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Definitions for CRS and FATCA

Definitions specific for the Common Reporting Standard question in relation to your CRS status

Other Active NFE means an entity that satisfies one of the criteria below:

  • The entity is wholly owned by a governmental entity, an international organisation or central bank.
  • During the last year, more than 50% of the entity’s gross income consisted of active income and less than 50% of the assets held by the entity were used to produce Passive Income (see below for the definition).
  • The entity is a start-up company that was established less than 24 months ago and is currently not operating a business (nor has it previously operated a business) and will not be operating as a Financial Institution.
  • The entity is in liquidation or bankruptcy and was not a Financial Institution in the last 5 years.
  • The entity is reorganising with the intent to commence or recommence business, other than as a Financial Institution.
  • Substantially all of the entity’s activities consist of acting as a holding company of one or more subsidiaries that are not Financial Institutions. This criterion does not apply if the entity functions as an investment fund or any investment vehicle with the purpose of acquiring companies and holding interests in those companies as capital assets for investment purposes.
  • Substantially all of the entity’s activities consist of providing financing and services to one or more subsidiaries that are not Financial Institutions. This criterion does not apply if the entity functions as an investment fund or any investment vehicle with the purpose of funding companies and holding interests in those companies as capital assets for investment purposes.
  • The entity primarily engages in financing and hedging transactions with (or for) Related Entities that are not (or as a group, do not engage in the business of) Financial Institutions. You must not provide these services to any entity that is not a Related Entity.
  • The entity is a Non-Profit Organisation (see below for the definition).

Participating Country means the countries that have implemented the Common Reporting Standard (as set out at http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/crs-by-jurisdiction/#d.en.345489), which at the date this document was prepared, includes; Argentina, Austria, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Japan, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Monaco, Montserrat, Netherlands, New Zealand, Norway, Portugal, Romania, St Vincent & The Grenadines, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turks & Caicos, Uruguay, Antigua & Barbuda, Bahamas, Barbados, China, Cook Islands, Costa Rica, Curacao, Hong Kong, Indonesia, Israel, Kuwait, Lebanon, Malaysia, Marshall Islands, Nauru, Panama, Poland, Russia, Saint Kitts & Nevis, Saint Lucia, Samoa, Saudi Arabia, Seychelles, Sint Maarten and United Kingdom.

Passive NFE means any entity that does not fall into any of the following categories:

  • a Custodian Institution, Other Investment Entity, Depository Institution or Specified Insurance Company;
  • a Listed Corporation or a Related Entity of a Listed Corporation;
  • an Other Active NFE;
  • an Investment Entity that is managed by another Financial Institution that is a tax resident in a Participating Country.

Definitions specific for the Foreign Account Tax Compliance Act question in relation to your FATCA status

Active NFFE means any entity that is not a Financial Institution or a Nonparticipating Financial Institution that meets any one of the following criteria:

  1. During the last year, less than 50% of the entity’s gross income consisted of Passive Income and less than 50% of the assets held by the entity were used to produce Passive Income (see below for the definition of Passive Income).
  2. The entity is listed on an established securities market.
  3. The entity is a Related Entity of an entity that is listed on an established securities market.
  4. The entity is incorporated or organised in a U.S. Territory and all of the owners of the entity are bona fide residents of that U.S. Territory.
  5. The entity is a governmental entity (other than the U.S. government) an international organisation or central bank (other than a U.S. central bank).
  6. The entity is wholly owned by a governmental entity (other than the U.S. government), an international organisation or central bank (other than a U.S. central bank).
  7. Substantially all of the entity’s activities consist of acting as a holding company of one or more subsidiaries that are not Custodian Institutions, Investment Entities, Depository Institutions or Specified Insurance Companies. This criterion does not apply if the entity functions as an investment fund or any investment vehicle with the purpose of acquiring companies and holding interests in those companies as capital assets for investment purposes.
  8. Substantially all of the entity’s activities consist of providing financing and services to one or more subsidiaries that are not Custodian Institutions, Investment Entities, Depository Institutions or Specified Insurance Companies. This criterion does not apply if the entity functions as an investment fund or any investment vehicle with the purpose of funding companies and holding interests in those companies as capital assets for investment purposes.
  9. The entity is a start-up company that was established less than 24 months ago and is currently not operating a business (nor has it previously operated a business) and will not be operating as a Financial Institution.
  10. The entity is in liquidation or bankruptcy and was not a Financial Institution in the last 5 years.
  11. The entity is reorganising with the intent to commence or recommence business, other than as a Financial Institution.
  12. The entity is regularly traded (as that term is used in the relevant FATCA U.S. Treasury Regulations) on one or more established securities markets for the calendar year.
  13. The entity primarily engages in financing and hedging transactions with (or for) Related Entities that are not (or as a group, do not engage in the business of) Financial Institutions. You must not provide these services to any entity that is not a Related Entity.
  14. The entity is a Non-Profit Organisation (see below for the definition).

