Commercial Banking

United States of America

FATCA overview

The Foreign Account Tax Compliance Act (FATCA) is a new piece of legislation administered by the United States Department of Treasury and the US Internal Revenue Service (IRS) to counter tax evasion by US persons. FATCA will ensure that US taxpayers holding financial assets outside the United States will report those assets and related income to the IRS as required.

HSBC is committed to being fully FATCA-compliant in all countries where we operate.

In the US, FATCA will affect entities organized outside of the US. All US financial institutions, including HSBC Bank USA, N.A. and affiliates, will be required to obtain from customers and other payees new IRS tax forms and (in certain cases) additional documentation, withhold up to 30% US tax from certain income payments when required, and report additional information to the IRS.

If you have any questions, please consult with your local tax adviser or visit the IRS FATCA website website.

W-9: This is a link to the withholding certificate referred to as a ‘W9’ on the IRS website. This form is completed to confirm US tax status.

W-8: This is a link to the US tax forms referred to as ‘W-8s’ on the IRS website. This is a series of forms that can be completed to confirm non-US tax status.

United States persons (including entities) are subject to US taxation on their worldwide income and may be subject to tax and other filing obligations with respect to their US and non-US accounts. US persons should consult a tax adviser for more information.

Deposit products offered in the United States by HSBC Bank USA, N.A. Member FDIC.


What is FATCA?
FATCA stands for the Foreign Account Tax Compliance Act. It is a new piece of legislation designed to prevent tax evasion by US persons who hold financial accounts outside the US or invest through non-US entities, effective as of July 1, 2014. Enacted by the United States Congress in March 2010 and implemented through regulations and guidance issued by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS), the purpose of FATCA is to encourage better tax compliance by preventing US Persons (see Glossary) from using accounts held at foreign (non-US) financial institutions (FFIs) and investments in nonfinancial foreign entities (NFFEs) to avoid US taxation on their income and assets.

What is the impact of FATCA?
US financial institutions will be required to obtain new tax forms (Form W-8 or W-9) and additional documentation in certain cases, withhold tax from certain income payments, and report additional information to the IRS.

HSBC has made a commitment to being fully FATCA compliant in all countries where we operate. We will therefore be requesting all of our non-US customers to provide a new Form W-8 within the next three years (as per timelines defined in the regulation).

How do I know if I am affected?
FATCA legislation will affect businesses organized outside the US, who will have to provide a new Form W-8 and additional documentation as required. HSBC policy will not permit undocumented customers; withholding and/or account closure will be triggered if the new Form W-8 is not provided in the advised timeline.

When will the FATCA legislation become effective?
The FATCA legislation is due to become effective on July 1, 2014.

Is HSBC the only bank to be affected by FATCA?
No.  All banks and other financial institutions worldwide will be affected by FATCA; however, their approach to adopting FATCA may differ. HSBC is committed to being fully FATCA compliant in all countries where we operate.

What does HSBC have to do to comply with FATCA?
To comply with FATCA, HSBC in the US will:

  • Conduct a review of new and existing customers to identify those that are reportable and/or are subject to withholding under FATCA.
  • Require businesses incorporated outside of the US to provide a new Form W-8 no later than June 30, 2016 (different timelines will apply depending on type of business).

In certain circumstances where customers fail to provide the appropriate documentation or when doing business with non-compliant entities, HSBC may be required to apply 30% US withholding tax on certain types of US income paid to such customers.

Is FATCA applicable to personal or business customers?
FATCA will impact both personal and business customers who hold an account, policy or agreement with HSBC.

Am I only affected if I am a US entity?
No. HSBC in the US will be reaching out to customers organized outside the US to determine their status under FATCA. The aim of this exercise is to update all Forms W-8 to the new version released by the IRS in 2014.

What do I need to do as a business customer? 
In order to establish your tax status under FATCA, we will need you to provide new IRS tax forms (such as Form W-8) and in some instances additional information / documentation (including, if applicable, a Global Intermediary Identification Number (GIIN)) (see Glossary).  We will be communicating with customers that need to complete these forms, detailing by when they will need to be completed.

Does FATCA replace existing tax rules I already follow?
FATCA does not replace the existing US tax regimes. It may however, add additional requirements and complexity to the existing tax rules you may already follow (including completion of new IRS tax forms, such as new versions of Form W-8). Should you need further advice on your US or non-US tax status or FATCA status/classification, you should contact a professional tax advisor.

