Glossary of Common CRS and FATCA terms
Active Non-Financial Entity (Active NFE)
A Non-Reporting Financial Entity (NFE) that meets any of these criteria:
- active by reason of income and assets (less than 50% of the NFE’s gross income for the preceding year or other appropriate reporting period is passive income and less than 50% of the assets held by the NFE during the preceding year or other appropriate reporting period are assets that produce or are held for the production of passive income
- publicly listed NFE
- Governmental Entity, International Organisation, Central Bank, or their wholly owned entity
- holding NFE that is a member of a non-financial group (generally where substantially all of the activities of the NFE consist of holding the shares of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses)
- NFE that is not yet operating a business and has no prior operating history, (a start-up NFE) but is investing capital into assets with the intent to operate a business
- NFE that is liquidating or emerging from bankruptcy
- treasury centre that is a members of a nonfinancial group
- not-for-profit NFE operating exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or a professional organisation, business league, chamber of commerce, labour organisation, or other organisation operated exclusively for the promotion of social welfare.
Controlling Person
Generally, a natural person who exercises control over an entity. Control depends on the legal structure of the entity.
- For a company, Controlling Persons include any natural person that holds directly or indirectly more than 25 percent of the shares or voting rights of the entity as a beneficial owner. If no such person exists, then it is any natural person(s) that otherwise exercise control over the management of the entity (for example, the senior managing official of the company).
- For a trust, the term Controlling Persons means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust.
- For a partnership Controlling Person means any natural person who exercises control through direct or indirect ownership of the capital or profits of the partnership, voting rights in the partnership, or who otherwise exercises control over the management of the partnership.
Foreign Financial Institution (FFI)
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.
Governmental Entity
The government of a jurisdiction, any political subdivision of a jurisdiction (which, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of a jurisdiction or of any one or more of the foregoing.
Non-financial foreign entity (NFFE)
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 (ie, not an operating or trading business)
- charitable organisations.
Passive Income
Passive income would generally include:
- dividends;
- interest;
- income equivalent to interest;
- rents and royalties, other than rents and royalties derived in the active conduct of a business conducted, at least in part, by employees of the NFE;
- annuities;
- the excess of gains over losses from the sale or exchange of Financial Assets that gives rise to passive income described above;
- the excess of gains over losses from transactions (including futures, forwards, options, and similar transactions) in any Financial Assets;
- the excess of foreign currency gains over foreign currency losses; and
- net income from swaps.
Where an NFE that regularly acts as a dealer in Financial Assets, any income earned in the ordinary course of such dealer’s business is not passive income.
Passive Non-Financial Entity
A Passive NFE means any NFE that is not an Active NFE.
A NFE will be deemed a Passive NFE if more than 50% of the NFE’s gross income for the preceding calendar year or appropriate reporting period is passive income or the assets held by the NFE during the same period are assets that produce or are held for the production of passive income.
Related entity
An Entity is a “Related Entity” of another Entity if either Entity controls the other Entity, or the two Entities are under common control.
For this purpose, control includes direct or indirect ownership of more than 50 per cent of the vote and value in an Entity.
US Person
- a citizen or resident of the United States
- a partnership created or organised 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 organised 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
- any other person that is not a foreign person (of the United States).
PLEASE NOTE: This FAQ and Glossary is general information only regarding CRS and FATCA. It does not constitute advice of any kind, may not be complete and is subject to change at any time without notice.
