case it need not take any further action under Section IV.D 4 of Annex I of the Agreement, and the account is not a U.S. reportable account.
If the provisions of the previous two paragraphs do not apply, the financial institution must obtain a statement from the account holder certifying whether the account has an active or passive status.
If a declaration is obtained from the account holder certifying that the entity holding the account has active status, the financial institution does not have to take any further action under Annex I, Section IV(D)(4) of the Agreement, the account not being a reportable US account.
If a statement from the account holder certifying that the entity holding the account has passive status is obtained, the financial institution must determine whether the persons in control of the account are citizens or residents of the United States of America, based on the procedures referred to as know your customer under the anti-money laundering legislation, unless the account has a balance in excess of US$1,000,000, in which case a statement from the account holder or persons in control of the account must be obtained.If in any of these cases it is determined that one of the parties who exerts control is grateful or resident of the United States of America, the account is treated as U.S. account subject to communication of information.
However, the procedures for the review of pre-existing entity accounts shall be completed within the deadlines established by Annex I, Section IV(E) of the Agreement, and those accounts identified as such up to 31 December 2014 shall be reported on Form 290 for 2014.
With respect to new Accounts owned by a non-U.S. entity other than a Foreign Financial Institution, based on the provisions of Annex I, Section V.B of the Agreement, the Financial Institution may reasonably determine that the Account Owner is a non-U.S. entity other than a Foreign Financial Institution that is an active entity based on information available to it or publicly available to it, in which case it need not take any of the other actions set forth in Annex I, Section V.C.2, and the Account is not a Reportable Account.
If not, the financial institution must obtain a statement from the entity holding the account certifying its active or passive status.
If a declaration is obtained from the account holder certifying that the entity holding the account has active status, the financial institution does not have to take any further action under C.2 above and the account does not qualify as a reportable US account.
If a statement from the account holder certifying that the entity holding the account has passive status is obtained, the financial institution must identify the persons exercising control over the account following the procedures referred to as know your customer under anti-money laundering legislation and must determine whether any of them are U.S. citizens or tax residents based on a statement from the account holder or such persons.
In the event that it is determined on the basis of the statement obtained that any of the controlling persons is a U.S. citizen or tax resident, the account will be treated as a U.S. reportable account.
For new accounts opened between 1 July 2014 and 31 December 2014, if the account cannot be determined to be an active entity as set out above and a statement from the account holder or controlling persons is not obtained, the financial institution must rely on information obtained and maintained by it under the procedures known as to its customer under anti-money laundering legislation for the purpose of determining whether the financial account is a reportable US account.If, subsequent to the filing of Form 290 for 2014, the financial institution obtains the statement referred to in the preceding paragraphs and determines from its contents that it should have included the account in Form 290 or that the declared account was not a U.S. account subject to reporting, it must file a supplementary Form 290 statement for that year 2014.
In calculating the balance or value of an account at the time immediately prior to its termination, the Financial Institution may choose to determine such balance or value within five business days of receipt of the order to terminate the account or to take as such the most recent balance or value that can be obtained after receipt of the order to terminate the account, which may be dated prior to the order to terminate the account.
Yes.In accordance with Article 3(4) of the Agreement, the fact that such information is not on file with the financial institution does not alter the obligation to include the reportable US account on Form 290.
No. The concept of a sponsoring entity is defined in the regulations issued by the United States Treasury, and has been incorporated, with appropriate modifications, into sub-paragraphs C and D of section II of Annex II to the Agreement, in relation to the entities that, in compliance with the requirements set out in Annex II indicated above, agree to comply with the FATCA obligations corresponding to a sponsored investment entity, controlled foreign corporation or a sponsored, closely held investment vehicle, which assume the liability arising from any possible breaches.
In any case, in order to file an information return on behalf of a third party, the necessary representation must be accredited in accordance with the general rules established in the General Tax Law and its implementing regulations.
In section VI.C of Annex I provides that for the purposes of determining the aggregate balance or value of accounts, the Spanish financial institution obliged to report information shall be obliged to aggregate all the accounts of the account holder opened with the same or related entities, provided that the requirements set out in that paragraph are met.
Therefore, for purposes of applying the balance or value thresholds and determining whether an account is a higher value account, the financial institution must aggregate (if eligible) the balances of all deposit accounts, custodial accounts, cash value insurance contracts, annuity contracts, and equity or debt interests in certain entities held by the account holder with that institution or its related entities.
