IRS releases new final version of Form W-8IMY
To better align with requirements in final and temporary regulations
TAX ALERT |
The IRS has recently published a new final version of Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting, along with final form instructions. Form W-8IMY must be provided by non-U.S. intermediaries and payees receiving reportable or withholdable payments on behalf of others or as a flow-through entity. The new Form W-8IMY (Rev. June 2017) and the related instructions have been updated to better align with new requirements set forth in final and temporary regulations published by the IRS in January 2017.
Most notably, the final Form W-8IMY contains new certifications and reflects new treatment of:
- Qualified derivatives dealers (QDDs) - The form and instructions have been updated to reflect the new requirements for QDDs set forth in the updated Qualified Intermediary Agreement published in Rev. Proc. 2017-15.
- U.S. branches – The form was also updated to include a new certification required for U.S. branches of foreign financial institutions (FFIs) that are not treated as U.S. persons. Specifically, in order to avoid chapter 4 withholding for payments made on or after July 1, 2017, these branches must certify that they are applying the rules described in Reg. section 1.1471-4(d)(2)(iii)(C). This certification is now reflected in the new form. In addition, these final regulations also provide that U.S. branches of FFIs treated as U.S. persons are no longer required to be branches of FFIs with specified chapter 4 statuses. The new instructions reflect this change by allowing such branches to leave lines 5 and 9 of the form blank.
- Limited FFIs and limited branches – On Dec. 31, 2016, limited FFI and limited branch statuses expired. Accordingly, these statuses have been removed from the new form and instructions.
- Sponsored FFIs and sponsored direct reporting non-financial foreign entities (sponsored direct reporting NFFEs) – The new form has been revised to reflect that as of Jan. 1, 2017, a sponsored FFI that is a registered deemed-compliant FFI or sponsored direct reporting NFFE can no longer provide its sponsoring entity’s global intermediary identification number (GIIN) and is instead required to obtain its own GIIN and to provide on Form W-8IMY.
- Nonreporting IGA FFIs – New certifications for nonreporting IGA FFIs have been added to the new form, specifically, the requirement in the applicable regulations for withholding agents to document nonreporting IGA FFIs. In addition, the instructions have been updated to clarify that nonreporting IGA FFI that are sponsored should provide their own GIIN, if required, and not use the GIIN of their sponsoring entity. These updated instructions also provide that a trustee of a trustee documented trust that is a foreign person should provide the GIIN received when it registered as a participating FFI or reporting Model 1 FFI.
Those withholding agents with valid Forms W-8IMY currently on file for customers and investors can continue to rely on them and will not need to request the new revised version of the form be provided. Only in instances where the withholding agent has knowledge of a change of circumstances for a current investor, accountholder or other payee will withholding agents need to request the revised form be provided.
Non-U.S. intermediaries and flow-through entities opening new accounts or onboarding as investors after the revised June 2017 version of the final Form W-8IMY was released, however, will need to provide the new form or may be subject to withholding at a rate of up to 30 percent on payments of certain U.S.-sourced income.
Moving forward, withholding agents should make sure to evaluate potential changes to their systems and procedures that might be required in order to collect and validate the additional information required on the new forms. In addition, non-U.S. intermediaries and flow-through entities opening new accounts or onboarding as investors after June 2017 will need to make sure they are providing the appropriate revised final Form W-8IMY, or risk a potential 30 percent withhold rate on payments of certain U.S.-source income.
For more information on the final and temporary regulations addressed above, see our article, IRS opens 2017 with new FATCA agreements and regulations.