Tax Agency: 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.

Without prejudice to the foregoing, US Treasury regulations may be applicable in certain cases, for example in those referred to 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 section d) of article 3 of the Order will be carried out by electronic means on the website that the US Tax Administration Agency (IRS) has created for this purpose ( https:// sa.www4.irs.gov/fatca-rup/ ).

Registration, like the rest of the obligations of Article 4 of the Agreement, is generally mandatory for all those entities that are considered a Spanish financial institution obliged to communicate information. If such consideration is not taken, as for example in the case of real estate collective investment institutions, 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 an obligation to communicate information, for sponsoring entities, sponsored investment entities, sponsored controlled foreign companies and, where applicable, instruments sponsored investment projects with a small number of investors, to which sections C and D of section II of Annex II of the Agreement refer and in the terms provided for in said annex, as well as for those entities that invoke their status or condition as an institution. foreign financial institution considered compliant, when required by the applicable regulations issued by the United States Treasury.

With the noted exceptions, entities identified in Annex II of the Agreement will not be required to register, for example, pension funds, as well as certain collective investment instruments that meet the requirements set forth therein.

Regarding the deadline to register and obtain the corresponding Global Intermediary Identification Number (GIIN), although in general the FIs must provide said GIIN to avoid withholding on payments made Since July 1, 2014, this deadline is extended until January 1, 2015 for FIs from a country with which the US. USA. has signed a FATCA Model 1 Agreement, as is the case of Spain.

To entities that meet the requirements of the applicable regulations issued by the United States Treasury for consideration as an exempt beneficial owner, as an excepted foreign financial institution or as a foreign financial institution considered compliant, which, by application of the Agreement, do not have the consideration of a Spanish financial institution obliged to communicate information.

No, it can be any type of entity as long as it has adequate procedures for compliance with due diligence measures and the conservation of documents.

In the case of an investment fund, although it may be common for the managing entity, as its representative and by application of article 5.3 of the Agreement, to be responsible for compliance with the obligations derived from the Agreement, nothing prevents compliance with the obligations is carried out through another entity, provided that the provisions of said article 6 are complied with. However, if the investment fund is eligible for the category of financial institution considered compliant for the purposes of being a financial institution not required to communicate information, both the fund and its sponsoring entity must comply with the requirements indicated in this regard in Section II of Annex II to the Agreement.

The date to determine if an account is new, whether the owner is a natural person or an entity, is July 1, 2014 in both cases.

Notwithstanding the above, section 1 of article 8 of the Order establishes that new accounts opened after June 30, 2014 by clients who are natural persons who keep one or more accounts open in the Spanish financial institution obliged to communicate information As of that date, they may be considered pre-existing accounts as long as the requirements set forth therein are met.

In the case of pre-existing individual accounts that are lower value accounts, the review must have been completed by June 30, 2016.

In the case of pre-existing individual accounts that are higher value accounts, the review must have been completed by June 30, 2015.

In the case of pre-existing accounts of an individual that were not high value accounts as of June 30, 2014 but at the end of 2015 or any subsequent calendar year had become such, the enhanced review procedures must be concluded within the period of 6 months, counted from the conclusion of the calendar year in question.

For pre-existing entity accounts with a balance or value exceeding US$250,000 as of June 30, 2014, the review must be completed by June 30, 2016.

For pre-existing entity accounts whose balance or value as of June 30, 2014 did not exceed US$250,000 but exceeds US$1,000,000 as of December 31, 2015 or any subsequent calendar year, the review procedures They must be concluded within a period of six months, counted from the conclusion of the calendar year in question.

Those pre-existing financial accounts that, in application of the aforementioned review procedures, are identified as US accounts subject to reporting must be included in form 290 corresponding to 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 communicate information will have to convert into US dollars the thresholds expressed throughout appendix I of the Agreement, applying the latest exchange rate published the calendar year previous to the one in which the financial institution determines this 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 purposes of determining whether or not it exceeds the thresholds established in Annex I of the Agreement and for the purposes of declaring the balance of the account in form 290, the balance or total value will be attributed to each account holder. of each financial account. This rule is also applicable for the purposes of balance aggregation.

However, the existence of a joint account subject to communication of information does not imply that information must be included in form 290 regarding the other holders of the declared accounts with respect to whom information must not be reported in application of the Agreement and its Order of development.

In the aforementioned case, the information related to the specific US person who exercises control over the entity that owns the US account subject to communication of information, in addition to the information related to said entity that holds the account, must be included in Form 290. However, the balance or declared value of the financial account held by the non-US entity will be the total corresponding to it, without being subject to any type of distribution or proration.

In the indicated case, the US entity must be identified as the account holder, since it is said specific US person that holds ownership of the account in accordance with letter ee) of Article 1 of the Agreement.

The scheme that presents the question is the following:

Form 290 will include the information related to each US account subject to communication of information and, based on said element, the information related to the account holders and, where applicable, the persons who exercise control will be recorded. about said owners and that determine that said account must be declared.

