Glossary of FATCA terms
Retail Banking and Wealth Management – Türkiye
Foreign financial institution (FFI)
expandedFFI 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 and certain types of insurance companies.
Limited Foreign Financial Institution (LFFI)
expandedA Limited Foreign Financial Institution (LFFI) is an entity that is part of a financial group and would qualify as a participating FFI except for the fact that they reside in jurisdictions which are legally prevented from complying with FATCA. An entity must register as a LFFI with the IRS and identify itself as a Non-Participating FFI (NPFFI) to withholding agents. New accounts or new products can be opened for US Persons in countries where HSBC is registered as a LFFI but certain restrictions apply. For example, HSBC cannot open accounts for US customers not resident in the country where HSBC has registered as LFFI.
IRS Forms
expandedWithholding 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. The W-8 series forms are currently used by foreign persons (including corporations) to certify their non-US status. The form establishes that one is a non-resident alien or foreign corporation, to avoid or reduce tax withholding from US source income. These forms will permit a non-US customer to self-certify their status under FATCA.
Inter-Governmental Agreement (IGA)
expandedAn 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 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
Internal Revenue Service (IRS)
expandedThe IRS is the United States government agency responsible for tax collection and tax law enforcement.
Non-Financial Foreign Entity (NFFE)
expandedA NFFE (Non-Financial Foreign Entity) is a non-US incorporated/established entity that does not meet the definition of an FFI and includes:
- Listed or privately held operating or trading businesses
- Professional service firms
- Certain entities with a passive trade (i.e. not an operating/trading business)
- Charitable organisations
Tax Identification Number (TIN)
expandedA US IRS specific term: Tax Identification Number.
For an individual this would be their US social security number, for an entity their employer identification number.
Specified United States (US) Person
expandedThe 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 organisation 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.
US person (USP)
expandedThe term "United States person" means:
- A citizen or resident of the United States,
- 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 or trust other than a foreign estate or foreign trust. (See Internal Revenue Code section 7701(a)(31) for the definition of a foreign estate and a foreign trust.),
- A person that meets the substantial presence test, or
- Any other person that is not a foreign person.
US citizen
expandedThe 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
expandedA 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. This will apply from 1 July 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 from 1 January 2017.
Various exceptions apply, including for income connected with a US business.
Foreign Account Tax Compliance Act Glossary
expandedThis glossary provides you with a list of documents that we will accept. These documents will help us to establish whether we need to share information about any accounts and/or policies you hold with us with the Internal Revenue Services (IRS), via Ministary of Finance.
Document Code |
Document Explanation |
What you can send us |
---|---|---|
W9 |
IRS Form W-9 |
Please access the IRS Website and complete Form W-9 which is a request for Tax Payer Identification Number and Certification. For the dual language form in Turkish, as well as the customer guidance created to assist in completing this form, please refer to the related content section. Please ensure you select the correct form as some have very similar titles. |
W8 |
IRS Form W-8BEN |
Please access the IRS Website and complete Form W-8BEN, which is a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. For the dual language form in Turkish, as well as the customer guidance created to assist in completing this form, please refer to the related content section. Please ensure you select the correct form as some have very similar titles. |
S1 |
Government Issued ID |
We need a form of government-issued identification, which explicitly states your citizenship/nationality in a country other than the US, such as current passport or current national identity card. The original identification must be provided in branch. |
S2 |
Explanation of Non-US Citizenship |
We need a copy of Individual Certification of Loss of Nationality. |
S3 |
Written Explanation of US Address/Phone |
We need your written explanation for any US address and/or US phone number found on your account (correspondence or residence). Please ensure that the written explanation is dated, signed and has your full name on it. |
S4 |
Documentary Evidence of Non-US Status |
We need documentary evidence that states your permanent residence address or indicates your country of residency or citizenship/nationality.
The original identification must be provided in branch. |
S8 |
Written Explanation of US Country of Birth |
If you don’t have a Certificate of Loss of Nationality of the United States, then you’ll need to provide us with a reasonable written explanation of why you don’t have this certificate or why the US citizenship/nationality was not obtained at birth. Please ensure that the written explanation is dated, signed and has your full name on it. |
SW |
Secrecy Waiver |
It is a document that gives permission to share necessary customer information with IRS under FATCA reqirements. |
(Page last updated November 2022)
Related content
- Explanation of US Address and Phone NumberDownload PDF: Link opens in a new window
- Türkiye Secrecy WaiverDownload PDF: Link opens in a new window
- W-9 FormDownload PDF: Link opens in a new window
- W-8BEN FormDownload PDF: Link opens in a new window
- W-9 customer guidanceDownload PDF: Link opens in a new window
- W-8BEN customer guidanceDownload PDF: Link opens in a new window