CAYMAN ISLANDS GUIDANCE NOTES ON THE …

1 Tax Information Authority CAYMAN ISLANDS GUIDANCE NOTES ON THE international TAX COMPLIANCE REQUIREMENTS OF THE INTERGOVERNMENTAL AGREEMENTS BETWEEN THE CAYMAN ISLANDS AND THE UNITED STATES OF AMERICA AND THE UNITED KINGDOM Version Date of Issue: 1 July 2015 These GUIDANCE NOTES are issued under the Tax Information Authority ( international Tax Compliance) (United Kingdom) Regulations, 2014 and the Tax Information Authority ( international Tax Compliance) (United States) Regulations, 2014 by the Tax Information Authority as the Competent Authority for the purposes of the legislation. This document will be kept under review and updates will be issued periodically.

2 For more information, please visit Department for international Tax Cooperation Contact: Mr. Peter Stafford Email: ii Contents Acronyms .. xii 1. BACKGROUND .. 1 General .. 1 CAYMAN ISLANDS Intergovernmental Agreements .. 1 Purpose of these GUIDANCE NOTES .. 3 Scope of the Agreements .. 4 Interaction with US Regulations and other IGAs .. 5 The CAYMAN ISLANDS Competent 6 Specified Persons .. 6 2. FINANCIAL INSTITUTIONS .. 7 General .. 7 CAYMAN ISLANDS Financial Institution .. 8 Reporting CAYMAN ISLANDS Financial Institutions .. 9 Non-Reporting CAYMAN ISLANDS Financial Institutions .. 9 US Agreement .. 9 UK Agreement.

3 10 Withholding Tax US Agreement only .. 10 Closing Recalcitrant Accounts US Agreement 10 Custodial Institution .. 11 Depository Institution .. 11 CAYMAN Branches Reporting to the IRS via Form 1099 US Agreement only .. 12 Investment Entity .. 13 Definition under the Agreements .. 13 Definition under the CRS .. 14 Definition under the US Regulations .. 16 Specified Insurance Company .. 18 Captive Insurance Companies .. 18 US Internal Revenue Code Section 953(d) Captive Insurance Companies .. 19 Nominee Companies .. 20 Subsidiaries and 20 iii Related Entities and Expanded Affiliated Groups .. 23 Definition under the US Agreement.

4 23 Definition under the US Regulations .. 23 Related Entities .. 23 Non-Participating Financial Institution US Agreement only .. 24 3. NON-REPORTING FINANCIAL INSTITUTIONS US AGREEMENT ONLY .. 26 General .. 26 Registered Deemed Compliant Financial Institutions .. 27 Non-reporting members of Participating Financial Institution Groups (US Regulations 1471-5(f)(1)(i)(B)) .. 27 Qualified Collective Investment Vehicles (US Regulations 1471-5(f)(1)(i)(C)) .. 28 Restricted Funds (US Regulations 1471-5(f)(1)(i)(D)) .. 30 Certified Deemed Compliant Financial Institutions / Annex II Exemptions .. 32 Financial Institution with a Local Client Base.

5 33 Local bank .. 36 Financial Institution with only low value accounts .. 36 Qualified credit card issuers .. 37 Trustee-Documented Trust .. 37 Sponsored Investment Entities and Controlled Foreign Corporations .. 38 Sponsored Closely Held Investment Vehicles .. 39 Collective Investment Vehicle .. 40 Investment Advisers and Investment Managers .. 41 Limited Life Debt Investment Entities (US Regulations 1471-5(f)(2)(iv)) .. 42 Excepted inter-affiliate FFI .. 44 Owner Documented Financial Institutions (US Regulations 1471-5(f)(3)) .. 45 4. NON-REPORTING FINANCIAL INSTITUTIONS UK AGREEMENT ONLY .. 46 General .. 46 Small or Limited Scope Financial Institutions that Qualify as Non-Reporting CAYMAN ISLANDS Financial Institutions.

6 46 Local Credit Unions .. 46 Financial Institution with Only Low-Value Accounts .. 46 Qualified Credit Card Issuer .. 47 iv Investment Entities that Qualify as Non-Reporting CAYMAN ISLANDS Financial Institutions and Other Special Rules .. 47 Trustee-Documented Trust .. 47 Sponsored Investment Entity .. 47 Sponsored Closely Held Investment Vehicle .. 48 Investment Advisors and Investment Managers .. 49 Collective Investment Vehicle .. 50 Special Rules for reporting interests of Investment Entities in Collective Investment Vehicles 50 5. EXEMPT BENEFICIAL OWNERS .. 51 General .. 51 Governmental Entities .. 51 Retirement/pension funds.

7 51 Limited Capacity Exempt Beneficial Owners .. 51 6. 54 How do the Agreements apply to CAYMAN Island resident trusts? .. 54 What is a CAYMAN ISLANDS resident trust? .. 55 Multi-jurisdictional 55 How are trusts categorised for the purposes of the Agreements? .. 56 Trusts as Investment Entities .. 56 Trusts as NFFEs .. 61 Registration US Agreement only .. 61 Reporting obligations .. 62 Information to be reported trusts as Investment Entities .. 63 Equity Interest (balance or value) .. 65 Amounts paid or credited to the Specified Person .. 66 Treatment of companies underlying CAYMAN Island resident trusts.

8 66 Trusts that hold Non-Financial Assets .. 67 Employee Benefit Trusts (EBTs) .. 67 Non-professional trustees/family trusts/family offices .. 68 Private Trust Company .. 68 Charitable 68 v Unit trusts .. 69 UK Resident Non Domiciled Specified UK Person UK Agreement only .. 69 7. COLLECTIVE INVESTMENT VEHICLES .. 70 Definition of a Collective Investment Vehicle .. 70 How the Agreements apply to fund entities .. 70 Reporting Obligations .. 71 Information to be reported .. 72 Related Entities .. 73 Platforms and other distributors of Funds .. 73 Fund nominees- Distributors in the chain of legal ownership .. 74 Advisory only distributors.

9 75 Deemed Compliant Collective Investment Vehicles .. 76 Sponsored Investment Entities .. 77 Sponsored Offshore Collective Investment Vehicles .. 78 Registration .. 79 Equity & Debt Interest in an Investment Entity .. 79 Debt or Equity interest regularly traded on an established securities market .. 80 Aggregation of Accounts .. 80 Transfer Agents or Service Provider .. 80 8. OTHER SPECIFIC VEHICLES .. 82 Partnerships .. 82 Securitisation or Structured Finance Vehicles .. 82 Personal Investment Companies .. 84 Segregated Portfolio Companies, Umbrella Funds and Multi-issuance Entities .. 84 Capital Raising Subsidiary Entities.

10 85 9. NON FINANCIAL FOREIGN ENTITIES (NFFEs) .. 86 General .. 86 Passive NFFE .. 86 Active NFFE .. 87 Direct Reporting NFFEs and Sponsored Direct Reporting NFFEs .. 89 Passive Income .. 89 Value of assets .. 90 vi Controlling Person .. 90 Examples .. 91 10. FINANCIAL ACCOUNTS .. 93 General .. 93 Accounts maintained by Financial Institutions .. 95 Reportable 96 Ceasing to be a Reportable Account .. 96 Account Holders .. 97 Trusts and Estates .. 97 Partnerships .. 98 Accounts held by persons other than a Financial Institution .. 98 Joint Accounts .. 98 Cash Value Insurance Contracts and Annuity Contracts.