Therefore, in the indicated case, along with the information related to the account, which will appear with its balance or total value, both the two specific US persons and the non-US entity that is not a IF and is passive in nature. Furthermore, with respect to the non-US entity, its nature must be indicated as indicated in number 17 of Annex I of the Order, identifying the specific US person as the person who exercises control over said owner.

No. According to the definition contained in letter nn) of section 1 of article 1 of the Agreement, the persons who exercise control will be those natural persons who have control, direct or indirect, of the account holder. Therefore, an entity cannot be identified as the person exercising control in the indicated case.

The expression persons exercising control should be interpreted in a manner consistent with the Recommendations of the Financial Action Task Force (FATF). In the case presented, 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 identification number of the entity that owns the account ( Global Intermediary Identification Number , GIIN) may be taken into consideration, verified in the list published for this purpose by the US Tax Administration Agency or based on in other information that is public or that is available to the Spanish financial institution required to communicate information.

For its part, subsection b) of section D.3. of section IV of Annex I to the Agreement refers to the case in which, as a consequence of the procedure followed in accordance with the provisions of section 2 of article 5 of the Agreement (significant non-compliance), the Spanish FI or another partner jurisdiction holding the account is treated by the US Tax Administration as a non-participating FI. In such case, the account will not be a reportable US account, but payments made to the account holder will be reportable as regulated in Article 4.1(b) of the Agreement.

It should be understood to refer to a residence certificate issued by a State body authorized for this purpose, such as, for example, an administration or body thereof, or a local entity of the country in which the beneficiary claims residence.

In relation to this type of group life insurance, the Spanish financial institution obliged to communicate information may treat it as an account not subject to communication of information, until the date on which the corresponding benefit must be paid to the employee or beneficiary, as long as receive a certificate from the company that proves that none of the employees covered by the insurance is a US person (not being obliged to review all the documentation that the company has in order to determine whether the status of the account holder is incorrect or not reliable) and the following requirements are met:

The policyholder is the company and said insurance covers at least 25 employees.
Covered employees have the right to receive the corresponding benefit and to designate beneficiaries in the event of a death contingency.
The total amount payable to the employee or beneficiary does not exceed one million dollars.

As indicated in Order HAP/1136/2014, in the event that the person submitting the declaration acts as sponsoring entity in accordance with the provisions of section 2 of article 1 of the same, the information referred to in sections 1 to 6 of the annex to said Order must be provided both with respect to the sponsored investment entity and the entity that acts as sponsoring entity.

Regarding the date of birth of the holder of the financial account (or, where applicable, of the persons who exercise control), if it is not completed by leaving said field blank, a warning message will be displayed indicating this circumstance, in order to carry out the appropriate actions to try to obtain said information. The aforementioned notice will be displayed regardless of whether or not the US NIF is completed.

Please note that, in order to benefit from the flexibility allowed after the publication by the IRS of Notice 2023-11, it is an essential requirement to complete the date of birth of the natural person holder or the controlling person.

You can consult the FAQ What obligations must a financial institution meet in order to benefit from the flexibility allowed by Notice (Notice 2023-11) published by the IRS?

Yes, the US TIN (NIF) is mandatory according to the provisions of Royal Decree 1021/2015, Third Additional Provision, so all efforts must be made in accordance with Due Diligence to obtain it.

Accordingly, the US TIN of the Account Holder or, where applicable, the persons in control (Substantial Owners) must be reported.

The TIN of the Account Holder or Substantial Owner must follow the US format. If you do not have it, you must put the “TIN” tag in the XML and you can complete the TIN with some of the numerical codes provided by the IRS (Internal Revenue Service) if the reason for your absence corresponds to any of the specified circumstances by this organization (note the question: How is the TIN field completed when it is not available?).

In this sense, it is recommended to consult the frequently asked questions Q3 and Q6 published by the IRS (FATCA-FAQs General-Reporting), at the following links:

We are a Model 1 FFI and the TIN relief provided under Notice 2017-46 regarding treatment of preexisting accounts will expire with the reporting of the 2019 data. Do we need to report all required TINs when we provide 2020 and future tax year data?

We are a Model 1 FFI and have not obtained a US TIN for an account as required in the 2020 data. Are there TIN codes we can use to populate the TIN field where we have not yet been able to obtain the TIN due to specific circumstances?

US TIN format

The content of the TIN label when it is American must conform to the following formats:

Nine consecutive digits without hyphens or other separations (e.g., “123456789”)
Nine digits with two dashes, a dash after the third digit and another dash after the fifth digit (e.g., “123-45-6789”)
Nine digits with a hyphen after the second digit (e.g., “12-3456789”)
It will not be accepted when completed in the following way: 000000000 or when certain numerical patterns such as 123456789 and 987654321 are entered.

Consequences of non-completion

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 determination of material non-compliance with the FATCA Agreement; although the IRS will take into account the facts, circumstances and causes that have determined the non-completion of the TIN, and whether the financial institution has adequate procedures and the efforts made to obtain said information.

However, if it is finally concluded that said situation constitutes a significant breach of the FATCA Agreement, and said errors are not corrected before the IRS adopts the appropriate measures, such as the withdrawal of the Intermediary Identification Number of the financial institution (GIIN) before the IRS, from that moment on, the 30% withholding will apply to payments of US origin made to the financial institution

In May 2021, the IRS published FAQ Q6 Reporting, including a list of codes detailed below.

