or the NFE’s formation documents require that, upon
the NFE’s liquidation or dissolution, all of its assets be
distributed to a Governmental Entity or other non-profit
organisation, or escheat to the government of the NFE’s
jurisdiction of residence or any political subdivision.
b) less than 50% of the NFE’s gross income for the preceding
calendar year or other appropriate reporting period is
passive income and less than 50% of the assets held
by the NFE during the preceding calendar year or other
appropriate reporting period are assets that produce or are
held for the production of passive income;
c) the stock of the NFE is regularly traded on an established securities
market or the NFE is a Related Entity of an Entity the stock of which
is regularly traded on an established securities market;
d) the NFE is a Governmental Entity, an International
Organisation, a Central Bank, or an Entity wholly owned by
one or more of the foregoing;
e) substantially all of the activities of the NFE consist of holding (in
whole or in part) the outstanding stock of, or providing financing
and services to, one or more subsidiaries that engage in trades
or businesses other than the business of a Financial Institution,
except that an Entity does not qualify for this status if the Entity
functions (or holds itself out) as an investment fund, such as
a private equity fund, venture capital fund, leveraged buyout
fund, or any investment vehicle whose purpose is to acquire or
fund companies and then hold interests in those companies as
capital assets for investment purposes;
f) the NFE is not yet operating a business and has no prior
operating history, (a 'start-up NFE') but is investing capital
into assets with the intent to operate a business other than
that of a Financial Institution, provided that the NFE does
not qualify for this exception after the date that is 24 months
after the date of the initial organisation of the NFE;
g) the NFE was not a Financial Institution in the past five years,
and is in the process of liquidating its assets or is reorganising
with the intent to continue or recommence operations in a
business other than that of a Financial Institution; or
h) the NFE primarily engages in financing and hedging
transactions with, or for, Related Entities that are not Financial
Institutions, and does not provide financing or hedging services
to any Entity that is not a Related Entity, provided that the group
of any such Related Entities is primarily engaged in a business
other than that of a Financial Institution.
If the Account Holder is a Passive NFE but considers that it
should be treated as an 'Active Non-Financial Foreign Entity'
under the United States FATCA regulations then please attach a
separate note to explain why. There is no need to consider this
point if the Account Holder is not US resident and does not have
any US tax-resident controlling persons.
'Control' over an Entity is generally exercised by the natural
person(s) who ultimately (whether alone or with others) has a
controlling ownership interest (typically on the basis of a certain
percentage (eg 25%)) in the Entity. Where no natural person(s)
exercises control through ownership interests, the Controlling
Person(s) of the Entity will be the natural person(s) who
exercises control of the Entity through other means. Where no
natural person(s) is/are identified as exercising control of the
Entity through ownership interests, then under the Standards
the Reportable Person is deemed to be the natural person who
holds the position of senior managing official.
'Controlling Person(s)' are the natural person(s) who exercise
control over an entity. Where that entity is treated as a Passive
Non-Financial Entity ('Passive NFE') then a Financial Institution is
required to determine whether or not these Controlling Persons
are Reportable Persons. This definition corresponds to the term
'beneficial owner' described in Recommendation 10 and the
Interpretative Note on Recommendation 10 of the Financial Action
Task Force Recommendations (as adopted in February 2012).
In the case of a trust, the Controlling Person(s) are the settlor(s),
the trustee(s), the protector(s) (if any), the beneficiary(ies)
or class(es) of beneficiaries, or any other natural person(s)
exercising ultimate effective control over the trust (including
through a chain of control or ownership). Under the Standards
the settlor(s), the trustee(s), the protector(s) (if any), and the
beneficiary(ies) or class(es) of beneficiaries, are always treated
as Controlling Persons of a trust, regardless of whether or not
any of them exercise control over the activities of the trust.
Where the settlor(s) of a trust is an Entity then the Standards
requires Financial Institutions to also identify the Controlling
Persons of the settlor(s) and when required report them as
Controlling Persons of the trust.
In the case of a legal arrangement other than a trust, 'Controlling
Person(s)' means persons in equivalent or similar positions.
'Custodial Institution' means any Entity that holds, as a
substantial portion of its business, Financial Assets for the account
of others. This is where 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: (i) the three-year period that ends on 31 December (or
the final day of a non-calendar year accounting period) prior to the
year in which the determination is being made; or (ii) the period
during which the Entity has been in existence.
'Depository Institution' means any Entity that accepts deposits
in the ordinary course of a banking or similar business.
'Entity' means a legal person or a legal arrangement, such as a
corporation, organisation, partnership, trust or foundation. This
term covers any person other than an individual (i.e. other than
a natural person).
'Financial Account' means an account maintained by a Financial
Institution and includes: Depository Accounts; Custodial
Accounts; Equity and debt interest in certain Investment Entities;
Cash Value Insurance Contracts and Annuity Contracts.
'Financial Institution' means a 'Custodial Institution', a
'Depository Institution', an 'Investment Entity', or a 'Specified
Insurance Company'. Please see the relevant domestic
guidance and the Standards for further classification
definitions that apply to Financial Institutions.
'Investment Entity' includes two types of Entities:
(i) an Entity that primarily conducts as a business one or more of