Налоги: Неамериканские физические и юридические лица - Форма 1042-S

Форма 1042-S содержит сведения о прибыли иностранных граждан, которая была получена из американских источников и облагается налогами в США, включая процентные ставки, альтернативные выплаты "in lieu" и сборы вашего счета за год.  Вы можете получить несколько форм 1042-S, касающихся различных типов дохода. 

Эта информация также сообщается я в IRS. Каждый тип дохода сообщается в отдельной форме и обозначается кодом в поле 1. Распространенные коды:

 

Циркулярное уведомление 230: Данные положения предоставляются исключительно в информационных целях и НЕ ЯВЛЯЮТСЯ способами решения налоговых проблем или рекомендациями по избежанию взысканий, обусловленных федеральными, областными или местными законами и нормами.

Connecticut Sales and Use Tax

The state of Connecticut imposes a sales and use tax which is applicable to online access to information including all data and access fees.

The tax rate as of 2017 is 1% and is applicable to clients with the state of legal residency of Connecticut or a Connecticut permanent/resident address.

The sales and use tax will be applied to all research and market data subscriptions as well as special connections such as VPN, IB Gateway, Extranet and Dedicated Leased Lines.

The sales and use tax will be passed through to client accounts at the time of the subscription billing. The tax is only applicable if a monthly fee is charged, therefore should an account receive a waiver the sales and use tax will similarly be waived.

 

 

Chicago Personal Property Tax

Chicago has a personal property tax which applies to a non-possessory computer lease by a Chicago resident. The Chicago tax authorities have ruled that tax is to be applied in cases where a customer pays for electronic research/use of an interactive site. The passive receipt or streaming of information is not subject to the tax.

Clients whose permanent residential address or principal business address is Chicago will have this tax passed through to their accounts.

The tax rate, as of October 2017, is 9%. The tax will be charged on the research and news feeds a client is subscribed to. Should a research and news feed be eligible to a waiver based upon commissions generated, the tax will not be applied.

As of October 2017, research and news subscriptions which would be subject to the tax would include

Base IBIS Research Platform and the IBIS Research Essentials Subscription Bundle
Cusip
Dow Jones News Service
Dow Jones Real Time News
US Press Release Feed
Reuters Global Newswire
Reuters StreetEvents Calendars
Reuters Fundamentals
Reuters Basic Newfeed
Morningstar Equity, ETF and Credit Reports
Wall Street Horizons
Zacks Equity Research Reports

The above list is provided on a best efforts basis and is subject to change. Clients will be responsible for any pass through tax regardless of any discrepancy from the list provided above.

 

Удержание налогов с выплат, эквивалентных дивидендам - ЧАВО

Вводная информация

Согласно новым правилам Федеральной налоговой службы (IRS), начиная с 1 января 2017 года, на выплаты, эквивалентные дивидендам (англ. dividend equivalent payments), в адрес иностранных лиц, имеющих позиции по деривативам активов США, будут распространяться налоговые удержания США. Ранее по таким выплатам налоги США не взимались. Эти правила требуют, чтобы посредники вроде нас выступали в роли налоговых агентов и производили необходимые удержания от имени IRS. Ниже Вы найдете сведения о налоговых сборах, их расчете и продуктах, на которые они распространяются.
 
Общие сведения
В чем заключается цель этого правила?
Данное правило основано на Разделе 871(m) Налогового кодекса и было введено с целью согласования режимов налогообложения, действующих для неамериканских лиц и касающихся дивидендов по акциям США и выплат, эквивалентных дивидендам, по деривативам, которые в значительной степени схожи с владением такими акциями.
 
Хорошим примером этого послужит своп на совокупный доход, андерлаингом которого является IBM. На дивиденды неамериканских владельцев позиций по акциям IBM налагались бы 30%-ные удержания США (минус льготы согласно налоговому соглашению). При этом до ввода Раздела 871(m) неамериканские обладатели длинных позиций по свопам IBM могли получать выплаты, эквивалентные дивидендам, но не платить налоги США. Это происходило несмотря на то, что оба вида выплат были практически идентичны в экономическом плане. ‘Выплаты, эквивалентные дивидендам’ теперь учитываются Разделом 871(m) и подлежат налоговым сборам США.
 
Что такое "выплата, эквивалентная дивидендам"?
Эквивалентом дивидендов является валовая сумма, связанная с выплатой дивидендов по активам США и используемая для расчета чистого объема средств, которые обладатель длинной позиции перечисляет или получает, даже если эта выплата составляет ноль или обладатель длинной позиции осуществляет нетто-платеж обладателю короткой. Соответственно подобные суммы будут включать в себя не только реальные выплаты, производимые в качестве дивидендов, но и расчеты дивидендов, которые используются при определении некоторых условий транзакции (включая процентные ставки, номинальную стоимость или цену покупки).
 
К примеру, обладатель биржевого опциона "колл" на акции США не имеет права на дивиденды, если опцион не исполняется до экс-дивидендной даты. Тем не менее, в премии, выплачиваемой владельцем для приобретения опциона, косвенно учитывается сумма ожидаемых дивидендов за срок его действия.[1] Поскольку данный фактор приводит к снижению суммы, которую покупатель перечисляет продавцу, то размер вычета рассматривается как выплата, эквивалентная дивидендам и потенциально подпадающая под действие соответствующих правил.
 
