09.05 – Reporting payments of US Source Withholdable Payments to Non-Participating Financial Institutions

Financial Institutions will also need to report up the payment chain when a Non-Participating Financial is the recipient of specific US Source Payments. The requirement to report US Source Withholdable Payments to Non-Participating Financial Institutions up the payment chain will fall on Financial Institutions other than those who have elected to act as qualifying intermediaries with primary withholding responsibility, withholding foreign partnerships or withholding foreign trusts (see Article 4(1)(d)&(e) of the Agreement).

Where such a Financial Institution pays, or acts as an intermediary for the payment of, a US Source Withholdable Payment to a Non-Participating Financial Institution, the Financial Institution is required to provide information to the “immediate  payor” of that income. The immediate payor is the person with withholding and reporting obligations to the US authorities.

The information that must be provided in respect of the payment is that required for withholding and reporting to occur.