21.01.2018

13'

Reporting Reminder 2018

CRS

From 2018 on, Swiss financial institutions must report CRS data to the Swiss Federal Tax Authority (SFTA). Reporting FIs must register on the Swiss registration and filing portal (ESTV SuisseTax)

The reporting FIs must transmit the information to the SFTA by June 30, 2018 the latest. 

The reports must be filed according to the SFTAtechnical instuctions. 

Additionally, the SFTA has released a guide for the data transmission.

The data can be filed in three ways:

  1. Upload of XML-file via ESTV SuisseTax (XML Data-Upload)

  2. Manual data entry via ESTV SuisseTax (Online form)

  3. Webservice-interface from machine to machine (M2M)

If a FI chooses the third way, the interface must be activated first. The reports cannot be filed in paper form.

8966 FATCA Reporting

Important changes in brief

Reporting on accounts held by Non-Participating FFIs

Reporting Model 2 FFIs that reported Non-Participating FFIs as part of their non-consenting reporting in January are not required to report such accounts anymore. Therefore, the respective boxes and lines do not have to be filled out (Line 5 of Part II, Line 1 and 3 of Part V). However, accounts held by Non-Participating FFIs with consent to report will still be reported as part of the regular 8966 reporting in March.

Limited FFIs and limited branches

References to limited FFI and limit branch statues have been removed as these statuses do not exist anymore.

Reporting Model 2 FFIs reporting on non-consenting U.S. accounts

For preexisting accounts that are non-consenting U.S. accounts reported by Reporting Model 2 FFIs, the following pooled reporting categories should be used:

For cases where a newly opened individual account has a change in circumstances that causes the original self-certification to be incorrect or unreliable, and where the Reporting Model 2 FFI is unable to obtain a valid self-certification establishing whether the account holder is a U.S. citizen or resident, pooled reporting category “recalcitrant account holders with U.S. indicia” should be used.

PFFIs (including Reporting Model 2 FFIs) that are partnerships

For a PFFI that is a partnership, the instructions relating to reportable amounts of its partners’ interest in the partnership in Part IV, line 4d, have been updated to conform to the temporary chapter 4 regulations published in January 2017 (T.D. 9809).

Mergers and bulk acquisitions of accounts

If a PFFI (successor FFI) acquires accounts of another PFFI (predecessor FFI) in a merger or bulk acquisition of accounts, the successor may take on the reporting responsibility of the predecessor and report the acquired accounts on Form 8966 for the calendar year in which the merger or acquisition occurs, provided the requirements described in the Regulations are satisfied. This relates also to Reporting Model 2 FFIs which acquire other Reporting Model 2 FFIs.

Identifying numbers for paper Forms 8966

A unique identifying number must be assigned to each Form 8966. For 2017, the number must be included at the end of the filer name in Part 1, line 1a.

Filing Forms

Swiss Reporting Model 2 FFIs have the following two reporting deadlines for the reporting year 2017:

It is within the responsibilies of the FFI to perform the 8966 FATCA reporting, and a delegation of the responsibility to a custodian is not possible.

As a Swiss Reporting Model 2 FFI, the 8966 FATCA reporting is performed electronically through the International Data Exchange Service (IDES). The FATCA XML Schemas andBusiness Rules for Form 8966 and the publications contained therein provide guidelines to meet the FATCA reporting requirements.

In addition, the aggregated reporting of non-consenting accounts may result in a group request from the U.S., which, in turn, may require a Reporting Swiss Financial Institution to transmit account data to the Swiss Federal Tax Administration (FTA). The data and documentation needed to be sent to the FTA additionally include a SEI-XML file and further documentation in pdf format. Further information can be found on the website “Administrative assistance toFATCA“ of the FTA.

Extension request

To request an automatic 90-day extension of time to file Forms 8966 to report consenting accounts, use Form 8809-I. Please note that Swiss Reporting Model 2 FFIs cannot request an extension of time to file Form 8966 to report non-consenting accounts.

1042-S and 1042 Reporting

Important changes in brief

General

Qualified derivatives dealers (QDDs)

As of 2017, QDDs must assume certain withholding and reporting responsibilities with respect to payments made on potential section 871(m) transactions in its QDD capacity. QDDs must fill out the respective information on Form 1042 and Form 1042-S if they made any payments in their QDD capacity that are reportable.

Form 1042-S

Unique form identifier

Beginning in 2017, a unique identifying number must be assigned to each Form 1042-S. The number cannot be the recipient’s U.S. or foreign TIN, it must be numeric and exactly 10 digits.

Amended forms

Beginning in 2017, each amended form must have an amendment number. Any amended form must have the same unique form identifier as the original form that is being amended.