Кого затрагивают налоговые удержания с выплат, эквивалентных дивидендам?
Данный налог затрагивает позиции, отвечающие предусмотренным критериям, на счетах неамериканских налогоплательщиков. Он не взимается с налогоплательщиков США. Счета иностранных налогоплательщиков, как правило, идентифицируются посредством формы W-8 от IRS и относятся к одному из следующих типов: частный, совместный, организация и траст.
 
Дивидендные выплаты по каким производным инструментам могут подлежать налогам?
Проверка того, какие деривативы попадают под действие правил, состоит из двух частей. Во-первых, производный инструмент должен быть связан с дивидендами по ценным бумагам США. Примеры включают:
-          опционы на акции
-          регулируемые фьючерсы на одиночные акции
-          регулируемые индексные фьючерсы и опционы на индекс. фьюч.
-          структурированные и биржевые индексные облигации
-          контракты CFD
-          конвертируемые облигации
-          транзакции по кредитованию ценными бумагами
-          деривативы индивидуальных корзин и
-          варранты
 
Если базовую позицию составляют активы США. Биржа, на которой котируется инструмент, и личность второй стороны сделки не имеют значения. Другими словами, правила могут касаться дериватива независимо от того, является ли он биржевым или внебиржевым и происходит ли торговля им в США или за рубежом.
 
Во-вторых, производный инструмент должен в значительной степени повторять экономические аспекты базового актива США в момент выпуска. Для этого либо рассматривается дельта (в случае простых контрактов), либо производится проверка существенной эквивалентности (в случае комплексных контрактов).
 
Дельта - это мера корреляции, представляющая собой соотношение между изменением реальной рыночной стоимости производного инструмента и изменением реальной рыночной стоимости актива США, с которым сопряжен дериватив.  Обычно в рамках данного правила дельта определяется только один раз за весь период существования дериватива – в момент ‘эмиссии’. Этот показатель не пересчитывается при изменении реальной рыночной стоимости базового актива или перепродаже производного инструмента на вторичном рынке.
 
Для контрактов действуют следующие правила:
·         До 2017 года – деривативы, выпущенные до 1 января 2017 года (т.е. любые клиентские активы, хранящиеся у нас по состоянию на 31 декабря 2016 года), не подвергнутся новым нормам налоговых удержаний.
·         2017 год - деривативы, выпущенные в 2017 году, могут подвергнуться новому налоговому режиму, если дельта составляла 1.0 в момент их эмиссии.
·         После 2017 года – деривативы, выпущенные после 31 декабря 2017 года, могут подвергнуться новым нормам налоговых удержаний, если дельта в момент эмиссии составляла 0.8 и больше.
Если производный инструмент классифицирован как “комплексный”, то дельта не учитывается и вместо нее производится проверка существенной эквивалентности. 
 
Когда происходит эмиссия дериватива?
Дата эмиссии дериватива крайне важна - она позволяет определить, подпадает ли инструмент под действие новых правил (инструменты до 2017 года не затрагиваются) и какой у него период расчета дельта. Обычно ‘выпуск’ инструмента - это момент когда он начинает существовать, т.е. дата его создания или эмиссии. Перепродажа инструментов на вторичном рынке не считается эмиссией.
 
В результате, правила выпуска котируемых опционов, фьючерсов и других биржевых продуктов отличаются от правил, применимых к внебиржевым инструментам. Например, опцион, котируемый на бирже США, обычно не "выпускается", когда он только становится доступен для торговли на какой-либо бирже. Вместо этого его эмиссия (и расчет дельта) происходит при заключении договора с клиентом. С другой стороны, эмиссией таких перемещаемых деривативов, как биржевые облигации, конвертируемые облигации и варранты, будет считаться их первая продажа. Значение дельта, определенное в это время, будет переноситься при продаже дальнейшим покупателям. 
 
Есть ли исключения?
У правил есть некоторые исключения по удержаниям. В них входят:
•        производные инструменты, с которыми связан “квалифицированный индекс” - как правило, общедоступный пассивный широкий индекс по активам США вроде S&P 500, NASDAQ 100 или Russell 2000.
•        производные инструменты, связанные с индексом, в составе которого мало или вообще нет активов США – например, Hang Seng Index.
•        если выплата, эквивалентная дивидендам, (или ее часть) не подлежит налоговым сборам США, поскольку базовый актив тоже находится в непосредственном владении данного неамериканского клиента. Чаще всего это применимо к деривативам на взаимные фонды REIT и биржевые фонды США, по которым выплачиваются ‘дивиденды’, переклассифицированные как прирост или возврат капитала.
 
Можете ли вы привести примеры ситуаций, когда это правило действует, а когда нет?
•        2 января 2017 года клиент приобретает фьючерс на одиночные акции IBM. Дельта фьючерса равна 1.0. Правило распространяется на этот фьючерс.
•        28 декабря 2016 года клиент покупает опцион IBM, находящийся глубоко "в деньгах" и котируемый на OCC. Дельта фьючерса равна 1.0. Правило не распространяется на данный фьючерс, поскольку он был выпущен до 2017 года.
•        15 января 2017 года клиент приобретает индексный фьючерс на узконаправленный (англ. narrow based) индекс. Предположим, что индекс не имеет налоговых льгот. На фьючерс распространяется соответствующее правило.
•        2 января 2017 года клиент покупает биржевую облигацию, привязанную к активам США, с дельта 1.0. Облигация была выпущена 1 июля 2016 года. Правило не действует, поскольку эмиссия произошла до 2017 года.
 
