Holding Companies and Treasury Companies Removed from Definition of UKFI

[Released May 21, 2015]

Automatic Exchange of Information:
holding companies and treasury companies

Published 21 May 2015


General position
Background to removing ‘relevant holding company’ and ‘treasury company’ from definition of UKFI
Approach to determining appropriate entity status

This note sets out HM Revenue and Customs’ (HMRC) views relating to the treatment of holding companies and treasury companies for the purposes of the UK’s agreements relating to the automatic exchange of information (AEOI) on financial accounts (the UK/US agreement Foreign Account Tax Compliance Act (FATCA), the UK/Crown Dependencies and Gibraltar agreement (CD and G), and the Multilateral Competent Authority agreement implementing the Common Reporting Standard (CRS), the latter taking effect for EU member states under Council Directive 2011/16/EU (‘the DAC’). This note will be incorporated into HMRC’s updated AEOI guidance at a later date.

General position

There are 4 categories of financial institution (FI) common to each of the agreements:

  • Custodial Institution
  • Depository Institution
  • Investment Entity
  • Specified Insurance Company

Regulations laid on 25 March 2015 (Statutory Instrument 2015/878, ‘The International Tax Compliance Regulations 2015’) implement the DAC and also revoke the previousFATCA Regulations (SI 2014/1506), instead incorporating the FATCA provisions into the new regulations. The effect of incorporating the FATCA provisions in this way leaves them substantially unchanged, with the exception of removing the requirement for UK financial institutions (UKFIs) to file nil returns (but note that a nil return may still be required if a UKFI wishes to make an election to apply certain de minimis thresholds) [emphasis added -Ed.] and removing 2 further categories of UKFI that had previously applied for FATCA purposes: a ‘relevant holding company’ and a ‘treasury company’ as those terms were defined in SI 2014/1506.

Background to removing ‘relevant holding company’ and ‘treasury company’ from definition of UKFI

Regulation 1.1471-5(e)(1)(v) of the US Treasury Regulations has as a final category of financial institution (FI) ‘an entity that is a holding company or a treasury company’, but that definition of ‘financial institution’ does not determine the meaning of ‘foreign financial institution’ (FFI) where there is a relevant agreement such as that between the UK and US to implement FATCA. Removing these categories of UKFI from the UK regulations aligns the UK position for FATCA with that of most other countries as well as the CD and G agreement and DAC. It also clarifies the position of holding companies and finance companies for non-financial groups (groups with no other FIs), and reduces compliance burdens for some businesses. This move has generally been welcomed.

However, because the previous definition of a UKFI included relevant holding companies and treasury companies some holding company members of financial groups would have registered with the IRS as the lead FI of an Expanded Affiliated Group (EAG) for FATCApurposes.

HMRC understands that reversing the registration and re-registering an entire group with new Global Intermediary Identification Numbers (GIINs) would be onerous, and an additional and unnecessary administrative burden for such groups. Furthermore for some groups identifying a new lead FI would be difficult and could cause difficulties with counter-parties.

If an entity registered as a lead FI also comes within the definition of a UKFI under 1 of the remaining 4 categories then they will continue to be defined and treated as a UKFI – this may be the case, for example, for treasury companies where they also come within the definition of an investment entity. Where that is not the case, HMRC are content for an entity that has already registered as a lead FI to choose to use the extended definition of Financial Institution included in the US Treasury regulations (which as noted above includes the concept of ‘relevant holding companies’ and ‘treasury centres of financial groups’), should they wish to do so. [emphasis added -Ed.] This is in line with current HMRC FATCA guidance that states where an alternative element of the US regulations or an alternative element of a different intergovernmental agreement is identified that an entity considers is beneficial then HMRC will consider the matter. In the circumstances described, a holding company or finance company of a financial group that does not come within 1 of the remaining 4 types of UKFI will not have any UK reportable accounts and will therefore have no UK obligations, and treating itself as an FI for the purposes of registration with the IRS does not frustrate the intentions of FATCA or AEOI generally. HMRC is therefore content for entities to take that approach if they wish.

