Tax Reporting
Keeping up to date with regulatory changes
Secure retention of client tax information
Proficient annual reporting
Tax reporting affects all new and existing clients because we have a regulatory obligation to collect your tax details.
We are often asked why you need to supply this and what we do with the information, so we have provided a summary below of the tax reporting regimes that we have to comply with, to help you understand this.
There are three tax reporting regimes which we must adhere to:
- Qualified Intermediary (“QI”)
- Foreign Account Tax Compliance Act (“FATCA”)
- Common Reporting Standard (“CRS”)
These are explained in the sections below.
Qualified Intermediary
Is this relevant to me as a client?
This is relevant to any client who invests directly in US stocks.
What is Qualified Intermediary?
Qualified Intermediary, or “QI” as it is known, is a regime that allows foreign intermediaries (i.e. Ravenscroft) to enter into an agreement with the Internal Revenue Service (the equivalent of HMRC in the UK). Ravenscroft is then able to carry out pooled reporting for the majority of QI clients, meaning the information that they have provided on the W8 (or other W series form) sits with Ravenscroft and does not need to be shared with further parties. Our custodian and the IRS level off the responsibility to us as the QI.
The QI agreement became available for intermediaries to sign into from 1st January 2001. Ravenscroft’s nominee company has signed a QI Agreement with the IRS which means that, in return for compliance with the terms of the Agreement in correctly identifying and documenting clients as a non-US person, we are able to, for the majority of clients, carry out pooled reporting.
What does this mean for me as a client?
Any client who intends to hold US stocks is asked to provide a Form W-8 or relevant W series form before they trade. This allows you to self-certify your status as a non-US person and ensures that the correct amount of withholding tax from any amount of US source income that you receive is deducted at source.
There are various types of W-8 form depending on the type of client, but we can identify from your form whether you are considered direct or indirect and also whether individual Form 1042-S reporting is required.
Individual reporting will require us to enter your details on individual Form(s) 1042-S. These forms go directly to the IRS and to the client.
We are required to report all details of US income received and withholding tax applied to the Internal Revenue Service on an annual basis. Most clients are pool-reported but in some scenarios, such as certain flow-through entities (e.g. simple and grantor trusts etc), it may be necessary to report the client on an individually named basis (on individual Forms 1042-S).
How do you determine the rate of withholding tax to be paid by me the client?
US source income is generally taxed at a default rate of 30%. In certain cases it may be possible to reduce this if you are resident in a country that has a Double Taxation Agreement with the USA. You may be able to claim tax treaty benefit which will ensure you do not pay the full rate of tax twice on the same income: once when you received your dividend, and again in your own country of tax residence when you file your tax return.
For example, the United Kingdom has a Double Taxation Agreement with the USA so UK residents may be able to reduce the withholding tax on their US source income to 15%. Other reduced rates may apply for different countries and this can change from time to time.
If you are eligible for tax treaty benefit, you must claim this on the W-8 form which is Part II on the W-8BEN, or Part III on the W-8BEN-E. More information can be found here.
What procedures does Ravenscroft have in place to monitor compliance with the QI regime?
Ravenscroft’s nominee company as a QI must make periodic certifications to the Internal Revenue Service to confirm compliance with the terms of the QI Agreement. We have robust procedures in place and follow strict guidance, to ensure we are acting in accordance with the terms of the Agreement at all times.
Working closely with our tax advisers, we put ourselves through regular health checks and external audits to ensure we are working in full compliance with the regime and keeping up to date with any regulatory changes.
It’s worth noting that withholding tax will only be charged if you purchase US stocks directly; if you buy US stocks via a fund the tax will not apply.
Which form should I complete?