Как рассчитываются удержания по выплатам, эквивалентным дивидендам?
Если на дериватив распространяются новые правила из Раздела 871(m), то выплата по нему составит дивиденды за каждую базовую акцию США, умноженные на дельта и число акций в основе инструмента (например, опционный контракт на поставку 100 акций с дивидендом в $1.00 и дельта 0.80 подлежал бы налоговым удержаниям на основе выплаты в $80.00, эквивалентной дивидендам).
 
В случае комплексного производного контракта эквивалент дивидендов будет равняться дивидендам за каждую базовую акцию, умноженным на эквивалентный андерлаингу хедж контракта, согласно расчету, произведенному при эмиссии.
 
Как контракты комбинируются для определения дельта?
Начиная с 2018 года, если клиент приобретет такой дериватив, как длинный "колл" с дельта меньше 0.80, и в течение двух дней после данной операции продаст "пут" с тем же базовым активом и размером, то эти позиции будут сопоставлены, чтобы определить, был ли превышен допустимый порог (напр., результатом совмещения покупки длинного "колла" при дельта 0.60 и продажи "пута" при дельта 0.40 будет дельта в 1.0).
 
В 2017 году только внебиржевые инструменты могут подвергнуться комбинированию для образования инструмента с дельта в 1.0,. 
 
Как мы сообщаем клиентам о затронутых позициях?
Чтобы снизить риск удержаний, мы будем уведомлять неамериканских пользователей посредством предупреждения в TWS, высвечивающегося при попытке создать ордер, который может вылиться в соответствующие налоги. Это даст клиентам выбор: отменить ордер во избежание сборов или отправить его с учетом потенциальных удержаний при выплате дивидендов. Начисления налогов также не произойдет, если Вы уже не будете владеть деривативом в установленную дату удержаний (т.е., как правило, в дату регистрации дивидендов).
 
 

ВАЖНОЕ ПРИМЕЧАНИЕ: Мы не даем рекомендаций по налоговым, юридическим или финансовым вопросам. Клиенту следует обратиться к своему консультанту, чтобы выяснить, как описанные в Разделе 871(m) правила могут повлиять на его торговую деятельность.


[1] Хоть владелец опциона "колл" и не получает дивидендов, их расчет косвенно учитывает в премии, которую он выплачивает при покупке (т.е. поскольку ожидается, что в экс-дивидендную дату цена акций упадет на сумму дивидендов, денежные дивиденды подразумевают более низкие премии).
 
 

How to update the US Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) on your account

Background: 

If you have been informed or believe that your account profile contains an incorrect US SSN/ITIN, you may simply log into your Account Management to update this information. Depending on your taxpayer status, you can update your US SSN/ITIN by modifying one of the following documents:

1) IRS Form W9 (if you are a US tax resident and/or US citizen holding a US SSN/ITIN)

2) IRS Form W-8BEN (if you are a Non-US tax resident holding a US SSN/ITIN)

Please note, if your SSN/ITIN has already been verified with the IRS you will be unable to update the information. If however the IRS has not yet verified the ID, you will have the ability to update through Account Management. 

 

How to Modify Your W9/W8

1) To submit this information change request, first login to Account Management

2) Click on the Settings section followed by Account Settings

 

3) Find the Profile(s) section. Locate the User you wish to update and click on the Info button (the "i" icon) to the left of the User's name

 

4) Scroll down to the bottom where you will see the words Tax Forms. Next to it will be a link with the current tax form we have for the account. Click on this tax form to open it

 

5) Review the form. If your US SSN/ITIN is incorrect, click on the UPDATE button at the bottom of the page

 

6) Make the requisite changes and click the CONTINUE button to submit your request.

 

7) If supporting documentation is required to approve your information change request, you will receive a message.  Otherwise, your information change request should be approved within 24-48 hours.

Withholding Tax on Dividend Equivalent Payments - FAQs

Background

Beginning January 1, 2017, new IRS regulations will impose U.S. withholding taxes on US dividend equivalent payments to non-US persons holding derivative positions on US equities. Previously, US withholding tax was not imposed on these payments. The regulations require intermediaries, such as us, to act as withholding agents and collect US tax on behalf of the IRS. An overview of the tax, how it’s determined and the products impacted is provided below.
 
Overview
What is the purpose of the regulation?
The regulation derives from Section 871(m) of the Internal Revenue Code and is intended to harmonize the US tax treatment imposed on non-U.S. persons with respect to dividends on U.S. stock and dividend equivalent payments paid on derivative contracts that replicate (to a high degree) ownership of such stock.
 
An example of this would be a total return swap having IBM as its underlying.  A non-U.S. person holding an IBM stock position would be subject to a 30% US withholding tax (reduced by treaty) on dividend payments. On the other hand prior to the implementation of Section 871(m), a non-U.S. person holding long exposure to IBM on the swap could receive payments equivalent to the dividends without imposition of U.S. withholding tax. This was the case even though the payments replicated similar economic exposure. Section 871(m) now considers those ‘dividend equivalent payments’ subject to US withholding tax.
 
What is a dividend equivalent payment?
A dividend equivalent payment is any gross amount that references the payment of a dividend on a U.S. equity and that is used to compute any net amount transferred to or from the long party, even if the long party make a net payment to the short party or the net payment is zero. Accordingly, such payments would include not only an actual payment in lieu of a dividend but also an estimated dividend payment that is implicitly taken into account in computing one or more of the terms of the transaction, including interest rate, notional amount or purchase price.
 
