FATCA Model II – Swiss and Japanese Versions Compared

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Note: The Japan version also indicates that U.S. withholding will be eliminated for FFIs that have entered into an FFI agreement with the IRS indicating that FFI’s may have an option to either register with the IRS or sign the agreement. It is unclear whether there are any advantages for a Japanese FFI to sign the agreement over registering as a participating FFI or whether one or the other will be required in certain circumstances. Additionally, the Japan framework indicates that U.S. withholding will be eliminating for registered FFIs (or those that signed) AND to those that conduct due diligence and reporting consistent with FATCA requirements. The difference in language from the Switzerland framework appears to point to an additional due diligence requirement for U.S. withholding agents (“USWAs”) meaning that USWAs may not be able to depend solely on a valid FFI EIN to prevent withholding for an FFI in Japan.

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