In January 2023, this frequently asked question has been modified by updating the aforementioned list of codes, which are also included in this FAQ.

Without prejudice to the detail explained below, it must be taken into account that, with respect to the codes to be used to complete the TIN label:

During the year 2023, submissions that use 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.
As of 01/01/2024, only submissions will be accepted with the codes updated after Notice 2023-11 (published in January 2023 update FAQ 6 Reporting).

In the event that the US TIN of the Account holder or the person exercising control (Substantial Owner) could not be obtained, and said TIN is mandatory, the following numerical codes provided by the IRS, provided that any of the circumstances listed below occur:

1.2.1 Preexisting Accounts:

Preexisting account of a natural person whose indications of being American are only the place of birth United States: “222222222“/ “222-22-2222“ / “22-2222222“.

Pre-existing account of a legal or natural person whose indications of being American are other than the place of birth United States: “444444444“ / “444-44-4444“ / “44-4444444“, with any of the following events also occurring:
- A change in circumstances has occurred 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 initially did not exceed the declaration threshold and has subsequently exceeded it, without having obtained a self-certification or other documentation.
Specific cases for pre-existing accounts:
1. Pre-existing account of a legal entity with a balance greater than $1,000,000 for whose foreign ENFP holder no self-certifications have been obtained, and no US evidence has been identified in relation to its controlling persons. “666666666“ / “666-66-6666“ / “66-6666666“.
2. Pre-existing accounts for which the TIN is not available and the account has been inactive or “dormant” but is still above the reporting threshold, also known as “dormant accounts”: “777777777“ / “777-77-7777“ / “77-7777777“.
  
  For reference, the United States defines “dormant account” in US Treasury Regulation §1.1471-4(d)(6)(ii).

1.2.2 New Accounts:

New account of a natural person whose place of birth is the United States: “333333333“ / “333-33-3333“ / “33-3333333“, with any of the following events also occurring:
- A change in circumstances has occurred that determines that the self-certification initially obtained when opening the account is considered incorrect or unreliable, and a new self-certification has not been obtained.
- At the time of its opening, the account did not exceed the declaration threshold and has subsequently exceeded it, without having obtained a self-certification.

New account of a legal or natural person whose indications of being American are other than the place of birth United States: “555555555“ / “555-55-5555“ / “55-5555555“, with any of the following events also occurring:

- A change in circumstances has occurred 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 its opening did not exceed the declaration threshold and has subsequently exceeded it, without having obtained a self-certification or other documentation.

The use of these numerical codes provided by the IRS does not exempt the entity from continuing to develop the efforts that are necessary in order to obtain the US TIN. For example, you must contact the account holder annually to request the US TIN.

In any other case, the code AAAAAAAAA can be used.

Additionally, entering any of the above codes will not prevent the IRS from reporting an error indicating that the entered value is invalid for a particular record, given that the US TIN will still not be properly completed.

NEW for 2023 and following years:

The IRS in its recent Notice (Notice 2023-11) offers flexibility to Financial Institutions, which have not been able to obtain the US TIN, in relation to certain pre-existing accounts that are reportable US accounts, if they follow the procedures indicated in said notification. (See questions What is the purpose of Notice 2023-11 published by the IRS? Does it apply to all types of accounts? and What obligations must a financial institution comply in order to benefit from the flexibility permitted by Notice 2023-11 published by the IRS? ).

Likewise, the IRS has updated frequently asked question Q 6 Reporting in January 2023, with the updated numerical codes to complete on the TIN label.

During the year 2023, submissions that use 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.
As of 01/01/2024, only submissions will be accepted with the codes updated after Notice 2023-11 (published in January 2023 update FAQ 6 Reporting), 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 NIF) field codes and their requirements and conditions are as follows:

1.2.1 Preexisting Accounts:

“222222222“/ “222-22-2222“ / “22-2222222“: Pre-existing account of a natural person whose indications of being American are only the place of birth United States, different from an account declared with the code “000222111”. This code takes priority if any other code (other than 000222111) would also be applicable.
“000222111” / “000-22-2111” / “00-0222111”: Pre-existing depositary account of a natural person whose indications of being American are only the place of birth, United States. Additionally, the FI must determine that the account holder is a resident of the jurisdiction where the account is held 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 priority if any other code could also be applicable.
“444444444” / “444-44-4444” / “44-4444444” : Pre-existing account of a legal or natural person whose indications of being American are other than the place of birth in the United States and in addition any of the following facts occur:
- A change in circumstances has occurred that has resulted in one or more US indicia being associated with the account or the self-certification or other documentation initially obtained being deemed incorrect or unreliable, with no valid self-certification or other documentation after the change of circumstances.
- The account did not exceed the declaration threshold on the determination date provided for in the Agreement between the Kingdom of Spain and the United States of America (FATCA) and developed in the Order creating model 290, and, subsequently, it has exceeded it, not having obtained a self-certification or other documentation.
Specific cases for pre-existing accounts:
1. “ 666666666 “ / “ 666-66-6666 “ / “ 66-6666666 : Pre-existing account of a legal entity with a foreign ENFP holder with one or more controlling persons with respect to which no self-certifications have been obtained, and no US indicia have been identified in relation to any of the controlling persons.
2. “777777777” / “777-77-7777” / “77-7777777”: Pre-existing inactive or “dormant” account. A pre-existing account for which a TIN is not available and which has been inactive or “dormant” but is still 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 not had any financial activity for three years, except for interest accounting. If several TIN codes could be applicable to an account, the other applicable code will take priority.