In the case of a listed call option on a U.S. stock, for example, the holder of the call is not entitled to receive a dividend unless the option is exercised prior to the dividend ex-date. Nonetheless, the premium paid by the holder to purchase the option implicitly takes into account the present value of the expected dividends over the option term.[1] Since this factor serves to lower the payment from the option buyer to the seller, it is viewed as a dividend equivalent payment potentially subject to the rules.
 
Who is subject to the dividend equivalent withholding tax?
The tax applies to qualifying positions held in an account of a non-U.S. taxpayer. It does not apply to U.S. taxpayers. Accounts of non-U.S. taxpayers generally are evidenced by the submission of an IRS Form W-8 and can include the following account types: individual, joint, organization and trust.
 
What derivative instruments potentially are subject to the dividend equivalent withholding tax?
The regulations adopt a two-part test to determine if a derivative instrument is subject to the rules. First, the derivative instruments must reference the dividend on a U.S. equity security. Examples include:
-          equity options
-          regulated single stock futures
-          regulated index futures and options on index futures
-          structured and exchange traded notes
-          CFD contracts
-          convertible bonds
-          securities lending transactions
-          derivatives on custom baskets and
-          warrants
 
If the underlying position is a U.S. equity. The exchange upon which the instrument is traded and the identity of the counterparty do not affect the application of the rules. That is, a derivative can be subject to the rules, whether it is exchange listed or over the counter or trades in the United States or overseas.
 
Second, the derivative instrument must substantially replicate the economics of the underlying U.S. equity at the time of issuance. The rules look to delta (for simple contracts) and a substantially equivalency test (for complex contracts) to make this determination.
 
Delta is a correlation measurement that computes the ratio of the change in the fair market value of the derivative instrument to a change in the fair market value of the U.S. equity referenced by the derivative.  In general, for purposes of this regulation, delta is only determined once over the life of the derivative instrument – at the time it is ‘issued’. It is not recomputed as the fair market value of the underlying security changes or when the derivative instrument is re-sold in the secondary market.
 
For most contracts, the rules are as follows:
·         Pre-2017 – a derivative instrument issued prior to January 1, 2017 (i.e., anything held by a customer with us on December 31, 2016) is not subject to the new withholding tax rules.
·         2017 - a derivative instrument issued in 2017 is potentially subject to the new withholding tax regime if the delta at the time of issuance is 1.0.
·         After 2017 – a derivative instrument issued after December 31, 2017 is potentially subject to the new withholding tax rules if the delta at the time of issuance is 0.8 or greater.
If the derivative is classified as “complex,” the delta test does not apply and instead the substantial equivalency test applies. 
 
So When Is a Derivative Instrument Issued?
Identified when a derivative instrument is issued is very important. It determines if the instrument is subject to the rules (pre-2017 issued instruments are not) and when the delta computation is made. In general, an instrument is ‘issued’ when it comes into existence, its inception date or date of original issuance. Instruments are not issued when re-sold in the secondary market.
 
As a result, there are differences in the issuance rules for listed options, futures, other exchange traded products and over-the-counter products. For example, a listed option traded on a US exchange, generally, is not issued when first listed by an exchange as available for trading. Instead, the listed option is issued (delta determined) when the option is entered into by the customer. On the other hand, for transferable derivatives, such as exchange traded notes, convertible bonds and warrants, they would be issued only when first sold. The delta determined at that time would carryover when sold to a subsequent purchaser. 
 
Are There Any Exceptions?
The rules do provide limited exceptions to withholding. These include:
•        a derivative instrument that references a “qualified index” - generally, a passive broad publicly available index on U.S. equities such as the S&P 500, NASDAQ 100 or Russell 2000.
•        a derivative instrument that references an index with little or no U.S. equity composition – such as the Hang Seng Index.
•        if the dividend equivalent payment (or portion thereof) would not be subject to U.S. withholding tax if the non-US person owned the underlying security directly. This most often will occur for derivative instruments on U.S. mutual funds, REITs and exchange traded funds that pay ‘dividends’ which are re-characterized as capital gain distributions or returns of capital.
 
Can you provide some examples of when the rules will or will not apply?
•        Customer purchases single stock futures on IBM on January 2, 2017. The delta of the future is 1.0. The future is subject to the rule.
•        Customer purchases a deep in the money OCC listed option on IBM on December 28, 2016. The delta of the future is 1.0. The option is not subject to the rule as it was issued prior to 2017.
•        Customer purchases index future on a narrow based index on January 15, 2017. Assume the index is not a ‘qualified index.’ The future is subject to the rule.
•        Customer purchases an exchange trade note that tracks U.S. equities on January 2, 2017 with a delta of 1.0. The note was issued on July 1, 2016. The option is not subject to the rule as it was issued prior to 2017
 
How is the dividend equivalent withholding computed?
If the derivative instrument is subject to the new Section 871(m), a dividend equivalent payment with respect to such instrument equals the per share dividend on the underlying U.S. equity, multiplied by the number of underlying shares referenced by the instrument, multiplied by the delta (e.g., an option contract delivering 100 shares of a stock paying $1.00 dividend and having a delta of .80 would be subject to a tax based upon $80.00 dividend equivalent payment).
 
In the case of a complex derivative contract, the dividend equivalent will be equal to the per share dividend on the underlying, multiplied by the contract’s hedge equivalent to the underlying as calculated when the contract was issued.
 
