Is my organisation’s Tax Entity Classification a Financial Institution (FI)?

You are a non-financial entity (NFE) if your organisation is not a Financial Institution. NFEs are divided into two categories:

• Active NFE: An active NFE is an entity that earns most (more than 50%) of its income from activities other than passive income (such as interest, dividends, or investments), or meets certain other criteria set out in the FATCA and CRS rules (for example, being a trading business, a charity, or a government entity).
• Passive NFE: A passive NFE is an entity where the majority (more than 50%) of its income is passive income, such as interest or dividends, or where most of its assets generate such income. Passive NFEs must disclose details about their controlling persons (those who ultimately own or control the entity).

If you are unsure about your classification, please consult your tax adviser or refer to the official FATCA and CRS guidance.

Most charities, not-for-profit organisations, and NGOs are classified as Active Non-Financial Entities (Active NFEs) under FATCA and CRS. When completing the self-certification form, you should generally select “Active NFE” unless your organisation’s main activities involve holding or investing money for others, or you otherwise meet the definition of a Financial Institution. If you are unsure, please consult your tax adviser or refer to the official FATCA and CRS guidance.

FATCA/CRS applies if you or your organisation may be subject to tax abroad. This legislation also applies if your organisation has stakeholders who may be subject to tax abroad.

On an annual basis, UK-based banks and other financial organisations are required to report information to HM Revenue and Customs (HMRC) on financial accounts held directly or indirectly by US persons.

Triodos Bank UK is committed to being fully FATCA compliant in all countries and territories where we operate. We will therefore be reviewing our existing customer base to confirm the FATCA statuses of our customers and where necessary we may have to contact our customers for further information and documentation.

FATCA stands for the Foreign Account Tax Compliance Act. It is a piece of legislation introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS) in 2014. 

The purpose of FATCA is to encourage better tax compliance by preventing US persons from using banks and other financial organisations to avoid US taxation on their income and assets.

A significant number of countries and territories worldwide have signed inter-governmental agreements (IGAs) relating to FATCA compliance with the United States government. These IGAs have resulted in the FATCA legislation becoming part of their local laws. The United Kingdom Government entered into a IGA with the US on 12 September 2012. This has been incorporated into UK law though the International Tax Compliance Regulations, SI 2015/878. 

If your account information holds any of the following seven criteria, we may request further information or documentation to determine if you are a United States (US) person under the Foreign Account Tax Compliance Act (FATCA): 

• US citizenship or US residence
• US place of birth
• US address including US PO boxes
• US telephone number
• Repeating payment instructions to pay amounts to a US address or an account maintained in the US
• Current power of attorney or signatory authority granted to a person with a US address
• 'In care of' or 'hold mail' address in the United States, which is the sole address for the account holder

We will continue to review the impact and consequences of the legislation for our customers and will correspond with affected customers accordingly. For more information regarding FATCA, please visit the HMRC website, or contact your professional tax adviser for advice.

Please note that you may receive more than one request for documentation if you have multiple relationships with different members of the Triodos Bank UK Group. It is important that you respond to all requests, even if you believe you have already supplied the requested information.

Please note that Triodos Bank UK is unable to offer tax advice. For tax related questions please contact your independent professional tax adviser or refer to the HMRC website.