“We are a large FTSE Company using an employee benefit trust based in the Channel Islands to settle awards under all our employee share plans, operated in multiple international jurisdictions.
The employee benefit trust appears to be taking an exceedingly cautious approach to comply with its obligations under the USA and UK FATCA (Foreign Account Tax Compliance Act).
In respect of the Company’s employee share plans, the trust is requesting that each participant, in advance of receiving a single distribution exceeding USD 50,000 and each subsequent distribution that would exceed or has exceeded a cumulative value of USD 50,000 within a relevant reporting year, submits a completed detailed form before each occasion they receive a relevant distribution.
Further, the trust is requesting that the Company, rather than the trust, obtains this from each participant on each occasion.
Are other companies experiencing a similar issue or have their trusts adopted a more pragmatic approach?”
Our legal advisers have mentioned this issue – it doesn’t affect our EBT as it is not offshore – but they suggested that a number of the CI based EBT trusts with whom their other clients deal are having to modify their practices because of FATCA. No solution to offer, unfortunately, but it would appear you are not alone.
Our EBT trustee has advised they are a ‘non-reporting’ entity i.e. not the cautious approach referred to above.