How are contracts combined for purposes of determining delta?
Starting in 2018, customers who purchase derivative instrument such as a long call having a delta below the .80 threshold and selling a put on the same underlying and same share quantity within 2 days of one another will have those positions combined for the purpose of determining whether the threshold has been exceeded (e.g., the purchase of a long call with a delta of 0.60 coupled with the sale of a put with a delta of .40 would result in a long delta of 1.0).
 
In 2017, only over-the-counter instruments are potentially subject to combination to create a delta 1.0 instrument. 
 
What information do we provide to inform clients about impacted positions?
To minimize exposure to the withholding tax, we intend to provide a TWS warning message will be provided when non-U.S. persons create an order that could generate the tax. This will give customers the option of canceling the order to avoid potential withholding or submitting the order and possibly paying the tax when a dividend occurs. Customers may avoid the potential withholding tax by not owning the derivative on the applicable withholding date (i.e., generally the dividend Record Date).
 
 

IMPORTANT NOTE: We do not provide tax, legal or financial advice. Each customer must speak with the customer’s own advisors to determine the impact that the Section 871(m) rules may have on the customer’s trading activity.


[1] While the holder of the call option does not receive a dividend, the premium paid by the holder for the option implicitly takes expected dividends into account (i.e., because the stock price is expected to drop by the amount of the dividend on the ex-dividend date, cash dividends imply lower call premiums).

Common Reporting Standard (CRS)

The Common Reporting Standard (CRS), referred to as the Standard for Automatic Exchange of Financial Account Information (AEOI), calls on countries to obtain information from their financial institutions and exchange that information with other countries automatically on an annual basis. The CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
 
Interactive Brokers will comply with the OECD's Common Reporting Standard – Automatic Exchange of Information (CRS-AEOI).
 
  • What is reported:
    • Name
    • Address
    • Tax ID Number
    • Tax Country
    • Date of Birth
    • Place of Birth
    • Year-end account balance
    • Gross Proceeds (all sales)
    • Interest income
    • Dividend income
  • To whom is the information reported:
    • For accounts held by the Interactive Brokers U.K. entity, the above information will be reported to HM Revenue & Customs of the United Kingdom. (During the first reporting period in May 2017, only Jurisdiction 1 countries will be reported.) The list can be found on the OECD website by clicking here http://www.oecd.org/tax/transparency/AEOI-commitments.pdf
    • For accounts held by Interactive Brokers Hong Kong entity, the above information will be reported to Inland Revenue Department of Hong Kong.
    • For accounts held by Interactive Brokers Japan entity, the above information will be reported to National Tax Agency of Japan
    • For accounts held by Interactive Brokers India entity, the above information will be reported to Income Tax Department of Japan
    • For accounts held by Interactive Brokers Canada entity, the above information will be reported to the Canada Revenue Agency
    • For accounts held by Interactive Brokers LLC, there is no reporting since the United Sates has not signed the CRS.
  • When will reporting take place and for what timeframe:
    • For IB UK accounts, the information will be reported for the first time in May 2017 for the calendar year 2016
    • For IB India, the information will be reported for the first time in May 2017 for the calendar year 2016
    • For IB HK, the information will be reported for the first time in May 2018 for the calendar year 2017
    • For IB Japan, the information will be reported for the first time in May 2018 for the calendar year 2017
    • For IB Canada, the information will be reported for the first time in May 2018 for the calendar year 2017
    • Non-Disclosed Introducing Brokers are responsible for their own reporting

 

FATCA Procedures - Grantor Trust Tax Information Submission

Overview: 

Interactive Brokers is required to collect certain documentation from clients to comply with U.S. Foreign Account Tax Compliance Act (“FATCA”) and other international exchange of information agreements.

This guide contains instructions for a Trust to complete the online tax information and to electronically submit a W-9 or W-8BEN.

 

U.S. Tax Classification

Your U.S. income tax classification determines the tax form(s) required to document the account.

You must login to Account Management with the trust's primary username to access the Tax Form Collection page.

1.      Tax Form Collection

The Tax Form Collection page lets account holders review and update important tax-related information and lets account holders electronically fill out an IRS Form W-9 (U.S. taxpayers) and IRS Form W-8 (non-U.S. taxpayers).
 
Accessing the Tax Form Collection Page
 
a. Click Manage Account > Account Information > Tax Information > Tax Forms.
 
b. Click the Update Tax Forms button to access the Collection page.
The Tax Form Collection page opens, displaying a form with tax-related information that should already be completed. (Advisors and brokers can check the status of client updates to this page on the Dashboard Pending Items tab.
 
c.  Review the Trust’s information and update as required.
 
Confirm the primary tax residency of the trust beside the Tax Residency question, "In what country is the trust a resident for tax purposes?"  Select the appropriate country in the drop down menu.
 
 
Select in the Tax Residency drop down menu the applicable country.
 
d. Click Continue.
 

2.      Classification for US Tax Purposes

 
Confirming the Trust’s classification for U.S. purposes
 
a. Review the Trust’s status by confirming the question, “How are you classified for US tax purposes?” The answer is pre-filled based upon your information completed during the account application process. 
 
 
b. Click the Continue button to confirm the trust classification and complete the Form W-8 or W-9 for the entity. 
 
c. Click the Continue button to identify each Grantor. 
 

3.      Identify Grantors

 

a. Click Manage Account > Account Information > Tax Information > Tax Forms.

 
b. Click the Create button beside each grantor to send each user the applicable tax questionnaire and to submit the tax certification form (W-8 or W-9).  
 
