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TMI BlogThe following Entities shall be treated as exempt beneficial owners or deemed-compliant FFIsX X X X Extracts X X X X X X X X Extracts X X X X ..... luded in the mutual agreement or arrangement described in paragraph 6 of Article 3 of the Agreement. I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated as Non-Reporting Indian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution. A. Governmental Entity. The government of India, any political subdivision of India (which, for the avoidance of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of India, board, corporation, authority or any other body established or constituted under an act of the Government of India or of its political subdivisions or any one or more of the foregoing (each, an Indian Governmental Entity ). This category is comprised of the integral parts, controlled entities, and political subdivisions of India. 1. An integral part of India means any person, organization, agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The following Entities shall be treated as Non-Reporting Indian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code. A. Treaty-Qualified Retirement Fund . A fund established in India, provided that the fund is entitled to benefits under an income tax treaty between India and the United States on income that it derives from sources within the United States (or would be entitled to such benefits if it derived any such income) as a resident of India that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or provide pension or retirement benefits. B. Broad Participation Retirement Fund. A fund established in India to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund: 1. Does not have a single beneficiary with a right to more than five percent of the fund s assets; 2. Is subject to government regulation and provides annual information reporting abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Owner. A fund established in India by an exempt beneficial owner to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the exempt beneficial owner. E. Investment Entity Wholly Owned by Exempt Beneficial Owners . An Entity that is an Indian Financial Institution solely because it is an Investment Entity, provided that each direct holder of an Equity Interest in the Entity is an exempt beneficial owner, and each direct holder of a debt interest in such Entity is either a Depository Institution (with respect to a loan made to such Entity) or an exempt beneficial owner. F. Regimental Fund or Non-public Fund of the Armed Forces. A fund established in India as a regimental fund or non-public fund by the armed forces of the Union of India for the welfare of the current and former members of the armed forces and whose income is exempt from tax under section 10(23AA) of the Indian Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be considered to have solicited customers or Account Holders outside India merely because the Financial Institution (a) operates a website, provided that the website does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders, or (b) advertises in print media or on a radio or television station that is distributed or aired primarily within India but is also incidentally distributed or aired in other countries, provided that the advertisement does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders; 4. The Financial Institution must be required under the laws of India to identify resident Account Holders for purposes of either information reporting or withholding of tax with respect to Financial Accounts held by residents or for purposes of satisfying India s AML due diligence requirements; 5. At least 98 percent of the Financial Accounts by value maintained by the Financial Institution must be held by reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for individuals who are Specified U.S. Persons and residents of India. B. Local Bank. A Financial Institution satisfying the following requirements: 1. The Financial Institution operates solely as (and is licensed and regulated under the laws of India as) (a) a bank or (b) a credit union or similar cooperative credit organization that is operated without profit; 2. The Financial Institution s business consists primarily of receiving deposits from and making loans to, with respect to a bank, unrelated retail customers and, with respect to a credit union or similar cooperative credit organization, members, provided that no member has a greater than five percent interest in such credit union or cooperative credit organization; 3. The Financial Institution satisfies the requirements set forth in subparagraphs A(2) and A(3) of this section, provided that, in addition to the limitations on the website described in subparagraph A(3) of this section, the website does not permit the opening of a Financial Account; 4. The Financial Institution does not have more than $175 million in assets on its balance sheet, and the Financial Institution and any Related Entities, taken together, do not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 1471 of the U.S. Internal Revenue Code. In addition, paragraph F of this section provides special rules applicable to an Investment Entity. A. Trustee-Documented Trust. A trust established under the laws of India to the extent that the trustee of the trust is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, or Participating FFI and reports all information required to be reported pursuant to the Agreement with respect to all U.S. Reportable Accounts of the trust. B. Sponsored Investment Entity and Controlled Foreign Corporation. A Financial Institution described in subparagraph B(1) or B(2) of this section having a sponsoring entity that complies with the requirements of subparagraph B(3) of this section. 1. A Financial Institution is a sponsored investment entity if (a) it is an Investment Entity established in India that is not a qualified intermediary, withholding foreign partnership, or withholding foreign trust pursuant to relevant U.S. Treasury Regulations; and (b) an Entity has agreed with the Financial Institution to act as a sponsoring entity for the Financial Institution. 