Frequently asked questions - Private Banking

1. How do I know if I am affected by FATCA?

FATCA legislation will affect both individual and entity clients of HSBC Private Bank who are treated as a US person (see glossary) for US tax purposes. The FATCA legislation will also affect certain types of entities with US owners.

The term ‘US person’ includes the following (but is not limited to):

• a citizen of the US, including an individual born in the US but resident in another country (who has not given up their US citizenship)
• a person residing in the US, including US green card holders
• certain persons who spend a significant number of days in the US each year
• US corporations, US partnerships, US estates and US trusts.

For more information regarding FATCA, please visit the IRS website or contact your tax advisor.

2. As a Private Banking client, am I only affected if I am a US citizen?

No. If an individual’s account holds any of the following seven criteria, HSBC may have to request further information or documentation from you to determine whether you are a US person under FATCA.

• US citizenship or US residence.
• US place of birth.
• US address including US PO boxes.
• US telephone number.
• Repeating payment instructions to pay amounts to a US address or an account maintained in the US.
• Current power of attorney or signatory authority granted to a person with a US address.
• In care of or hold mail address which is the sole address for the account holder.

Please refer to the glossary for the definitions of US citizens and US persons.

3. Are all individual clients of HSBC Private Bank impacted by FATCA?

No, FATCA will not impact all HSBC Private Bank clients. For most individual clients, FATCA will have minimal impact, and there will be no action required.

All new and existing clients will be reviewed in order to identify US persons (see glossary) and those with any US connections for FATCA purposes. Clients who are treated as a US person for US tax purposes will generally be subject to FATCA reporting.

4. As a Private Banking client, what does FATCA mean for me if I am a US person?

If you are considered a US person (see glossary), you may be asked to supply HSBC with additional information or documentation, typically a W-9 form and secrecy waiver.

If you are a specified US person (see glossary), HSBC will be required to report information about you and your account to the local tax authority or the IRS on an annual basis.

Additionally, if you are a US person or a specified US person, we will give consideration to the implications of our wider Private Banking policies for the services that we can provide to you.

Whilst we will correspond with affected clients in due course, HSBC cannot offer any tax advice relating to FATCA and we recommend that you contact a professional tax advisor to discuss your personal tax situation.

5. What information will HSBC report to the IRS or local tax authority?

The information reported to the IRS (see glossary) or to a client’s local tax authority will depend on the FATCA classification of the client. This information will typically be of a personal nature (for example, name, address, US taxpayer identification number), and of a financial nature (for example, account number, account balance, amounts paid into the account). We will be communicating with the affected clients in detail on these requirements.

6. As a Private Banking client, what does FATCA mean for me if I am not a US person?

For most clients, FATCA will have minimal impact, and there will be no action required.

However, HSBC may still contact you to confirm your status as a non-US person (see glossary) if we have reason to believe you are potentially a US person for FATCA purposes or we find evidence of US indicia on your account that requires us to collect additional documentation from you to meet our obligations under the legislation.

7. Does FATCA replace existing US tax rules that I already follow?

FATCA does not replace the existing US tax regimes, it may however add additional requirements and complexity to the existing US tax rules you may already follow. We recommend you contact a professional tax advisor to discuss your personal tax situation.

8. What happens if a joint account is held by a US person and a non-US person?

A joint account which has one US owner is treated as a US account and therefore the entire account is subject to the FATCA legislation. The US person on the account will be affected and may be asked to supply HSBC with additional information or documentation, typically a W-9 form and secrecy waiver.

9. Are all entity clients of HSBC Private Bank impacted by FATCA?

No, FATCA will not impact all HSBC Private Bank entity clients. However, due to the complexity of the entity classification rules under FATCA and the complex nature of HSBC Private Bank entity clients most will have to be contacted and asked to provide their FATCA classification to the bank on the appropriate IRS W form.

10. Which entity client accounts are impacted by FATCA?

All new and existing entity clients will be reviewed in order to identify any which are classified as US persons or which have US connections. This includes trusts, partnerships, foundations and companies. Entities will be required to self-certify their FATCA status and, depending on their classification, provide certain information on beneficial owners or substantial US beneficial owners or controlling persons.

11. Are trust accounts impacted by FATCA?

Yes, trust accounts are in scope for FATCA and are categorised under the entity classification rules. Due to the complex and unique structure of trusts, HSBC cannot offer any advice relating to FATCA and we recommend you contact your professional tax advisor to discuss the classification of the trust under FATCA.

12. Am I only affected if I am the trustee, settlor or beneficiary of a US trust?

No. The impacts of FATCA are wider than just US trusts. HSBC will be reaching out to impacted entity clients globally to determine their status under FATCA. The aim of this exercise is to identify those that are reportable under FATCA.

13. What do I need to do if I am affected by FATCA?

Over the next few months we will continue to review the impact of the legislation for our clients and will correspond with affected clients. For more information regarding FATCA, please visit the IRS website, or contact your professional tax advisor for further information and/or advice.

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

14. As an individual client, what type of information and/or documents can I expect to supply to HSBC Private Bank?

We will be communicating with affected clients and will provide full details of the information and/or documentation HSBC Private Bank needs for FATCA purposes.