Also, update the "Percentage of Ownership" to add up to 100%, if necessary.
 
 
 
 
c. Enter the required fields for the username and password for specified grantor and click the Continue button to complete the email delivery of the link.
 
 
 
We will then send the owner a link to complete the necessary tax form. This link will only be used for the collection of tax forms. You must provide the username and password to the Grantor as link will not contain them.   
 
Each Grantor must login with the username/password created and complete the pending tasks by going to Manage Account > Account Information > Tax Information > Tax Forms  > Update Tax Forms.
 
d. Click the Continue button upon creating and sending usernames to each Grantor.  
 
 
 
 
Disclaimer
This guide does not constitute tax or legal advice and Interactive Brokers cannot advise you on how to complete an IRS Forms W-8 or W-9.  Instructions are for information purposes only and do not address all possible scenarios. Please consult your tax professional if you are unsure how to complete.
 

Entity and FATCA Classification for Non-Financial Entities

Introduction
Interactive Brokers (“IB”, “we” or “us”) is required to collect certain documentation from clients (“you”) to comply with U.S. Foreign Account Tax Compliance Act (“FATCA”) and other international exchange of information agreements.

This guide contains a series of flowcharts and accompanying notes that summarize IRS rules relating to:

1. The tax classification for purposes of determining which W-8 or W-9 tax form an entity is required to complete; and

2. The FATCA classification required of entities completing the W-8 tax form (Part I, Section 5).

Note: The flowcharts and notes contained herein do not cover every possible scenario and other scenarios not presented here exist and may more closely align with your situation. You should consult a tax professional regarding your particular circumstances if you are still unsure of your U.S. entity and/or FATCA classification after reading this guide.

 

What is NOT Covered in this Guide
The guide is directed to non-U.S. entities that (i) are the beneficial owners of the payments made to the account and (ii) are not financial institutions. This guide does not apply to:
 

• Individuals (use W-9 or W-8BEN)
• U.S. entities (use W-9)
• Entities acting as an intermediary (such as a nominee, broker, custodian, investment advisor) on behalf of another person (use W-8IMY).
• Non-U.S. Tax-Exempt Organizations and Private Foundations
• Financial Institutions
 

Note: The U.S. entered into bilateral agreements called Intergovernmental Agreements (IGAs) with many countries regarding the implementation of FATCA. In some cases, the provisions of an applicable IGA could modify the results described in this guide. Entities are covered by an IGA should refer to the IGA and/or consult a tax professional for their filing requirements.
 

1. U.S. Tax Classification
Your U.S. income tax classification determines the tax form(s) required to document the account. The flow chart below may help you determine your tax classification and the tax form to be completed.

Important: The U.S. imposes income tax on its residents’ worldwide income. On the other hand, nonresidents are only subject to withholding tax on certain limited types of US source investment income (dividends from U.S. companies, etc.). Completion of a W-8 series tax form certifies you are NOT taxable as a U.S. resident. A W-8 form may also be used to claim a reduced rate of withholding tax under a U.S. income tax treaty.

 

Flowchart for Determining Tax Classification and Required Tax Form (Non-Trust Entities)

 

 

Flowchart for Determining Tax Classification and Required Tax Form (Trusts)

 

 

 

2. FATCA Classification

The W8 tax forms are also used to collect FATCA classifications. Many countries have executed “Intergovernmental Agreements (IGA)” with the U.S. requiring its local financial institutions to classify its customers for FATCA purposes. The classification rules under an IGA may not exactly match the classification rules established by the IRS. Other institutions have agreed with the IRS to become FATCA compliant and determine their customers’ FATCA classifications under the IRS rules. We are required to collect this information. The flowchart below applies the IRS default FATCA classification rules and is general in nature.  The flowchart is accompanied by sample W-8BEN-E screenshots for a common account structure: a non-U.S. corporation classified for FATCA purposes as a Passive Non-Financial Foreign Entity (NFFE), which qualifies for treaty witholding rates.
 

Note: It is important to recognize many organizations meet the qualifications for multiple FATCA types and you must select the most appropriate classification. Your specific situation may not fall within the general guidance. We recommend you seek your own independent advice as we are not in a position to make this determination for you and the rules are complex.
 

Flowchart for Determining FATCA Classification

 

Example: A corporation is a common form of entity ownership, involving two or more owners with none having any personal liability for the debts of entity.  As outlined in the Tax Classification flowchart above, an entity of this type would be required to complete the W-8BEN-E. Assuming the corporation is not classified as a Foreign Financial Entity (e.g. bank, broker, investment manager, hedge fund, mutual fund, insurance company) as discussed in footnote 5 below, then its FATCA classification would be Passive NFFE.  Screenshots of the W-8BEN-E for this sample entity are provided below.

 Sample Screenshots - W-8BEN-E (Passive NFFE)

 

 

 

Footnotes

 1  The US Internal Revenue Service (IRS) established rules for determining the tax classification of entities formed outside the United States. These rules apply regardless of how the entity is classified in its country of organization or residency.
 

Generally corporate entities are treated as the beneficial owners of an account and should complete a W-8BEN-E and select “corporation” unless they elect otherwise (discussed below).


IRS regulations assign a default classification to each entity type. This default classification may be overridden by making a filing with the IRS and obtaining an US employer identification number. Certain entities cannot change their classification and are treated as corporations in all events (e.g., Sociedad Anonima, Public Limited Company and Aktiengesellschaft). A complete list may be found at US Treasury Regulation Section 301.7701-2(b)(8).
 

