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Industry Updates

FATCA and Trustees: Part II

14 Apr 2015

This update is a follow-up to our update entitled FATCA and Trustees: Part I ("Part I"), published in December 2014. 

Defined terms and abbreviations not otherwise described herein have the same meaning given to them in Part I. 

Since Part I was published, there have been a number of developments in both the Cayman Islands and British Virgin Islands ("BVI"). 

Revised Cayman Islands Guidance Notes 

On 15 December 2014, the Cayman Islands Tax Information Authority ("Cayman TIA") issued the second official version of the Cayman Islands FATCA Guidance Notes. Of particular interest: 

(a)  A trust with an individual trustee resident in the Cayman Islands is now stated to be a Cayman Islands trust (in addition to corporate trustees which are incorporated, resident or licensed in the Cayman Islands).

(b)  There is a new section on Private Trust Companies.  This conforms with our views in Part I such that if the PTC is not a financial institution ("FI") (for example because it is not in business) then any trusts of which the PTC is trustee are not FIs themselves.  However there is still no guidance as to whether a PTC is in business or not.  

(c)  There is clarification of the treatment of charitable trusts in the case of UK FATCA.

Extension of FATCA Notification Deadline in the Cayman Islands 

On 23 February 2015, the Cayman Islands announced an extension to the notification deadline in respect of Regulation 14(3) of the Tax Information Authority (International Tax Compliance) (United States of America) Regulations 2014.2  The deadline has been extended from 31 March 2015 to 30 April 2015. 

This requires each Reporting Financial Institution ("RFI") to notify the Cayman TIA by 30 April 2015 in respect of the following information: 

(a)  The name of the RFI;

(b)  The categorisation of the RFI;

(c)  Any GIIN number issued by the IRS; and

(d)  The principal point of contact together with proof of authorisation. 

The first reporting deadline remains at 31 May 2015. 

Opening of the FATCA Reporting Portal in the Cayman Islands 

The Cayman TIA has announced the opening of the Automatic Exchange of Information portal for RFIs to make the relevant notifications and reports to the Cayman TIA.3  A User Guide is also available.

Removal of Obligation to File Nil Returns in the Cayman Islands 

The obligation for an RFI to submit a nil return (i.e. when they have no reportable accounts) shall be removed.  RFIs will still be able to submit nil returns voluntarily, if they wish to do so.  Despite the removal of the requirement to file nil returns on reporting, RFIs shall still be obliged to effect notifications / registrations as outlined above. 

BVI Guidance Notes 

On 20 March 2015, the BVI International Tax Authority ("BVI ITA") issued the official version of the BVI FATCA Guidance Notes ("BVI Guidance Notes").4  Most of the draft has remained. 

Of particular interest in the final version:

(a)  For US FATCA, the trustee documented trust route is only available for a trust with BVI governing law.

(b)  There is clarification of the treatment of charitable trusts in the case of UK FATCA.

(c)  There is a new example of a trust not being an RFI as it does not hold Financial Assets. 

Extension of FATCA Reporting Deadline in the BVI 

The BVI has announced an extension to the first reporting deadline.  This deadline has been extended from 31 May 2015 to 30 June 2015. 

This requires each RFI to notify the BVI ITA by 30 June 2015 in respect of the following information:

(a)  The name, address, US TIN of the entity or individual accountholder and, where the accountholder is a Passive NFFE that has controlling persons who are Specified US Persons, the name, address and US TIN of such persons; 

(b)  The account number; 

(c)  The name and identifying number of the RFI; and 

(d)  The account balance or value as of the end of 2014. 

Opening of the FATCA Reporting Portal in the BVI 

The BVI ITA is currently putting processes in place to allow for the transmission of this information electronically through an online portal known as the BVI Financial Account Reporting System ("BVIFARS").  Details relating to the use of BVIFARS are contained in the BVI Guidance Notes.  RFIs will be required to enrol with BVIFARS the first time they wish to access the system and this enrolment application will need to be approved by the BVI ITA before access is granted.  There is no deadline for completion of the enrolment process however access to BVIFARS will not be available to the public until mid-April 2015. 

Removal of Obligation to File Nil Returns in the BVI 

The BVI ITA has confirmed that although Reporting FIs with no US Reportable Accounts are not required to enrol on BVIFARS or file a nil return, it will be possible for such Reporting FIs to enrol and submit a nil return through BVIFARS if they wish to do so.  

Further Advice 

If clients require legal advice or have any concerns about FATCA, Maples and Calder has leading expertise on the relevant provisions having established a FATCA team that has worked closely with the Cayman Islands and BVI governments over the past three years.  MaplesFS also provides client focused solutions to FATCA. 

To the extent that any Cayman Islands or BVI trustees are regarded as resident in another jurisdiction, specific advice should be obtained.

1 See our update entitled Revised FATCA Guidance Notes Issued for further information.

2 See our update entitled Extension of FATCA Notification Deadline for further information.

See our update entitled FATCA Reporting: Automatic Exchange of Information Portal Opens for further information.

See our update entitled FATCA Reporting Obligations in the British Virgin Islands for further information.

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