Nonparticipating Financial Institution means a Financial Institution other than a participating FFI, a deemed compliant FFI, or an exempt beneficial owner, as those terms are defined under the relevant FATCA U.S. Treasury Regulations.

Passive NFFE means any entity that is not any of the following;

  • a Financial Institution or a Nonparticipating Financial Institution;
  • an Active NFFE; or
  • a withholding foreign partnership or withholding foreign trust pursuant to relevant U.S. Treasury Regulations.

Definitions that apply to both the CRS and FATCA questions

Custodial Institution means any entity that holds financial assets for the account of others as part of its business and the entity’s gross income attributable to the holding of financial assets and related financial services equals or exceeds 20% of the entity’s gross income during the shorter of:

  • three years prior to the current year; or
  • the period since the establishment of the entity.

Depository Institution means any entity that accepts deposits in the ordinary course of a banking or similar business. For example, a bank or a financial lease company.
Financial Institution means a Depository Institution, Custodial Institution, Other Investment Entity, Investment Entity that is managed by another Financial Institution or Specified Insurance Company, but excludes a Nonparticipating Financial Institution.
Investment Entity that is managed by another Financial Institution means any entity, the gross income of which is primarily* attributable to investing, reinvesting, or trading in financial assets, if the entity is managed by a Depository Institution, Custodial Institution, Specified Insurance Company or an Other Investment Entity.

Non-Profit Organisation means an organisation that meets all of the following requirements:

  • the entity was established and is operated in its country of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes, or the entity is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
  • the entity is exempt from income tax in its country of residence;
  • the entity has no shareholders or members who have a proprietary or beneficial interest in the income or assets of the entity;
  • the applicable laws of the entity’s country of residence or the entity’s formation documents do not permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or non-charitable entity, except pursuant to the conduct of the entity’s charitable activities, as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the entity has purchased; and
  • the applicable laws of the entity’s country of residence or the entity’s formation documents require that upon the entity’s liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organisation.

Other Investment Entity means an entity that primarily* conducts as a business one or more of the following activities or operations on behalf of a customer:

  • trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange interest rate and index instruments; transferable securities; or commodity futures trading;
  • individual and collective portfolio management; or
  • otherwise investing, administering, or managing funds, money, or financial assets on behalf of other persons.

*Applies only if the gross income attributable to the relevant activities is at least 50% of gross income during the shorter of three years prior to the current year or the period since the establishment of the entity.

Passive Income is the portion of the gross income that consists of:

  • dividends;
  • interest and income equivalent to interest;
  • rents and royalties, other than rents and royalties derived in the active conduct of a trade or business conducted, at least in part, by employees of the entity;
  • annuities;
  • income from swap-contracts;
  • rental income of real estate property provided that this income can be obtained by performing little to no activity.

The list above is not exhaustive. You should refer to the relevant regulations under the Common Reporting Standard or FATCA U.S. Treasury Regulations for further information.

You are a Related Entity of another entity (second entity) if the second entity is a subsidiary of you, you are a subsidiary of the second entity or you are both subsidiaries of another entity.

Specified Insurance Company means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a cash value insurance contract or an annuity contract.