The IRS default classification usually depends on (i) the number of owners and (ii) whether any owner is personally liable for the debts of the entity based on the organizing statute (i.e., bank guarantees or other contractual agreements by owners are ignored). The following table summarizes the default rules:
 

 
Number of Owners
Owners have Limited Liability?
 
 
Yes?
No?
 
 
1 Owner
Corporation
Disregarded Entity
 
 
2+ Owners
Corporation
Partnership
 
 
 
 

Note: Since the entity tax classification of a disregarded entity is determined by its owner, a US disregarded entity may find the flowchart helpful if the owner is a non-US entity.
 

A fiscally transparent entity (such as a partnership, simple trust or grantor trust) using IRS Form W-8IMY must provide IRS tax forms for all of its beneficial owners (partners in a partnership, beneficiaries for a simple trust and settlors for a grantor trust) for the account to be documented for US tax purposes.
 

Certain unit investment trusts (generally where there is an ability to vary the investments) are not considered trusts for US tax purposes. These investment trusts are treated in the same manner as a traditional business entity under the rules discussed above (i.e., corporation, partnership or disregarded entity).
 

Finally, a trust (other than a unit investment trust treated as a business entity) is considered a non-US trust for US tax purposes if (1) a court outside the United States is able to exercise primary supervision over the administration of the trust, and (2) any non-US person has the ability to control (or veto) any “substantial decision” of the trust.
 

The flowchart assumes that the default entity classification rules apply and the entity is not a per se corporation.
 

 

A partnership or simple or grantor trust may enter into a withholding agreement with the IRS pursuant to which the partnership or simple or grantor trust agrees to withhold US taxes on the account. The flowchart assumes no withholding agreement was executed.
 

 

 

3  In general, US tax treaty benefits are granted to the beneficial owner of the income determined under US tax principles. For fiscally transparent entities (such as partnerships, simple or grantor trusts or disregarded entities), this means the owners of the entity, NOT THE ENTITY ITSELF, claim US tax treaty benefits. These benefits are claimed on the beneficial owners’ W8 tax forms. However in certain limited cases, an entity may be considered fiscally transparent for US tax purposes but not fiscally transparent by the country with which the US has an income tax treaty. This type of an entity is called a “hybrid entity.” In certain cases, a hybrid entity, not the owners, may claim US tax treaty benefits if the hybrid entity meets the so-called qualified resident test under the applicable tax treaty. A qualifying “hybrid entity” claims the benefits of a US tax treaty by providing a Form W-8BEN-E, in addition to the form required by the flowchart. Importantly, electing hybrid status does not eliminate the need to document all beneficial owners. We note it is unusual for a hybrid entity to claim treaty benefits. The more common scenario is the beneficial owners claim treaty benefits on their tax forms.
 

 

4  The rules for classifying trusts are difficult and complex. The flowchart applies generalized rules only. There are many nuances to be considered when classifying a trust which are not addressed in the flowchart. For example, simple trusts cannot have charitable beneficiaries.
 

 

5  What is a foreign financial institution for FATCA purpose?
The various FATCA classifications can be broken down into two major categories: foreign financial institutions (FFI) and non-financial foreign (NFFE). Very generally, a financial institution is an entity that is a:


• Depository Institution
• Custodial Institution
• Investment Entity
• Insurance Company that issues certain cash value insurance or annuity contracts.
 

An FFI typically is required to register with the IRS, obtain a Global Intermediary Identification Number and report on its customers / owners to the appropriate tax authorities. If the entity does not meet the definition of a Financial Institution, it is considered an NFFE and covered by this guide book.
 

Subject to variations under IRS regulations and intergovernmental agreements:


• a Depository Institution is an institution that accepts deposits in the ordinary course of a banking or similar business. This includes banks and credit unions.
• a Custodial Institution is an institution which holds financial assets for the account of others as a substantial portion of its business. This includes brokers, custodial banks, trust companies, clearing organizations, etc.
• an Investment Entity is any entity if either
(i) the entity generates 50%+ of its gross income from (i) trading in money market instruments, foreign currency, transferrable securities, interest rates, futures, etc.; (ii) portfolio management or (iii) otherwise investing, administering or managing funds or financial assets on behalf of other persons (generally, broker-dealers and investment managers);
or
(ii) 50%+ of the entity gross income is attributable to investing, reinvesting, or trading in financial assets AND it is managed by a Financial Institution (mutual funds, hedge funds, and collective investment vehicles are examples);
or

(iii) the entity holds itself out as an entity created to invest, reinvest, or trade invest in financial assets (mutual funds, hedge funds, and collective investment vehicles are examples).
 

An individual cannot be an FFI. Thus, an organization managed by a professional individual investment advisor (as opposed to an employee of an organization) would not be considered an Investment Entity under (ii) above because it is not managed by a financial institution.
 

Trusts, family investment companies and funds may fall within the definition of an Investment Entity when they are professionally managed by a financial institution – i.e. where a financial institution handles the day-to-day functions of the entity or has discretionary authority over the fund.
 

Example: Individual created a non-US Trust A and appoints X, a non-US bank or other financial institution, as the trustee. X, as trustee, is responsible for the management and administration of Trust A. Trust A is an Investment Entity and a Foreign Financial Institution because it is managed by a Foreign Financial Institution.
 