This decision may be made by a financial group on a case by case basis. For example Global Bank Group may wish to continue to treat the top holding company ‘Global Bank plc’ as a financial institution despite having no reportable accounts, because it is the lead financial institution for the group for FATCA purposes. However, unless it so chooses then the default position will be that UK holding companies, and treasury companies, within the group will not be financial institutions unless they are within 1 of the remaining 4 categories of UKFI.

Approach to determining appropriate entity status

Groups may need to review the status of holding companies and treasury centres in light of this update. Holding companies and treasury companies will need to consider whether the activities undertaken in the name of the entity mean that they will be a UKFI as now defined, or (in the case of holding companies and finance companies of financial groups) if there is a benefit in classifying such an entity as a financial institution.
If the entity is not a financial institution or chooses not to be a financial institution, as above, then it will be an Non-Financial Foreign Entity (NFFE). Whether it is an active or passive NFFE will depend on the activities carried out in the entities name.


[IRS “FATCA News and Information” released on May 20, 2015]

1. Updated! IRS Planned Maintenance

Due to planned maintenance, the FATCA International Data Exchange Service (IDES) will be unavailable from 1:00p.m. Eastern Daylight Time (EDT) (UTC/GMT -4) on Saturday, May 23, 2015 until 4:00 p.m. EDT on Monday, May 25, 2015 due to an annual power outage. We apologize for any inconvenience.

2. Updated! IDES Web Page

The following web pages have been updated:

3. Updated! IDES Testing Session Opens

The FATCA International Data Exchange Service (IDES) opens for testing from Monday, June 1, 2015 at 12:00 PM EDT to Monday, June 8, 2015 at 12:00 PM EDT (UTC/GMT -4).  The test session will be open to users that have completed IDES enrollment by Thursday, May 28, 2015 at 5:00 PM EDT.

Malaysia will Defer FATCA Reporting

[News Release, May 19, 2015]

This is to inform that the date (30 June 2015) for submission of information to IRBM under the draft Guidance Notes pursuant to FATCA is deferred to another date as the Malaysia-US IGA is still being finalised.

The new date will be notified in due course.


Cayman Islands AEOI Portal Update

On May 11, 2015, the Department of International Tax Cooperation (DITC) issued an update providing that notifications may be submitted on or before Thursday, May 21, 2015 (extended from May 12), and that returns may be reported on or before Friday, June 12, 2015 (extended from May 31).

The DITC said that, “No adverse consequences or enforcement measures will be attracted once there is compliance on, or before, the above dates for notification and returns reporting.”

Near-term FATCA Deadlines – May 2015


Date Country Comments
May 20, 2015 US In order for an entity to be included in the published June list in time for the June 29, 2015 filing requirement, application for a FATCA Entity ID Number (“FIN”) (like a GIIN, but for non-FFIs with filing requirements) must be completed by May 20, 2015.  Any USWAs, Direct Reporting NFFE’s, etc., which have a reporting requirement with the IRS by June 29th but do not have a GIIN must obtain a FIN.
May 21, 2015 Certain Model 1 FFIs In order to be able to use IDES ahead of the June extended deadline for submission of FATCA reports for Model 2 and non-IGA jurisdictions, the FFI will have to obtain its new GIIN by May 21, 2015. See IDES FAQ A14  which provides that Sponsoring Entities may be required to obtain a second GIIN in order to report.
May 31, 2015 Cayman Islands Registration/notification should have been completed by April 30, 2015; although, there has been a ‘soft landing’ extension to May 12, 2015.  The reporting deadline remains May 31, 2015. See Update providing a further extension.
May 31, 2015 China At this stage, no details have been released in relation to the schema or submission portal.
May 31, 2015 Finland At this stage, no details have been released in relation to the submission portal.
May 31, 2015 Lichtenstein Registration required by May 31, 2015. Submission required by June 30, 2015
May 31, 2015 Mexico Entities will need to submit to Mexico.
May 31, 2015 The Netherlands The IRS schema is expected to apply; however, awaiting final confirmation from the local tax authority.There are a variety of filing deadlines, but FFIs are expected to file by May 31, 2015.
May 31, 2015 Norway Norway has a specific schema, and additional data points which apply; however, note that the GDC is working on translating the schema and will release the required data points as soon as possible.
May 31, 2015 Spain N/A
May 31, 2015 United Kingdom The United Kingdom has a specific schema and additional data points which apply.
June 1, 2015 British Virgin Islands The filing deadline is June 30, 2015.  However, all BVI FFIs must complete registration with the BVI submission portal by June 1, 2015.

