Non-Participating Financial Institutions - FATCA vs CRS

CRS and FATCA treat non-participating institutions very differently. Under CRS, non-participating Investment Entities are classified as Passive NFEs, meaning the paying agent must look through to the controlling persons. FATCA, on the other hand, penalizes non-participating FFIs that fail to register for a GIIN by imposing a 30% withholding tax on U.S.-sourced payments like dividends, interest, or asset sale proceeds. FATCA also pressures FFIs to close accounts of non-participating FFIs. However, FATCA’s reach is limited where no U.S.-sourced payments are received, such as when a custodial institution only holds company shares.

#FATCA #CRS #GlobalTax #WithholdingTax #InternationalCompliance #CrossBorderFinance