1.2.2 New Accounts:

“333333333” / “333-33-3333” / “33-3333333”: New account of a natural person whose place of birth is the United States, and any of the following facts also occur:
- A change in circumstances has occurred that determines that the self-certification initially obtained when opening the account is considered incorrect or unreliable, and a new self-certification has not been obtained.
- At the time of its opening, the account did not exceed the declaration threshold and has subsequently exceeded it, without having obtained a self-certification.
“555555555” / “555-55-5555” / “55-5555555”: New account of a legal or natural person whose indications of being American are other than the place of birth in the United States, and any of the following facts also occur:
- A change in circumstances has occurred 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 its opening did not exceed the declaration threshold and has subsequently exceeded it, without having obtained a self-certification or other documentation.

1.2.3 Other cases different from the above:

“999999999” / “999-99-9999” / “99-9999999”: This code will be used for any account for which the FI cannot obtain the TIN and none of the other codes described above are applicable. Use of this code implies that the FI has completed its review of accounts without US TINs and has applied TIN codes to records where appropriate in good faith.

The use of these numerical codes provided by the IRS does not exempt the entity from continuing to develop the efforts that are necessary in order to obtain the US TIN.

Additionally, entering any of the above codes will not prevent the IRS from reporting an error indicating that the entered value is invalid for a particular record, given that the US TIN will still not be properly completed.

The error notification will provide 120 days to correct the incidents, in accordance with Article 5.1 “Minor errors and administrative errors” of the Agreement between the Kingdom of Spain and the United States of America (FATCA) (section 4.2.2 of the Authorities Agreement Competent between the United States and Spain). Consistent with the FATCA Agreement (and ACC if applicable), if the TIN is not provided within 120 days, the United States will evaluate the data received (including whether the FI meets the conditions set out in Notice 2023-11) and if there is a significant non-compliance based on the facts and circumstances (See question Reporting FAQ #3 where the procedure for significant non-compliance is detailed).

In the event that the legal entity account holder type is FATCA101, FATCA102 or FATCA103 (XML AccountHolderType tag) the holder may not be US.

In that case, you must complete the non-US TIN in the XML “TIN” tag in the format of the country that issued it, as well as the country that issued it in the “Issuedby ” tag.

In the case of FATCA104 account holder type, the holder is always American.

Thus, we distinguish between the following cases:

If the account holder is a legal entity type FATCA 101 or FATCA 102 . In this case, the owner may not be American, but the person who exercises control must be (substantial owner)
- For the account holder when they are not US , they 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 complete the value “NA” (Not Available) as your TIN and ES in the issuing country.
- For the person who exercises control (substantial owner) , must complete the US TIN. If you do not have it, you can justify your absence with some of the numerical codes provided by the IRS, to the extent that you fall into any of the circumstances defined by the IRS.
In the event that the account holder is a legal entity type FATCA103 . In this case, the owner may not be American. 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 your TIN and ES in the issuing country.
In the event that the account holder is a legal entity type FATCA104 , the US TIN of the holder must be completed. If you do not have it, you can justify your absence with some of the numerical codes provided by the IRS, to the extent that you fall into any of the circumstances defined by the IRS.

Reminder for Cancellation Submission Messages. DocTypeIndic FATCA3:

It is important to note that the above will only apply to FATCA1, FATCA2 and FATCA4 records. THE FATCA3 record must contain the exact same data that was originally submitted, otherwise you will receive a non-identical deletion notification from the IRS. Therefore, in the case of FATCA3, the TIN will be presented again in exactly the same way that it appears in the record that you want to delete.

You can obtain more information about the correct structure of the US TIN at the following link on the AEAT website:

US TIN (NIF) validations

Regarding the date of birth of the holder of the financial account (or, where applicable, of the persons who exercise control), if it is not completed leaving said field blank, A warning message will be displayed indicating this circumstance, so that you can take the appropriate actions to try to obtain said information. The aforementioned notice will be displayed regardless of whether or not the US TIN is completed.

With respect to shares that are marketed through a registration system in global accounts on behalf of third parties, the provisions of section 2 of said letter will apply. Therefore, the investment fund will be considered a Spanish financial institution not obliged to communicate information if the requirements set out in Annex II of the Agreement are met, with the obligations corresponding to the marketer in whose name said units are registered.

Regarding the shares that are registered in the registry of the managing entity in the name of the participant, the provisions of section 1 of said letter will 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.

Section 6 of Article 7 of the Order establishes that the documentary evidence, the declarations of the owner and other information used in the application of the due diligence precepts must be available to the Tax Administration.