Why has my other Bank asked for different documentation than HSBC?
The way in which banks and other financial institutions collect information from their customers in order to confirm their tax status under FATCA may vary. This may mean that in some instances you are asked for different documentation from HSBC than from another Bank.  US banks will generally require you to complete a new IRS Form W-8, and may request additional documentation to establish your non-US tax status or FATCA status / classification.

HSBC cannot offer advice on your FATCA tax status or classification. If you need further support you should visit the IRS website or contact a professional tax advisor.

How frequently will I have to provide information for FATCA purposes?
FATCA is an ongoing process. If your account information changes, we may be required to contact you to obtain additional information/documentation so that we are able to update your account classification under FATCA.

What information will HSBC report to the IRS?
The information reported to the IRS will depend on the FATCA classification of the customer. For US owners of non-US entities that are specified US Persons or substantial US owners, this information will typically be of a personal nature (for example, name, address, US taxpayer identification number) and of a financial nature (e.g., account number, balance and amounts paid to the account).  The IRS may also, pursuant to an Inter-governmental agreement (IGA), automatically share information about non-US customers that it receives from US financial institutions with the tax authorities in the customers’ countries of residence.

What types of information and/or documents can I expect to supply to HSBC?
We will be communicating with the affected customers and provide full details of the IRS tax forms (such as Form W-8) and other information / documentation HSBC needs for FATCA purposes.

Will HSBC supply me with all the forms I need to complete?
Yes. If HSBC requires further information from you, we will either send you the relevant forms or direct you to a website where you can download them.

When do I have to provide the requested information and/or documentation for FATCA?
Customers should supply the requested documentation and information by the date contained within the communication received from HSBC. In general, the regulations require all non-US entities to have a new Form W-8 by June 30, 2016.

What will HSBC do if I do not provide the information required under FATCA?
HSBC is committed to being fully compliant with FATCA. 

HSBC may not open new accounts or offer additional products and services to customers who choose not comply with HSBC’s requests for documentation to establish a customer’s status under FATCA.

In accordance with the FATCA regulations, HSBC may exit the relationship with customers who decide not to provide the necessary information and documentation within the requested timeframe.

HSBC may also need to withhold tax on certain US-source payments paid to you or your account if the requested documentation is not provided.  This information will also be reported to the IRS. (Please see the Glossary for further information on withholding tax.) 

What do I need to do if I am affected by FATCA?
We will continue to review the impact of the legislation for our customers and will communicate with affected customers in due course.  For more information regarding FATCA, please visit the IRS website or contact your professional tax advisor for advice.

Please note that you may receive more than one request for documentation if you have multiple relationships with different members of the HSBC Group. Local privacy laws may prevent the sharing of certain information within HSBC Group across national borders; thus it is important that you respond to all requests, even if you believe you have already supplied the requested information.

HSBC is unable to offer tax advice. For tax related questions please contact your professional tax advisor or refer to the IRS website.


Foreign Financial Institution (FFI)
FFI is the abbreviation for Foreign Financial Institution. It refers to a non-US Financial Institution. The FATCA legislation contains an extensive definition of FFI and includes entities such as banks, custodian institutions, investment funds, certain trusts, and certain types of insurance companies.

Global Intermediary Identification Number (GIIN)
A GIIN is an identification number that the IRS provides to participating FFIs, registered deemed compliant FFIs, sponsoring entities, direct reporting non-financial foreign entities (DRNFFEs) and sponsored DRNFFEs and any other entities required to register on the IRS FATCA portal website. This identification number will be used to identify the registered entity FFI to withholding agents.

IRS Forms
Withholding certificates, also referred to as W-forms, are US IRS tax forms. Form W-9 is a Request for Taxpayer Identification Number and Certification. This US Tax Form is provided by an account holder to confirm and certify their US status and provide their TIN and other tax certifications. The W-8 series forms are used by foreign persons (individuals and entities) to certify their non-US status. The form establishes that one is a non-resident alien or foreign corporation and to eliminate or reduce US tax withholding from US source income (e.g., under an income tax treaty). These forms will permit a non-US customer to self-certify their status under FATCA.

Forms W-8 include: Form W-8BEN (for individuals); Form W-8BEN-E (for entities); Form W-8IMY (for intermediary flow-through entities or certain US branches); Form W-8EXP (for foreign governments, international organizations, central banks and certain tax exempt organizations); and Form W-8ECI (for non-US entities engaged in business in the US).

