On 7 February 2014 the Department of Finance published revised draft guidance notes (the Guidance) to FATCA. A revised draft of the Financial Accounts Reporting Regulations (the Regulations) were also published. The Irish tax authorities are accepting observations and comments on the updated Guidance up to Friday 21 May 2014.
Among the key changes from the previous draft of the Guidance are:
- A revised timeline for FATCA implementation
The implementation of FATCA was delayed by six months from 1 January 2014 to 1 July 2014. This postponement was announced by the US Internal Revenue Service Notice 2013-43 which issued in July last year. As a result of that change the Guidance has been updated to reflect the resulting changes required to the timelines as set out in the Ireland-US Intergovernmental Agreement (IGA). The draft Regulations have also been updated so that the new timelines should be read into the existing IGA.
- Investment Entity clarification
While the definitions as to what constitute Financial Institutions remain largely the same some further clarification is given in the context of an Investment Entity. An Investment Entity is an entity that primarily conducts as a business, or is managed by an entity that conducts as a business certain activities for or on behalf of a customer, e.g. investing , administering or managing funds on behalf of other persons. The Guidance qualifies this noting that an entity will be regarded as an Investment Entity where its gross income attributable to such activities is equal to or exceeds 50 per cent of the entity’s gross income during the shorter of the preceding three years or the period during which the entity has been in existence.
- Regular trading analysis
Ireland’s IGA does not contain a definition of ‘regularly traded’ unlike more recently signed IGA’s with, for example, France and the Cayman Islands which require a meaningful volume of trading in respect to the interests on an ongoing basis. As with the UK the revised Irish Guidance indicates that an equity or debt interest will be considered to be regularly traded if listed on a recognised stock exchange. There is no need to check annually if any transactions have been undertaken. One proviso however is that listing must not be solely for the purpose of avoiding reporting under FATCA. This interpretation of ‘regularly traded’ should have positive consequences for, for example, debt issuance vehicles with listed debt and exchange traded funds.