For these purposes, 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 able to 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 exclusive ownership corresponds to a relict estate will not be considered a financial account if the Spanish financial institution in which it is opened has in its possession a copy of the will or death certificate of the deceased.

It can be considered that the partial exemption applicable to entities implies compliance with the requirement provided for in subsection ii of section VI.B.4 letter i) of Annex I of the FATCA Agreement between the US and Spain.

These terms are defined in letters l) and m) of article 1.1. of the Agreement, including both financial institutions obliged to communicate information and financial institutions not obliged to communicate information.

Therefore, the provisions of section VB of Annex I to the Agreement would also be applicable with respect to those financial institutions not required to communicate information because they are identified as such in Annex II or have such consideration in accordance with the applicable regulations of the jurisdiction of which be treated.

With respect to pre-existing accounts whose ownership corresponds to a non-US entity other than a foreign financial institution, section 2.c) of article 8 of Order HAP/1136/2014 establishes that the Spanish financial institution obliged to communicate information may choose by first applying any of letters a), b) or c) of paragraph 4 of letter D of section IV of Annex I to the Agreement.

Based on the foregoing, the financial institution may first choose to reasonably determine that the entity holding the account is a non-U.S. entity other than a Foreign Financial Institution that is an active entity based on information in its possession or to which it can access because it is public, in which case you do not have to carry out any other of the actions provided for in said section IV.D 4, the account not being considered a US account subject to communication of information.

Alternatively, the financial institution may first determine that none of the persons exercising control are citizens or tax residents of the United States of America, based on the information obtained and maintained in application of the procedures called know your client in accordance with anti-money laundering legislation, in which case you do not have to carry out any other of the actions provided for in the aforementioned section IV.D 4 of Annex I to the Agreement, not being the account is a US reportable account.

If the provisions of the two previous paragraphs do not apply, the financial institution must obtain a statement from the account holder certifying whether it has active or passive status.

If a statement is obtained from the owner certifying that said entity that owns the account has active status, the financial institution does not have to carry out any other of the actions provided for in section 4 of letter D of section IV. of Annex I to the Agreement, the account not being a US reportable account.
If a statement is obtained from the account holder certifying that said entity holding the account has passive status, the financial institution must determine whether the persons who exercise control over it are citizens or residents of the United States of America. , based on the procedures called know your customer in accordance with anti-money laundering legislation, unless the account has a balance greater than 1,000,000 US dollars, in which In this case, you must obtain a statement from the account holder or from the people who exercise control over it. If in any of these cases it is determined that any of the controlling persons is a citizen or resident of the United States of America, the account will be treated as a US reportable account.

However, the procedures for reviewing pre-existing entity accounts must be concluded within the deadlines established by letter E of section IV of Annex I to the Agreement, and those accounts identified as such must be declared in form 290 corresponding to 2014 until December 31, 2014.

With respect to new accounts owned by a non-U.S. entity other than a foreign financial institution, the financial institution may reasonably determine that the entity holding of the account is a non-US entity other than a Foreign Financial Institution that is an active entity based on the information it has or can access because it is public, in which case it does not have to carry out any other of the actions provided for in the section C.2 of section V of annex I, the account not being an account subject to communication of information.

Otherwise, the financial institution must obtain a statement from the account holder entity certifying its active or passive status.

If a statement is obtained from the owner certifying that said entity that owns the account has active status, the financial institution does not have to carry out any other of the actions provided for in the aforementioned section C.2, not having the account the consideration of a US account subject to reporting.
If a statement is obtained from the owner certifying that said entity that owns the account has passive status, the financial institution must identify the people who exercise control over it following the procedures called know to your client in accordance with anti-money laundering legislation and must determine whether any of them are citizens or tax residents of the United States of America, based on a declaration from the account holder or from said people.

If, based on the declaration obtained, it is determined that any of the persons exercising control is a citizen or tax resident of the United States, the account will be treated as a US account subject to communication of information.

For new accounts opened between July 1 and December 31, 2014, if the entity cannot be determined to be an active entity as provided above and a declaration is not obtained from the account holder or persons exercising control, the financial institution must rely on the information obtained and maintained in application of the procedures called know your customer in accordance with anti-money laundering legislation for the purposes of determine whether the financial account is a reportable US account. If, after the presentation of form 290 corresponding to 2014, the financial institution obtained the declaration mentioned in the previous paragraphs and determined according to its content that it should have included the account in form 290 or that the declared account was not an account subject to communication of information, must present a complementary declaration of form 290 corresponding to said year 2014.

To calculate the balance or value of an account at the time immediately prior to its cancellation, the Financial Institution may choose to determine said balance or value within five business days following receipt of the order to cancel the account or consider as such, the most recent balance or value that can be obtained once the order to cancel the account is received, which may be dated prior to it.

Yes. In accordance with the provisions of section 4 of article 3 of the Agreement, the fact that said information does not appear in the files of the financial institution does not alter the obligation to include the US account subject to communication of information in form 290.