Documents may include US tax forms (also referred to as withholding certificates, IRS W forms or self-declarations of FATCA status) (see glossary). Additional documentation may be required depending on your FATCA classification.

15. As the trustee, settlor or beneficiary of a trust what type of information and/or documents can I expect to supply to HSBC Private Bank?

We will need you to provide an IRS W form in order to establish the status of the trust under FATCA. Additional documentation on the beneficiaries of the trust may be required depending on the FATCA classification you select. We will be communicating with our primary contact for the trust in due course.

16. How frequently will I have to provide information to HSBC Private Bank for FATCA purposes?

FATCA is an ongoing process. If your account information or circumstances change, we may be required to contact you to obtain additional information and/or documents so that we are able to update your account classification under FATCA.

Please note that you may receive more than one request for documentation if you have multiple relationships with different members of the HSBC Group. All efforts will be made to avoid repeat contacts and keep the client experience as uncomplicated as possible, but it is important that you respond to all requests, even if you believe you have already supplied the requested information.

17. Will HSBC Private Bank supply me with all the forms I need to complete?

Yes. If HSBC Private Bank requires further information from you, your relationship manager will send you the relevant forms.

18. What will happen to my account(s) with HSBC Private Bank if I do not provide the information required under FATCA?

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

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

HSBC may exit the relationship with customers who decide not to provide the necessary information and documentation.

HSBC may also need to report information about customers who do not provide the required documentation to us.

In addition, we may also be required to withhold tax on certain US-source payments coming into your account. (Please refer to the glossary for further information on Withholding tax).

19. What do I need to do if I want more information about FATCA?

If you need further information or guidance on how to complete your W forms or your status under FATCA we recommend that you visit the IRS website. These forms are issued by the IRS and guidance about completing them is available on their website.

Alternatively, we recommend you contact a professional tax advisor to discuss your personal tax status.

Finally, your relationship manager is available if you have any further queries but please note that HSBC cannot offer any tax advice.

20. How are trusts treated for FATCA purposes?

A trust is treated as ‘an entity’ for the purposes of FATCA classification.

If you are the beneficial owner of an entity account at HSBC Private Bank Trust Company, you will be asked to self-certify the status of the trust for FATCA purposes (for example, by providing the appropriate withholding certificate to the bank) and HSBC Private Bank Trust Company will thereafter validate that status.

21. As the beneficiary or settlor of a trust administered by HSBC Private Bank Trust Company, what does FATCA mean for me?

Where an HSBC administered trust or company does not have any owners who are US persons (see glossary), the beneficial owner of that entity should not be directly impacted by FATCA, provided that the accounts are properly documented to ensure FATCA compliance.

If HSBC is administering an entity of which you are a beneficial owner you will be classified as either a US person or a non-US person and if you are classified as a ‘reportable US account holder’ your account will be reported to the tax authorities.

22. What will the HSBC Private Bank Trust Company report to the US or local tax authorities?

All foreign financial institutions (FFI), including HSBC non-US trustees, will need to carry out the following procedures for administered trusts and trust underlying companies (and their beneficial owners).

1. Identify beneficial owners of administered structures as either US or non-US persons.
2. Report certain information on reportable US account holders to tax authorities.

23. How will HSBC trust companies identify trust owners who are reportable US account holders for FATCA purposes?

The identification of trust owners under the US Treasury regulations is dictated by how the trust is classified for US tax purposes. ‘Trust owners’ may include:

• beneficiaries entitled to a mandatory distribution from the trust (ie, pursuant to the terms of the trust document)
• beneficiaries who may receive a discretionary distribution from the trust (ie, at the discretion of the trustee or a person with a limited power of appointment), but only if such persons receive a distribution in the calendar year.

Moreover, where the trust is a grantor trust for US tax purposes, the proper person to be documented and reported for FATCA purposes is the settlor.

The concept of ‘trust owners’ differs under IGA rules which rely on the concept of ‘controlling persons’ but essentially ‘controlling persons’ will include settlors with an interest in the trust and beneficiaries in receipt of a distribution or defined as having an interest in the trust by virtue of their entitlement to mandatory distributions.

24. Am I affected by FATCA reporting differently from one country to another?

A number of countries have signed inter-governmental agreements (IGAs) with the US. These agreements build FATCA compliance into their legal framework, and this affects the way in which an HSBC Private Bank Trust Company will report information on US accounts in order to be FATCA compliant.

Currently there are two models for IGAs:

• the IGA model 1 requires the FFI to provide the information on US accounts which they hold to the competent authority of the resident country
• the IGA model 2 requires the FFI to provide the information on US accounts which they hold directly to the IRS.

25. As a beneficiary of a trust administered by an HSBC Private Bank Trust Company, am I subject to the FATCA withholding tax if I am a US person?

If you are the beneficiary of a trust administered by an HSBC Private Bank Trust Company, you will be asked to self-certify your status for FATCA purposes (for example, by providing the appropriate withholding certificate to the bank) and an HSBC Private Bank Trust Company will thereafter validate that status.

Entities administered by HSBC which are properly documented will not be subject to the 30% withholding tax (see glossary).

Whilst we will correspond with affected clients in due course, HSBC cannot offer any tax advice relating to FATCA and we recommend you contact a professional tax advisor to discuss your personal tax situation.