Non-US individual - W-8BEN
Non-US company - W-8BEN-E
Non-US partnership - W-8IMY and WHS in the name of the partnership, plus W series forms for each underlying partner
Non-US complex trust - W-8BEN-E in the name of the trust
Non-US simple trust - W-8IMY and WHS in the name of the trust, plus W series forms for each underlying individual/beneficiary
Non-US grantor trust with named beneficiaries - W-8IMY and WHS in the name of the trust, plus W series forms for each underlying individual/beneficiary
Non-US grantor trust with discretionary beneficiaries - W-8IMY in the name of the trust, plus W-8BEN for the grantor on the basis that the grantor is treated as the beneficial owner
Non-US unit trust - W-8BEN-E
Non-US investment fund - W-8BEN-E
Non-US charity exempt under US law - W-8EXP
Non-US charity not exempt under US law - W-8BEN-E
Non-US pension fund - W-8BEN-E
Non-US government - W-8EXP
Non-US central bank - W-8EXP
Non-US bank, broker or other financial institution that is a Non-Qualified Intermediary - W-8IMY and WHS in the name of the entity, plus W-8BEN/W-8BEN-E for each underlying individual/beneficiary. W-8BEN-E only if the entity is acting for its own account (i.e. own assets)
Non-US bank, broker or other financial institution that is a Qualified Intermediary - W-8IMY and WHS in the name of the entity, plus W-8BEN/W-8BEN-E for each underlying individual/beneficiary. W-8BEN-E only if the entity is acting for its own account (i.e. own assets)
Useful Links
What else do I need to know?
If your circumstances change, which affects the details we hold for you - such as a change of address - you must advise us immediately and provide us with a new W Series Form within 30 days of the change occurring.
Please let us know by contacting clientservices@ravenscroftgroup.com
A change to your country of residence may affect the rate of withholding tax applied to your US source income.
Have your tax details changed?
Please let us know by contacting clientservices@ravenscroftgroup.com
Foreign Account Tax Compliance Act
Is this relevant to me as a client?
This is relevant to any client who is a US tax payer, however all new clients are asked to self-certify and provide their tax details.
What is the Foreign Account Tax Compliance Act?
Also known as FATCA, this is a federal law that was passed by the United States in 2010 as part of the HIRE Act to combat tax evasion by US taxpayers holding investments in foreign accounts.
An Inter-Governmental Agreement (“IGA”) between Guernsey and the US Treasury was signed on 13 December 2013, the purpose of which is to bring into effect the provisions of the Foreign Account Tax Compliance Act ("FATCA"). This requires Ravenscroft as a foreign financial institution (“FFI”) to report details of foreign assets held by our US account holders or be subject to an additional withholding tax on withholdable payments if we do not comply.
What does this mean for Ravenscroft?
Ravenscroft as a foreign financial institution (“FFI”) must report details of foreign assets held by our US account holders or be subject to an additional withholding tax on withholdable payments if we do not comply.
Officially introduced on 1st July 2014, the regime is now well established and is considered part of our everyday procedures. All jurisdictions in which Ravenscroft operates have signed an Intergovernmental Agreement with the United States of America confirming our intention to participate in FATCA. Ravenscroft has registered its reportable FFI entities with the Internal Revenue Service signalling our intention to fully comply.
US Persons must be reported by the States of Guernsey to the Internal Revenue Service on an annual basis, providing information relating to the account as shown below. Reportable persons include direct account holders and the Controlling Persons of entities.
Reportable Persons information to be reported:
1) Name
2) Address
3) Tax Identification Number (TIN) for Specified US Persons
4) Date of birth
5) Name, address and TIN
6) The account number or functional equivalent
7) The account balance or value as of the end of the calendar year or other appropriate period (there are some exceptions to this rule)
8) Total gross amount of interest paid or credited to the account
9) Total gross amount of dividends paid or credited to the account
10) Total gross amount of other income paid or credited to the account
What does this mean for me as a client?