EBF Requests Extension of Deadline for Limited FFI Status

The European Banking Federation (EBF) has requested that Limited FFI status as provided in the U.S. Treasury Regulations, and which is due to expire after December 31, 2015, be extended so that it continues to apply after December 31, 2015, for all jurisdictions. This would render the regulatory rule consistent with that of the IGAs under which there is no specified deadline for expiration of Limited FFI status.

In addition, the comment letter indicates that Limited FFI status would apply to Argentine FFIs, and states that an Argentine IGA is unlikely before the end of 2015:

… the industry is specifically concerned by developments in Argentina. The Central Bank of Argentina (BCRA) and the Argentinian tax authorities (AFIP) recently advised local financial institutions that cross-border data reporting (even with customer consent) is prohibited under Argentine law. We understand that it is unlikely that the US/Argentina IGA negotiations will be finalised before year-end 2015.

IDES Enrollment Process for USWAs, TFIs, and Certain Others is Now Available

On May 8, 2015, the IRS posted instructions on the IRS webpage for IDES enrollment for users that are required to report through IDES but are not required to obtain a Global Intermediary Identification Number (GIIN).  These users, which include U.S. Withholding Agents (USWAs), Territory Financial Institutions (TFIs), commercial software vendors, and third party preparers, are now able to obtain a FATCA Identification Number (FIN), a 19-character identifier that will allow users to enroll and access IDES.  Users must consent to IRS publication on the Foreign Financial Institution (FFI) List when requesting a FIN because it constitutes confidential return information.  The FIN must appear on the June FFI List for users to enroll in IDES in time for reporting.  Users must register for a FIN by May 20, 2015 in order to report by the June 29, 2015, deadline.


[May 8, 2015] The IRS has added or updated 14 FAQs pertaining to the International Data Exchange Services (IDES) system. The IDES system allows the IRS to exchange taxpayer information with foreign tax authorities.

New FAQ A14 provides that Sponsoring Entities may be required to obtain a second Global Intermediary Identification Number (GIIN) in order to report.

[FAQ 14:] I am a Sponsoring Entity located in a Model 1 IGA jurisdiction.  I am responsible for reporting on behalf of entities in Model 2 and non-IGA jurisdictions.  When I attempt to enroll in IDES the system rejects my enrollment as coming from a Model 1 IGA jurisdiction.  How can I use IDES as required to submit FATCA Reports?

[Response:] The IRS developed a process that allows you to use IDES.  You will obtain a second GIIN that reflects that you are located in a Model 2 or non-IGA jurisdiction.

1. Enter the IRS Registration Portal and create a new account.

2. Select the Financial Institution Type, Sponsoring Entity and click Next to continue.

3. Complete other questions and proceed to Part 1, Questions 3A-4.

     a. Question 3: Select Financial Institutions Country of Residence, Other.

     b. Question 3B: Enter your Financial Institution’s country/jurisdiction tax ID, if available.

     c. Question 4: Select the Financial Institution’s classification in its jurisdiction of tax residence, None of the Above.

4. Complete the application and other entries as you did originally.

After the approved GIIN appears on the FFI List, use the GIIN to enroll in IDES. Detailed information on IDES enrollment process can be found at https://www.ides-support.com/.
Note: In order to be able to use IDES ahead of the June extended deadline for submission of FATCA reports for Model 2 and non-IGA jurisdictions you will have to obtain your new GIIN by May 21, 2015 [Emphasis added -Ed.].

Deadline to Submit FATCA Information Extended by Spain

On March 12, 2015, Ministry of Finance Order HAP/410/2015 of March 11, 2015, was published. The Order extends for the year 2014 the deadline to submit Form 290, the annual information declaration for financial accounts of certain US persons. The new deadline for 2014 is June 1, 2015. Previously, the deadline had been March 31, 2015.

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