CRS/FATCA Controlling Person Reporting

FATCA/CRS require that every entity be classified pursuant to FATCA/CRS definitions. Everything from a school to a factory to a bank has to determine its classification. One type of classification is a Passive Non-Financial Entity (Passive NFE or Passive NFFE under FATCA regulations terminology).

A Passive NFE must report Controlling Persons. However, it is not always clear who should be identified as the Controlling Person. The parameters include the following natural persons who exercise control over the Passive NFE:

  • A natural person who holds, directly or indirectly, more than a certain percentage of the beneficial interests of the entity.
  • A natural person on whose behalf a transaction is being conducted.
  • Those persons who exercise ultimate effective control through indirect means.

Each jurisdiction sets out a percentage ownership threshold that is currently in the range of 10% to 25%. If no one individual satisfies the ownership threshold (including after looking up through the Passive NFE’s ownership structure), the next step in the analysis may be to look at who exercises ultimate effective control through indirect means. It is clear under both FATCA and CRS that this individual may be a senior managing official.

W-8 & W-9’s, Self-Certifications and FI Reporting

FATCA requires U.S. Persons to be reported by an FI to the appropriate tax authority. CRS requires FIs to report persons who are resident in Reportable Jurisdictions to the local tax authority. However, even if the Controlling Person is not ultimately reportable by the FI to the tax authority, the Passive NFE must still report personal data about the Controlling Person to the FI through an IRS form or a self-certification.

  • The personal data under FATCA includes:
  • Name
  • Address
  • US Tin / DOB

The personal data under CRS includes:

  • Name
  • Residence address
  • Jurisdiction(s) of residence
  • Tax ID Number
  • Date of birth
  • Place of birth

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