However, some of the balance or value thresholds defined in Section II(A) of Annex I to the Agreement refer to specific categories of financial accounts and should therefore be applied specifically to those categories.Thus, for example, where a Spanish reporting financial institution maintains two pre-existing accounts held by the same natural person, one being a custody account with a balance or value of USD 20,000 and the other a deposit account with a balance of USD 25,000, it must aggregate these balances in accordance with the above rules.If such financial institution elects to apply the balance or value thresholds, it shall treat such accounts as not subject to review, identification or disclosure because their aggregate balance does not exceed the threshold set out in Annex I, Section II(A)(1) of Annex I to the Agreement.
IF in the same scenario above the balance of the deposit account were USD 40,000, the aggregate balance or value of the deposit account together with that of the custody account would exceed the above threshold.In such a case, since the deposit account would have a balance of less than USD 50 000, the threshold defined in Annex I, Section II(A)(4) above would apply to such an account and therefore only the custody account would be an account subject to review, identification or disclosure.
The third additional provision of Royal Decree 1021/2015 establishes, in relation to pre-existing accounts subject to disclosure under the FATCA Agreement between the United States and Spain, the obligation for Spanish financial institutions to obtain during 2017 the US TIN of the persons who hold ownership or control of such accounts if they had not previously obtained it.In the event that the Spanish financial institution has not complied with this obligation, failure to obtain and report the US TIN for pre-existing reportable accounts in relation to the years 2017, 2018 and 2019 will NOT be considered as a "significant failure" of a Spanish financial institution, provided that the following three obligations are met:
the date of birth of persons owning or controlling such accounts whose US TIN has not been communicated is obtained and communicated;
an annual requirement is issued to such persons to provide the US TIN;and
the Spanish financial institution performs a search in its electronic files of the US TINs pending to be obtained, prior to the filing of form 290 relating to the 2017 financial year.
For a sponsored entity or a sponsored investment vehicle to be considered a financial institution that is not required to report information, it must be a sponsored investment entity, a sponsored controlled foreign company or a sponsored investment vehicle with a reduced number of investors as defined in Annex II, Section II, paragraphs C and D of the Agreement and have agreed with a sponsoring entity that the latter will comply with the obligations referred to in those paragraphs on their behalf and on the terms set out therein.
The IRS in its recent Notice (Notice 2023-11) offers a relaxation to Financial Institutions, which have not been able to obtain the US TIN, in relation to certain pre-existing accounts that are US reportable accounts.The main purpose of Notice 2023-11 is that the failure to report the US TIN should not result in financial institutions being deemed to be in material breach of their FATCA obligations.To do so, financial institutions should follow the procedures outlined in the Notification.
This relaxation applies to submissions made in 2023, 2024 and 2025.
For more information, the full content of the Notice (Notice 2023-11) can be found at the following link:
Foreign Financial Institution Temporary U.S. Taxpayer Identification Number Relief (irs.gov)
Pursuant to sections 3.03 and 3.04 of Notice 2023-11, a financial institution may report a pre-existing account without a U.S. TIN and no significant noncompliance will be determined if it meets the following conditions:
State the date of birth of the natural person holder and controlling person for whom the US TIN has not been obtained.
Pursuant to sections 3.03 and 3.04 of Notice 2023-11, a financial institution may report a pre-existing account without a U.S. TIN and no significant noncompliance will be determined if it meets the following conditions:
- the IRS website address with the link to the IRS FAQs (https://travel.state.gov/content/travel/en/international-travel/while-abroad/Joint-Foreign-Account-Tax-Compliance-FATCA-FAQ.html)
- a copy of the above FAQs and either a copy of the IRS's relaxed procedures for such citizens or the following address for such procedures (https://www.irs.gov/individuals/international-taxpayers/relief-procedures-for-certain-former-citizens).
This obligation will start to be enforceable for submissions in 2024.
In any case, the financial institution must retain records of the policies and procedures applied to comply with these annual requirements until the end of the year 2029.
It conducts an annual electronic search of its databases for missing US TINs.
This obligation will become enforceable for submissions in 2024.
If the US TIN is not provided, report with the explanatory codes included by the IRS in its FAQ Q6 Reporting (see question How to fill in the TIN (US TIN) field when the TIN is not available).
It is noted that this notification does not preclude the US competent authority from finding material non-compliance for failure to satisfy obligations other than obtaining and reporting the US TIN for pre-existing accounts.
For more information, the full content of the Notice (Notice 2023-11) can be found at the following link:
Foreign Financial Institution Temporary U.S. Taxpayer Identification Number Relief (irs.gov)