News Update: FATCA regulations
We would like to bring to your attention an important professional USA legislation known as the “FATCA”. We shall detail below part of its general legal principles, a few general implications and specific implications on our procedures with respect to reporting new grants to us:
FATCA (Foreign Account Tax Compliance Act) colloquially refers to some provisions included in the Hiring Incentives to Restore Employment Act signed into law on March 18, 2010 and took into effect on January 1, 2013.
It adds a new chapter to the Internal Revenue Code (Chapter 4) aimed at addressing perceived tax abuse by U.S. persons through the use of offshore accounts. The new rules require Foreign Financial Institutions (“FFI”s) to provide the Internal Revenue Service (“IRS”) with information on certain U.S. persons invested in accounts outside of the U.S. and for certain non-U.S. entities to provide information about any U.S. owner.
Generally, an FFI requires a determination of which accounts are “United States accounts” (a defined term), compliance with verification and due diligence procedures, annual reporting on those United States accounts to the U.S. Treasury, compliance with additional IRS reporting requests, and withholding 30% where applicable (e.g., recalcitrant account holders, nonparticipating FFIs, electing FFIs, etc.).
FFI’s that enter into an FFI agreement with the IRS need to report the following information on their U.S. accounts:
- The name, address, and Taxpayer Identification Number (“TIN”) of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity.
- The account number
- The account balance or value (timing to be clarified by Regulations)
- Possibly have to report the gross receipts and gross withdrawals or payments from the account
FATCA entered into force on July 1, 2014
However… an Important relief regarding grants under Section 102:
On the beginning of July, we were happy to update and announce that Israel and the United States of America signed an agreement to Improve International Tax Compliance and to Implement FATCA. The agreement – Model 1 IGA – was signed and published on June 30th 2014.
The IGA determines that accounts, in which the sole financial assets are shares or options held by a trustee for employees, according Section 102 of the Israeli Tax Ordinance (new version) 1961 (“section 102”), are exempt from FATCA and therefore, are not required to be identified and reported under the FATCA.
Therefore, according to the IGA, accounts that are being held and/or managed by Tamir Fishman within the framework of section 102 are exempt from the FATCA.
As for the non-Israeli beneficiaries, whose grants are not within the framework of Section 102, their exercises are being processed with Oppenheimer & Co. (Tamir Fishman executing broker).
Oppenheimer have informed us that they will soon request each client (company which opened an activity Oppenheimer account) to sign a new and updated W8BENE form or a W8IMY (in this case of a W8IMY form, an additional W8 or W9 for each beneficiary are required) per each account of the client with Oppenheimer.
That is in order to fully comply with all reporting requirements.
Therefore…. Specific implications
Tamir Fishman Equity Plan Services, as a stock administrator, suggest that each beneficiary, whose grants are not under section 102, shall sign a W8 or W9 as the case may be, and a copy of the said documents shall be delivered to us upon grant event.