Example: Individual created a non-US Trust A and appoints Y, an individual professional manager, as the trustee. Y, as trustee, is responsible for the management and administration of Trust A. Trust A is not an Investment Entity or a Foreign Financial Institution because it is not managed by a Foreign Financial Institution. Individuals cannot be financial institutions.
 

 

6  The IRS has a list of countries with which it has executed intergovernmental agreements (IGAs) to authorize the implementation of FATCA in that jurisdiction. The list of IGAs can be found at https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA....
 

 

7  See #4 for the definition of Financial Institution. An organization that is not considered a financial institution is considered a non-financial foreign entity (NFFE). There are 3 types of NFFEs; Excepted, Active and Passive. An Active NFFE is an operating business where less than 50% of (i) its gross income is considered passive income and (ii) its average assets are held for the production of passive income. Any NFFE that is not Excepted or Active is a Passive NFFE and must provide us with a certification of its substantial US owners (if any) – generally 10%+ direct or indirect ownership. Some IGAs modify the means of substantial US owners and refer to them as Controlling Persons.
 

8   Other possible choices include nonfinancial group entity, excepted nonfinancial start-up company, excepted non-financial entity in liquidation or bankruptcy, publicly traded NFFE or sponsored NFFE. See the instructions to the W-8 for further information.
 

 

Disclaimer

This guide does not constitute tax or legal advice and Interactive Brokers cannot advise you on how to complete IRS Forms W-8. Examples included in this guide are for illustration only and do not address all possible scenarios. Please consult your tax professional if you are unsure how to complete IRS Forms W-8.

FATCA FAQs - Issues Involving Mismatch Between Tax Treaty Country and Address

FATCA related FAQs involving mismatches between tax treaty country and address. See KB2601 for other FATCA related FAQ topics.

 

Q1: I claimed treaty benefits in one country but have an address outside that treaty country. Why did I receive an email asking for additional documentation?
 

A1: We are required to verify your connection with the treaty country since you also have an address outside that country. We can process your claim for treaty benefits if you provide one document from Category (A) AND one document from Category (B) below.
 

                                Category (A)
AND
Category (B)
ANY OF the following unexpired documents issued by the treaty country:
ANY OF the following documents that match your address in the treaty country:
·         Driver’s license
·         Driver’s license
·         Passport
·         Bank or brokerage statement*
·         National identity card
·         Utility bill*

*Bank or brokerage statements and utility bills must be less than 12 months old.  Alternatively, if you cannot provide documents from both categories, please provide a written explanation as to why you are entitled to treaty benefits together with any supporting documentation. Note: we may request further information or documentation from you depending on the explanation provided.
 

 

Q2: I submitted a proof of address and I received an email that the document submission did not resolve the issue. Why?
 

A2: Please confirm that the proof of identity you submitted was issued by the treaty country and that the proof of address relates to your address in the treaty country. A proof of address document alone is not sufficient to resolve the matter. Sometimes, customers inadvertently submit documentation for the other address. Please check the date of the proof of address document. We can only accept documents dated less than 12 months old. Also confirm you submitted a proof of identity document from the treaty country.
 

 

Q3: I live in Hong Kong and chose China as my tax treaty country on my Form W-8BEN. I received a notification saying the proof of address and proof of identity I submitted was not sufficient to claim benefits under the U.S.-China tax treaty. Hong Kong is a Special Administrative Region of the People’s Republic of China, so the U.S.-China tax treaty applies to it, correct?
 

A3: No. According to the US Internal Revenue Service, the U.S.-People’s Republic of China tax treaty does NOT apply to Hong Kong. Unless you can provide a proof of address and identity in the People’s Republic of China or provide other evidence that you are a tax resident of People’s Republic of China, you may not claim Chinese tax treaty benefits.
 

 

Q4: I live in Macau and chose China as my tax treaty country on my Form W-8BEN. I received an e-mail saying that the proof of address I submitted for my Macau address was not sufficient to claim benefits under the U.S.-China tax treaty. Macau is a Special Administrative Region of the People’s Republic of China, so the U.S.-China tax treaty applies to it, correct?
 

A4: No. According to the U.S. Internal Revenue Service, the U.S.- People’s Republic of China tax treaty does NOT apply to Macau. Unless you can provide a proof of address and identity in the People’s Republic of China or provide other evidence that you are a tax resident of People’s Republic of China, you may not claim Chinese tax treaty benefits.
 

 

Q5: I live in Taiwan and chose China as my tax treaty country on my Form W-8BEN. I received an e-mail saying that the proof of address I submitted for my address in Taiwan was not sufficient to claim benefits under the U.S.-China tax treaty. Taiwan is formally known as the Republic of China, so the U.S.-China tax treaty applies to it, correct?
 

A5: No. According to the US Internal Revenue Service, the U.S.- People’s Republic of China tax treaty does NOT apply to Taiwan. Unless you can provide a proof of address in People’s Republic of China or provide other evidence that you are a tax resident of People’s Republic of China, you may not claim Chinese tax treaty benefits.
 

 

Q6: The information you have in your master file is out-of-date. I moved so that the address you identified as outside the treaty country is incorrect. What should I do?
 

A6: The fastest and most effective way to remedy the situation is to provide the requested information (see FAQ#1 above) so that our records are complete. You should also log into Account Management and make any required changes to your personal information.
 

 

We do not provide tax advice. Please consult your tax advisor for advice in completing tax forms and determining your taxpayer status.

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