2. A Financial Institution is a sponsored controlled foreign corporation if (a) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entified; d) The sponsoring entity agrees to perform, on behalf of the Financial Institution, all due diligence, withholding, reporting, and other requirements that the Financial Institution would have been required to perform if it were a Reporting Indian Financial Institution; e) The sponsoring entity identifies the Financial Institution and includes the identifying number of the Financial Institution (obtained by following applicable registration requirements on the IRS FATCA registration website) in all reporting completed on the Financial Institution s behalf; and f) The sponsoring entity has not had its status as a sponsor revoked. C. Sponsored, Closely Held Investment Vehicle. An Indian Financial Institution satisfying the following requirements: 1. The Financial Institution is a Financial Institution solely because it is an Investment Entity and is not a qualified intermediary, withholding foreign partnership, or withholding foreign trust pursuant to relevant U.S. Treasury Regulations; 2. The sponsoring entity is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, or Participating FFI, is authorized to act on behalf of the Financial Institution (such as a profess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more exempt beneficial owners, Active NFFEs described in subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial Institutions that are not Nonparticipating Financial Institutions. F. Special Rules. The following rules apply to an Investment Entity: 1. With respect to interests in an Investment Entity that is a collective investment vehicle described in paragraph E of this section, the reporting obligations of any Investment Entity (other than a Financial Institution through which interests in the collective investment vehicle are held) shall be deemed fulfilled. 2. With respect to interests in: a) An Investment Entity established in a Partner Jurisdiction that is regulated as a collective investment vehicle, all of the interests in which (including debt interests in excess of $50,000) are held by or through one or more exempt beneficial owners, Active NFFEs described in subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial Institutions that are not Nonparticipating Financial Institutions; or b) An Investment Entity that is a qualified collective investment vehicle under relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws of India. i. The account is subject to regulation as a savings vehicle for purposes other than for retirement; ii. The account is tax-favored (i.e., contributions to the account that would otherwise be subject to tax under the laws of India are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate); iii. Withdrawals are conditioned on meeting specific criteria related to the purpose of the savings account (for example, the provision of educational or medical benefits), or penalties apply to withdrawals made before such criteria are met; and iv. Annual contributions are limited to $50,000 or less, applying the rules set forth in Annex I for account aggregation and currency translation. b) An account established in India under the Senior Citizens Saving Scheme of 2004 to provide Indian senior citizens saving schemes and savings and deposits account. B. Certain Term Life Insurance Contracts. A life insurance contract maintained in India with a coverage period that will end before the insured individual attains age 90, provided that the contract satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time. 4. An obligation of a Financial Institution solely to facilitate the payment of taxes at a later time. E. Partner Jurisdiction Accounts. An account maintained in India and excluded from the definition of Financial Account under an agreement between the United States and another Partner Jurisdiction to facilitate the implementation of FATCA, provided that such account is subject to the same requirements and oversight under the laws of such other Partner Jurisdiction as if such account were established in that Partner Jurisdiction and maintained by a Partner Jurisdiction Financial Institution in that Partner Jurisdiction. VI. Definitions. The following additional definitions shall apply to the descriptions above: A. Reporting Model 1 FFI. The term Reporting Model 1 FFI means a Financial Institution with respect to which a non-U.S. government or agency thereof agrees to obtain and exchange information pursuant to a Model 1 IGA, other than a Financial Institution treated as a Nonparticipating Financial Institution under the Model 1 IG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into force by September 30, 2015. Based on this understanding, as of the date of signature of the Agreement, the United States Department of the Treasury intends to continue to treat each Indian Financial Institution, as that term is defined in the Agreement, as complying with, and not subject to withholding under section 1471 of the U.S. Internal Revenue Code during such time as India is pursuing the necessary internal procedures for entry into force of the Agreement. The United States further understands that India s Ministry of Finance intends to contact the United States Department of the Treasury as soon as it is aware that there might be a delay such that India would not be able to provide its notification under paragraph 1 of Article 10 of the Agreement prior to September 30, 2015. In reference to subparagraphs 1(y) and 1(z) of the Agreement (definitions of Cash Value and Cash Value Insurance Contract) , it is understood that a single premium life insurance contract that does not permit an amount to be paid on surrender or termination of the contract and that does not allow amounts to be borrowed under or with regard to the contract, does not constitute a Cash Value Insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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