Changes to codes

Income code 54 has been changed from “Other income” to “Substitute payments - interest from certain actively traded or publicly offered securities” and applies to payments of interest on actively traded or publicly offered securities if the interest is described in the Treasury Regulations and the withholding agent reduced the rate of withholding under an income tax treaty.

Income code 23 (Gross income - Other) applies to reportable payments of income for which no other income code applies.

There is a new chapter 4 exemption code which can be applied for payments that are not subject to chapter 4 withholding and for which no other chapter 4 exemption code applies.

The following codes have been removed as these exemptions do not apply anymore:

List of foreign country codes

Beginning in 2017, the same list of country codes used on other IRS forms should be used for filing Form 1042-S. 

Foreign taxpayer identifying number and date of birth

Beginning in 2017, financial institutions with payments on an obligation that they maintains at its U.S. office or U.S. branch must report the recipient's foreign taxpayer identifying number (FTIN) and date of birth (if the recipient is an individual).

Amount repaid to recipient

Overwithheld tax repaid to a recipient under the set-off procedure should be reported in box 11 of form 1042-S, if the repayment is made in the year following the calendar year of overwithholding.

Combined reporting procedures

Special procedures for combined information reporting under chapter 3 may be applied by successor entities in certain situations following a merger or acquisition (see Revenue Procedure 99-50 for details). These procedures may also be used for purposes of reporting under chapter 4.

Reminder: U.S. Payee Pools

Please keep in mind that forms 1042-S for payments paid out to U.S. Payee Pools (accounts held by U.S. persons) must be filed. These forms will be usually reported under chapter 4 exemption code 18 (U.S. Payees of participating FFI or registered deemed-compliant FFI) and recipient code 48 (U.S. Payees Pool).

Form 1042

Potential 871(m) transactions

As of 2017, Section 3 of Form 1042 applies to payments made by a withholding agent under any potential section 871(m) transaction (rather than just payments made under notional principal contracts or other derivatives contracts that reference a U.S. stock or underlying security).

Reconciliation of U.S. source FDAP income

For 2017, Section 2 doesn’thave any fields for the amounts of excluded payments on offshore obligations and excluded payments on collateral anymore (as these exclusions no longer apply under the chapter 4 regulations).

Filing Forms

You must file your 1042-S and 1042 reporting with the IRS by March 15, 2018. You have the option to request an automatic extension of time to file (see below).

You have to file Forms 1042-S electronically as a .txt-file through the FIRE system. You can find the specifications for the electronic filing of Forms 1042-S for the tax year 2017 in Publication 1187.

Form1042 must still be filed on paper. You may be required to attach copies of forms 1042-S received by upstream withholding agents. For filing Form 1042, please use the following address:

Ogden Service Center

P.O. Box 409101
Ogden, UT 84409
USA

Be sure to retain proof that you mailed the tax forms on time. By having proof of filing on time you can avoid late filing penalties. If you are using a private delivery service (e.g. DHL, FedEx etc.), you can use the following street address:

Ogden - Internal Revenue Submission Processing Centre

1973 Rulon White Blvd.
Ogden, UT 84201
USA

Should you seek assistance in generating the electronic file, please do not to hesitate to contact us.

Extension Requests

In order for the extension request to be accepted you must file it with the IRS by March 15, 2018.

For an automatic 30-day extension of time to file Forms 1042-S, use Form 8809.

For an automatic 6-month extension of time to file Form 1042, use Form 7004. Please note that by filing Form 7004 you cannot extend the time to pay your taxes due. The deadline to pay your taxes remains unchanged.

You can complete and submit both forms online and file to the IRS electronically as follows:

1099 Reporting

We would like to remind you that Swiss Reporting Model 2 FFIs must continue to apply backup withholding on U.S. non-exempt recipients under chapter 61 on reportable payments, if required, for the period during which an account is treated as non-consenting U.S. account. As a result, you as QI, in certain cases, may still have to make sure that the 1099 reporting for QI purposes is performed.

For cases where you have to file a 1099 reporting, you must meet one of the following deadlines depending on what and how you submit:

Please note that the 1099 reporting on paper cannot be performed using the downloadable PDF. Copies 1, B, 2 and C can be filled out online in a pdf format. You must file the original 1099 paper forms which you have to order from the IRS. Should you require original paper forms for the 1099reporting, they can be ordered from the IRS or directly from us.

For a 30-day extension of time to file Forms 1099, use Form 8809. You must file Form 8809 electronically through the FIRE system no later than February 28, 2018 (if you file Forms 1099 on paper) or March 31, 2018 (if you file Forms 1099 electronically).

Please remember that it is the primary responsibility of the QI to ensure that the 1099 reporting has been performed, even if the reporting has been delegated to a custodian. Should your custodian fail to report as required under the QI agreement, you must report your reportable payments to U.S. persons directly to the IRS.