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HMRC internal manual

International Exchange of Information Manual

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HM Revenue & Customs
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Miscellaneous: Related Entity

An entity is regarded as being related to another entity if one entity controls the other or the two entities are under common control - the “Related Entity Group”. For this purpose control is taken as including the direct or indirect ownership of more than 50 per cent of the vote and value in an entity.

Whether an entity is a related entity to another entity is relevant for the account balance aggregation rules [see IEIM403560], the scope of the term Reportable Person [see IEIM403440] and for determining if an NFE can meet the criteria for being an Active NFE [see IEIM404040].

FATCA

Whether an entity is a related entity of another entity has a wider application for FATCA.

An entity that is a member of a Related Entity Group will not be a Financial Institution if-

  • The entity does not maintain financial accounts (other than accounts maintained for members of its Related Entity Group)

 

  • The entity does not hold an account with or receive U.S. source withholdable payments from any withholding agent other than a member of its Related Entity Group;

 

  • The entity does not make U.S. source withholdable payments to any person other than to members of its Related Entity Group that are not limited FIs or limited branches; and

 

  • The entity has not agreed to undertake reporting as a Sponsoring Entity or otherwise act as an agent regarding the Agreement on behalf of any Financial Institution, including a member of its related entity group.

 

Related Entities are relevant in the context of the obligations placed on UK Financial Institutions, in respect of any Related Entities that are Non-Participating Financial Institutions (NPFI).

Where a UK Financial Institution has any related entities that, as a result of the jurisdictions they operate in, are unable to comply with FATCA, then the UK Financial Institution must treat the Related Entity as an NPFI and fulfil obligations in respect of that NPFI [see IEIM402360].