No. The concept of sponsoring entity is defined in the regulations issued by the United States Treasury, and has been incorporated, with the pertinent modifications, in sections C and D of section II of Annex II of the Agreement, in relation to those entities that, complying with the requirements indicated in the aforementioned Annex II, assume compliance with the obligations derived from FATCA that correspond to a sponsored investment entity, controlled foreign corporation or to a sponsored, closely held investment vehicle (sponsored investment entity, sponsored foreign company or sponsored investment vehicle with a small number of investors), which retain the liability derived from possible non-compliance.

In any case, to submit an informative 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 establishes that for the purposes of determining the balance or added value of the accounts, the Spanish financial institution obliged to communicate information will be obliged to aggregate all the accounts of the owner opened in the same or in related entities, provided that meet the requirements provided for in said section.

Therefore, for the purposes of applying the balance or value thresholds and determining whether it is a higher value account, the financial institution must aggregate (if the requirements are met) the balances of all deposit accounts, custody accounts, insurance contracts with cash value, annuity contracts and shares in capital or debt of certain entities that the owner of the same keeps open in said institution or in entities linked to it .

However, some of the balance or value thresholds defined in point A of Section II of Annex I to the Agreement refer to specific categories of financial accounts and should therefore apply specifically to those categories. Thus, for example, in the event that a Spanish financial institution required to communicate information maintains two pre-existing accounts whose owner is the same natural person, one of them being a custody account with a balance or value of 20,000 US dollars and the other a deposit account with a balance of US$25,000, you must add these balances according to the rules mentioned above. If said financial institution chooses to apply the balance or value thresholds, it will consider said accounts as not subject to review, identification or communication of information since their aggregate balance does not exceed the limit set in number 1 of letter A of Section II of Annex I to the Agreement.

IF in the same previous scenario the balance of the deposit account were 40,000 US dollars, the balance or aggregate value of the same together with that of the custody account would exceed the threshold expressed above. In such a case, since the deposit account would have a balance of less than 50,000 US dollars, the threshold defined in number 4 of the aforementioned letter A of section II of Annex I would be applicable to said type of accounts, so only the custodial account would be an account subject to review, identification or communication of information.

The third Additional Provision of Royal Decree 1021/2015 establishes, in relation to pre-existing accounts subject to communication of information under the provisions of the FATCA Agreement between the United States and Spain, the obligation of Spanish financial institutions to obtain during the year 2017 the US NIF of the people who have ownership or control of said accounts if they had not previously obtained it. In the event that the Spanish financial institution has not complied with said obligation, failure to comply with the obligation to obtain and communicate the US NIF of pre-existing accounts subject to communication of information will NOT be considered as “significant non-compliance” by a Spanish financial institution, in relation to for the years 2017, 2018 and 2019, as long as the following three obligations are met:　

the date of birth of the persons who have ownership or control of such accounts whose US NIF has not been communicated is obtained and communicated;　
An annual requirement is made to said persons to provide the US NIF; and　
The Spanish financial institution carries out a search in its electronic files for the US NIFs pending to be obtained, prior to the presentation of form 290 related to the 2017 financial year.

In order for a sponsored entity or a sponsored investment vehicle to be considered financial institutions not required to report information, it must be a sponsored investment entity, a sponsored controlled foreign company, or a sponsored investment vehicle with a small number of investors, depending on are defined in sections C and D of section II of Annex II of the Agreement and have agreed with a sponsoring entity that it fulfills, on their behalf, the obligations referred to in the aforementioned sections and in the terms indicated in the themselves.

The IRS in its recent Notice (Notice 2023-11) offers flexibility to Financial Institutions, which have not been able to obtain the US TIN, in relation to certain pre-existing accounts that are US accounts subject to reporting. The main purpose of Notice 2023-11 is that the failure to declare the US TIN does not give rise to financial institutions being considered to have incurred significant breaches of their obligations under the FATCA Agreement. To do this, financial institutions must follow the procedures indicated in the Notification.

(See question What obligations must a financial institution meet in order to benefit from the flexibility allowed by Notice 2023-11 published by the IRS?) .

This flexibility is applicable to presentations made in 2023, 2024 and 2025.

For more information, you can consult the full content of the Notification (Notice 2023-11) at the following link:

Foreign Financial Institution Temporary US Taxpayer Identification Number Relief (irs.gov)

In accordance with the provisions of sections 3.03 and 3.04 of Notice 2023-11, a financial institution may report a pre-existing account without a US TIN and no significant non-compliance will be determined if it meets the following conditions:

Declare the date of birth of the individual holder and controlling person for whom the US TIN has not been obtained.
Make an annual request to the holder, regarding any TIN not provided, with the conditions indicated below. To satisfy the annual requirement requirement, the financial institution may choose the form of communication that it considers most appropriate to contact the owner.

In the request or communication to the owner, the financial institution must necessarily include any of the following two contents:
- 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 begin to be enforceable for the presentations of the year 2024 .

In any case, the financial institution must keep records of the policies and procedures applied to comply with these annual requirements until the end of 2029.
Conducts an annual electronic search of its databases for missing US TINs. This obligation will become enforceable for filings in 2024.
Declare, if the US TIN is not provided, with the explanatory codes included by the IRS in its frequently asked question Q6 Reporting (see question How is the TIN (US NIF) field completed when it is not available? ?) .

