U.S. Tax Residency Criteria for FATCA Purposes

U.S. Tax Residency Criteria for FATCA Purposes

U.S. tax residency criteria for FATCA purposes are as follows:

Criteria for individuals and individual entrepreneurs.

Pursuant to the law of the USA, individuals are considered U.S. tax residents if one of the following requirements is satisfied:

  • The individual is a U.S. citizen;

  • The individual has been granted the right to permanent residence in the USA (Form 1-551 (Green Card));

  • The individual satisfies the 'substantial presence test’'* criterion. The Bank does not transfer information on individuals who are Russian Federation citizens and at the same time have no USA citizenship, USA Green Card (permanent residence permit for the USA) or do not meet the 'substantial presence test' criterion (have not been physically present in the USA for a long time).
    * The individual meets the 'substantial presence test' criterion if he/she has been physically present in the USA for at least 31 days in the current calendar year and at least 183 days in 3 years including the current year and two preceding years. To this effect the total of days when the individual has been present in the USA in the current year, as well as in the two preceding years, is multiplied by the following coefficients:

  • 1 for the current year (i.e. all days when the individual has been present in the USA are counted);

  • 1/3 for the year before the current year and

  • 1/6 for the year two years before the current year. Teachers, students, trainees temporary present in the USA on a F, J, М or Q visa are not considered U.S. residents for tax purposes.

Criteria for legal entities

1. The legal entity registered/incorporated in the USA that is not a person excluded from the list of specified U.S. Persons:

  • a corporation the stock of which is regularly traded on one or more established securities markets;

  • any corporation which is a member of the same expanded affiliated group as a company/corporation specified in the previous paragraph;

  • any American organisation exempt from taxation under section 501(a),

  • an individual retirement plan as defined in section 7701(a)(37) of the U.S. Internal Revenue Code;

  • the United States or any wholly owned agency or instrumentality thereof;

  • any State, the District of Columbia, any U.S. territory (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the US Virgin Islands) any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing;

  • any American bank as defined in section 581 of the U.S. Internal Revenue Code (bank or trust companies a substantial part of the business of which consists of receiving deposits and making loans and discounts, or of exercising fiduciary powers and which have the relevant licence);

  • any American real estate investment trust as defined in section 856 of the U.S. Internal Revenue Code;

  • any American regulated investment company as defined in section 851 of the U.S. Internal Revenue Code or any entity registered with the U.S. Securities and Exchange Commission;

  • any American common trust fund as defined in section 584 of the U.S. Internal Revenue Code;

  • any American trust that is exempt from tax under section 664(c) of the U.S. Internal Revenue Code (provisions of this section regard charitable remainder trusts);

  • an American dealer in securities, commodities, or derivative financial instruments (such as futures, forwards X options) that is registered as such under the laws of the United States;

  • an American broker that has the relevant licence;

  • any American tax-exempt trust under a plan that is described in section 403(b) (employee trusts that meet specific criteria) or section 457(g) (deferred compensation plans for government organisations) of the U.S. Internal Revenue Code.

2. The legal entity is registered/incorporated outside the USA and is not a financial institution for FATCA purposes and one of the beneficial owners controlling the legal entity who directly or indirectly owns more than 10 % of the legal entity is one of the following persons:

a. Individuals that are U.S. residents for tax purposes (see Clause A);
b. Legal entities registered/incorporated in the USA that are not persons excluded from the list of specified U.S. Persons (see Clause B) and more than 50 % (on a separate or aggregate basis) of their gross income for the preceding year is passive income, and more than 50 % (on a separate or aggregate basis) of their weighted assets (at the quarter end) produce such income:

Passive income consists of:

  • Dividends;
  • Interest;
  • Income received from a pool of insurance contracts if the amounts received depend in whole or part upon the performance of the pool;
  • Rents and royalties (other than rents and royalties derived in the active conduct of a trade or business conducted);
  • Annuities;
  • Income from the sale or exchange of property that gives rise to the above-mentioned passive income;
  • Income from transactions (including futures, forwards, and similar transactions) in any commodities, but not including: any commodity hedging transaction provided that transactions in such commodities are the core activity of your organisation;
  • Income from transactions (including futures, forwards, and similar transactions) in any commodities, but not including: any commodity hedging transaction provided that transactions in such commodities are the core activity of the organisation;
  • Income from transactions in foreign currencies (gains and losses);
  • Contracts with the price dependent on the underlying asset (nominal), for example, derivatives (currency swaps, interest rate swaps, options etc.);
  • A surrender value of the insurance contract or a loan amount secured by an insurance contract;
  • Amounts gained by an insurance company through insurance reserves and annuities.