Ravenscroft is required to collect and hold full tax details of all clients who hold a financial account with us. We are not permitted to open any account without full tax details or a US declaration, regardless of country. You will need to provide us with your country(ies) of tax residence and tax identification number(s) or your country’s functional equivalent – for example, Guernsey and Jersey use the Social Security number for reporting and the UK uses the NI (National Insurance) number. You will also need to declare your status as a Non US Person or otherwise.
What procedures does Ravenscroft have in place to monitor compliance with FATCA?
Each of Ravenscroft’s FFIs must follow guidelines based around the Inter-Governmental Agreements between the jurisdiction in which the financial account is held, and the IRS. We must also make regular declarations to the IRS to confirm compliance with the regime, which includes annual reporting of our in-scope clients.
What else do I need to know?
If your circumstances change which affects the details we hold for you - such as a change of address - you must advise us immediately and provide us with a tax self-certification form within 30 days of the change occurring.
Please let us know by contacting clientservices@ravenscroftgroup.com
Have your tax details changed?
Please let us know by contacting clientservices@ravenscroftgroup.com
Common Reporting Standard
Is this relevant to me as a client?
This is relevant to any client who holds an account in a jurisdiction that is participating in Common Reporting Standard and if the client is tax resident a reportable jurisdiction. All clients are asked to self-certify and provide their tax details when opening an account.
What is the Common Reporting Standard?
Also known as CRS, this regime was introduced by the Organisation for Economic Co-operation and Development (OECD) and as with FATCA, the aim is to combat tax evasion. More than 100 countries have signalled their intention to participate in the global automatic exchange of tax information.
Further information can be found here.
What does this mean for Ravenscroft?
Officially introduced on 1st January 2016, the regime is well established and is considered part of our everyday procedures. All of the jurisdictions in which Ravenscroft operates have committed to the adoption of the global Common Reporting Standard regime. If your account is held in a jurisdiction that is participating in CRS and you are tax resident in a reportable jurisdiction, we are obliged to report your details to the tax authority of that jurisdiction on an annual basis.
Reportable persons include direct account holders and in some cases, the Controlling Persons of entities.
Reportable Persons information to be reported:
1) Name
2) Address
3) Tax Identification Number (TIN) or functional equivalent
4) Date and place of birth (in the case of an individual)
5) Name, address and TIN
6) The account number or functional equivalent
7) The account balance or value as of the end of the calendar year or other appropriate period (there are some exceptions to this rule)
8) Total gross amount of interest paid or credited to the account
9) Total gross amount of dividends paid or credited to the account
10) Total gross amount of other income paid or credited to the account
What does this mean for me as a client?
Ravenscroft is required to collect and hold full tax details of all clients who hold a financial account with us. We have previously collected tax details for our longer standing account holders as part of a remediation exercise and now by law must collect full tax details for every new client account that we open. You will need to provide us with your country(ies) of tax residence and tax identification number(s) or your country’s functional equivalent – for example, Guernsey and Jersey use the Social Security number for reporting and the UK uses the NI (National Insurance) number.
What procedures does Ravenscroft have in place to monitor compliance with CRS?
Each of Ravenscroft’s entities must follow strict guidelines based around the Inter-Governmental Agreements.
In 2022 the Guernsey Revenue Service bought in further legislation by ordering the completion of a non compliance report for every Financial Institution in Guernsey. This means that any client who fails to provide tax information within 90 days must be noted on the report. The Revenue Service by law has the power to freeze accounts.
What else do I need to know?
If your circumstances change which affects the details we hold for you - such as a change of address - you must advise us immediately and provide us with a tax self-certification form within 30 days of the change occurring.
Please let us know by contacting clientservices@ravenscroftgroup.com
Have your tax details changed?
Please let us know by contacting clientservices@ravenscroftgroup.com
Do you have any further questions?
Ravenscroft is unable to provide tax advice but we suggest you speak to your accountant or tax advisers if you need any specific advice. If you have any general questions in regard to the above, we would be delighted to assist.
Contact us on clientservices@ravenscroftgroup.com