It is noted that this notification does not prevent the competent US authority from finding significant non-compliance for not satisfying obligations other than those of obtaining and declaring the US TIN of pre-existing accounts.

For more information, you can consult the full content of the Notification (Notice 2023-11) at the following link:

Foreign Financial Institution Temporary US Taxpayer Identification Number Relief (irs.gov)

Section 3.05 of Notice 2023-11 also establishes a series of obligations for the AEAT, which affect financial institutions and account holders:

Financial institutions must not discriminate against US citizens who provide a US TIN.
US citizens residing in Spain must provide their US TIN to financial institutions upon request.
Financial institutions that have been identified by the competent US authority as potentially non-compliant will be subject to appropriate control measures by the AEAT, in order to ensure compliance with FATCA regulations.

When the entity that owns the account is a Non-Financial Entity and provides a declaration of tax residence in which the only information missing is whether it is active or passive.
No. The omission of stating the active or passive condition of the entity does not oblige the Financial Institution to block the account. All this without prejudice to contacting said entity to complete the declaration with said information.

It must be taken into account that the status of Passive Non-Financial Entity carries with it the obligation to identify the people who exercise control ( substantial owners ).
When the person who owns or controls the account provides a declaration of tax residence in which the tax identification number information is missing, if it has been issued by the United States of America.

Yes. The tax identification number is an essential piece of information in the aforementioned declaration and must always appear in it, in accordance with the provisions of section 2 of article 7 of Order HAP/1136/2014, of 30 June, by which Model 290 is approved.

In the event that the person who holds the ownership or control of the financial account continues without providing the required declaration, despite having made a total blockage of the same, the financial Institution must communicate the account with each and every person. of the data available at that time, as long as said circumstance continues. All of this, without prejudice to contacting said person to provide the aforementioned statement.

Technically, the label may be optional (as it involves a choice between several possible options of one type or another of information), but if it is legally required that said information be recorded in Form 290, the financial institution must complete the Model with the information it has about that information field, in any case. That is, if you have it, you cannot choose whether to declare it or not.

Section 2.a) of Article 2 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 (Law on tax compliance on foreign accounts), made in Madrid on May 14, 2013, establishes the information to be provided for each of the accounts subject to communication of information, being the Annex to Order HAP/1136/2014, of June 30, by which model 290 is approved, which details the content of the information that Model 290 must contain.

For example, the type of owner must be provided or whether a certain account is canceled must be indicated, even if this is information that in Form 290 corresponds to an optional label.

No. The amount of the “Inflow of funds” field of form 291 ( annual informative declaration of the Income Tax of non-residents. Accounts of non-residents without permanent establishment ) does not correspond to what must be declared in the "Interest" field of Form 290.

This is because the “Inflow of funds” field is defined in Form 291 as the total annual amount for the sum of notes to the credit of the account or sum of credits, which does not strictly correspond to the concept of interest. , being the total gross amount of interest paid or due on the account during the calendar year or other relevant reference period.

When entering or not recording this value in Form 290, it must be taken into account that:

The account number is not limited to the codes IBAN or ISIN, but may be different depending on the category of financial account in question.
Only in the event that the financial institution does not have any unique identifier, functional equivalent or numbering
that allows you to identify the declared financial account, you must enter the characters "NANUM".
If “NANUM” was recorded because the information was aggregated by client in its databases, the financial institution must provide the identifying numbers of the accounts individually considered as this aggregation is not correct in accordance with the applicable regulations.

In short, the use of the value “NANUM” must be considered exceptional, being recorded only in those cases in which the financial institution does not have the identification code of the financial account in question.

The regulatory basis for the above is found in the following sections:

Article 2.2.(2) of 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 (Foreign Account Tax Compliance Law), done in Madrid on May 14, 2013, when determining the information to be obtained and exchanged, it is indicated that this consists, among other things, of: " b) The account number." the account number (or equivalent functional element in the absence of an account number) ”

Similarly, the Annex to Order HAP/1136/2014, of June 30, which approves model 290, within the content of the annual informative declaration of financial accounts of certain US persons, establishes in its section 8 that the messages transmitted by financial institutions to the AEAT must contain:

“ Account number . It may consist of an IBAN code, ISIN, the reference number of a cash value insurance contract or an annuity contract or any other identifying code used by the financial institution obliged to communicate information

Therefore, the account number is not limited to the IBAN or ISIN codes, but can be different depending on the category of financial account, and only in the event that no unique identifier of the declared financial account is available. , you must enter the characters "NANUM" (no account number).

No. The NilReport element is optional.

However, in accordance with what is indicated in the Technical Manual for the presentation of Form 290, available at the Electronic Office, if a declaration is presented NilReport para un periodo, no podrá presentarse ninguna declaración con AccountReports para ese periodo hasta que el NilReport sea anulado (FATCA3). Del mismo modo si se han presentado AccountReports para un periodo no podrá presentarse una declaración NilReport para ese periodo hasta que todas las AccountReports sean anuladas (FATCA3). Por último, tampoco se acepta un segundo NilReport para una misma Institución Financiera (ReportingFI) y ejercicio, si ya se aceptó un NilReport.