Inter-Governmental Agreement (IGA)
An IGA is an agreement between the US and specific countries to build FATCA compliance into the country’s legal framework so that the country can implement FATCA. An IGA will require that country’s financial institutions to provide the information on US accounts which they hold either:

  • Directly to the IRS
  • To the local tax authority of the resident country for further transmission to the IRS.

An IGA may also require the IRS to exchange information about accounts of non-US persons held in the US with foreign country tax authorities (subject to the US Treasury being satisfied that appropriate safeguards exist to protect the confidentiality and use of exchanged information).


Internal Revenue Service (IRS)
The IRS is the United States government agency responsible for tax collection and tax law enforcement.

Non-Financial Foreign Entity (NFFE)
A NFFE (Nonfinancial Foreign Entity) is an entity organized outside the US that does not meet the definition of an FFI and includes:

  • Privately held operating businesses
  • Professional service firms
  • Any other non-publicly-traded foreign entity not involved in banking or investing

A passive (non-active) NFFE that is not otherwise exempted from FATCA must provide information about its “substantial US owners” to be disclosed to the IRS or certify it has no such owners.

Specified United States (US) Person
The term specified United States person means any United States person other than:

  • A corporation the stock of which is regularly traded on one or more established securities markets for a calendar year
  • Any corporation which is a member of the same expanded affiliated group as a corporation the stock of which is regularly traded on one or more established securities markets for the calendar year
  • Any organization exempt from taxation under US federal tax law or an individual retirement plan
  • The United States or any wholly owned agency or instrumentality thereof
  • Any State, the District of Columbia, any US territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing
  • Any bank incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any state thereof
  • Any real estate investment trust
  • Any regulated investment company, or any entity registered with the Securities Exchange Commission under the Investment Company Act of 1940
  • Any common trust fund
  • Any trust that is exempt from tax or is deemed a charitable trust
  • A dealer in securities, commodities, or derivative financial instruments that is registered as such under the laws of the United States or any State
  • A broker and
  • Any tax exempt trust under a tax exempt or public school annuity plan or governmental plan

Substantial presence test
In general, an alien (non-US citizen) individual meets the substantial presence test for US tax residency if the individual is physically present in the US for

  • At least 31 days during the current calendar year, and
  • At least 183 days during the three-year period that includes the current calendar year and the two immediately preceding years (counting all days in the current year, 1/3 days in preceding year and 1/6 days in the second preceding year)
  • Subject to special exemptions for those with F, J, M, Q or diplomatic visas (i.e., foreign students, teachers, diplomats), international organization employees and certain other exemptions (see IRS Publication 519 for more details)

Substantial US owner
A substantial US owner generally is a US person owning more than a 10% interest in a corporation, partnership or non-grantor trust, or any ownership interest in a grantor trust or a certain type of investment vehicle (e.g., a real estate investment vehicle or non-professionally managed trust).

Tax Identification Number (TIN)
For an individual, a USTIN would be the individual’s US social security number (SSN) or Individual Taxpayer Identification Number (ITIN). For an entity, a USTIN would be its employer identification number (EIN).

US Person (USP)
The term "United States person" means:

  • A citizen or resident of the United States (including a green card holder and an individual that meets the “substantial presence test”),
  • A partnership created or organized in the United States or under the law of the United States or of any State, or the District of Columbia,
  • A corporation created or organized in the United States or under the law of the United States or of any State, or the District of Columbia,
  • Any estate other than a foreign estate,
  • Any trust if: a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more United States persons have the authority to control all substantial decisions of the trust, or
  • The United States government, a State or the District of Columbia (including any agency, instrumentality or political subdivision thereof).

US Citizen
The term "United States Citizen" means:

  • An individual born in the United States,
  • An individual whose parent is a US citizen,
  • A former alien who has been naturalized as a US citizen,
  • An individual born in Puerto Rico,
  • An individual born in Guam, or
  • An individual born in the US Virgin Islands.

Withholding tax
A 30% withholding tax applies under FATCA on ‘withholdable payments’ in respect of financial institutions that do not comply with the FATCA requirements and/or customers who do not provide the requisite FATCA documentation.

The term withholdable payment means:

  • Fixed or determinable, annual or periodical (FDAP) income, if such payment is from sources within the US – this will include any payment of interest and dividends by a US corporation. This will apply from July 1, 2014.
  • Any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the US. This will apply no earlier than January 1, 2017.

Various exceptions apply, including for income connected with a US business, interest/OID paid on short-term obligations (i.e., obligations with a term of 183 days or less) and income from grandfathered obligations (certain obligations outstanding on June 30, 2014).

(Last updated October 2014)

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