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FAQs

What is the regulation applicable related to the Foreign Account Tax Compliance Act (FATCA)?

Which are the duties undertaken in the Agreement?

How is the duty to register complied with? What is the deadline for Spanish financial institutions to register?

To which entities does section 2.2 of article 1 of the Order refer?

Is it necessary for the third-party service providers referred to in Article 6 of the Order to be financial institutions as defined in the Agreement and the Order? What happens in the case of investment funds?

Which date must be taken as a reference to consider that an account is new? Does this date differ if the account belongs to an organisation?

What is the period within which Spanish financial institutions are required to communicate information to carry out the procedures for reviewing pre-existing accounts established in Annex I of the Agreement?

On form 290, from which year must the American accounts subject to information communication be included which are identified in application of the revision procedures established in relation to pre-existing accounts?

What exchange rate should be applied to determine the balance or value of an account denominated in a currency other than the US dollar?

In the case of joint accounts in which only one of its holders is an American, which balance should be attributed to this holder for the purposes of applying the norms of appropriate diligence and declaring this account on form 290?

Is it possible to identify on form 290 an entity as a person who exerts control over a non-American entity, other than a financial institution, that has passive character?

In the case that the determination of the people who exert control over an organisation is carried out according to the percentage of stock in the capital or of voting rights, what percentage should be used for these purposes?

Regarding article B. 4. b) (2) of section II of appendix I of the Agreement, is any kind of documentary evidence of the ones defined in article D. section VI of the Agreement admissible to these effects?

How must the documentary evidence of article D. 1. of section VI of appendix I of the Agreement be understood?

In relation to those group life insurances for employees who are not included in section III of appendix II of the Agreement is there any alternative with regard to the norms of due diligence of identification and obtaining of documentation?

What entity should be notified with regard to the Global Intermediary Identification Number (GIIN) in cases of unit trust institutions that register for the sponsored investment entities scheme?

Revised In what cases is it mandatory to include in form 290 the date of birth of the owner of a pre-existing account?

Is it mandatory to complete the TIN (US NIF) field? What is its format? What are the consequences of not completing it?

Revised How is the TIN (US NIF) field completed when it is not available?

If the Account Holder Type is FACTA 101, FACTA 102, FACTA 103 or FATCA 104, what are the steps to follow to complete the TIN (US NIF) field?

How is the date of birth of the financial account holder completed?

How should article 11.1 c) of the Order be interpreted when stocks are marketed partially through a register system in global accounts by third parties?

With regard to article 11.2 of the Order, does marketer's duty withstand if the foreign unit trust institution is established in a country that has not signed a FACTA Agreement with the US?

Of the entities that the Agreement refers to, in which category fall the communities of property owners constituted in the scheme of horizontal property?

How are mutual insurance companies and voluntary social insurance organisations (EPSV) treated under FATCA? In which category of Appendix II of the Agreement are EPSV pension plans classified?

Is it obligatory to keep the originals of the holder's tax returns and of the documentary evidence?

How should the requirement set out in letter b) of point A.1 of section II of Appendix II of the Agreement be interpreted with regard to Small Financial Institutions with local clientele?

What treatment must be given to an account whose exclusive ownership corresponds to a deceased person's estate?

How is it determined whether a pre-existing account whose ownership corresponds to a non-U.S. institution different from a foreign financial institution is a U.S. account subject to reporting?

How must the Spanish financial institution obliged to communicate information proceed for the purpose of calculating the balance or value of an account at the moment immediately prior to its cancellation?

Must a pre-existing account which is an account subject to communication of information be included in form 290 when its holder's Tax Code (NIF) does not appear in the files of the declaring financial institution ?

Does the fact that an organisation submits form 290 in the name of third parties automatically convert it into a sponsoring entity of those third parties?

Are the rules for the aggregation of the balance or value of the accounts applied individually for each type of account or jointly in relation to all the accounts?

Is it possible that not obtaining during 2017 a US tax code not obtained previously can be considered a "serious breach" of the obligation set forth in article 2.2.a) of the FATCA Agreement?

When can a sponsored entity or sponsored investment instrument be considered non-reporting financial institutions?

New What is the purpose of the Notice (Notice 2023-11) published by the IRS? Does it apply to all types of accounts?

New What obligations must a financial institution meet in order to benefit from the flexibility allowed by Notice 2023-11 published by the IRS?

New What implications arise from section 3.05 of Notice 2023-11 for the Tax Agency?

NewIn the Technical Manual for the presentation of Model 290 available at the AEAT Electronic Headquarters, some labels are cataloged as optional, among others, the type of account number (AccountClosed, AcctHolderType...) What does the optional character of these tags mean?

New Can the amount in the "Funds Entry" field of Form 291 be included in the payment category “FATCA502” (Interest) of Form 290?

NewWhen should the NANUM value (no account number) ?

New Is it mandatory to submit the information return form 290 when there are no accounts to report?

New
In the Technical Manual for the presentation of Model 290 available at the AEAT Electronic Headquarters, some labels are cataloged as optional, among others, the type of account number (AccountClosed, AcctHolderType...) What does the optional character of these tags mean?

New
When should the NANUM value (no account number) ?