Proposed revised Qualified Intermediary (QI) Agreement - Banking blog


The revised QI Agreement (contained in Notice 2016-42) is intended to replace the current QI Agreement (contained in Rev. Proc. 2014-39), which will expire on 31 December 2016. Once finalized, the revised QI Agreement will come into effect for existing QIs on 1 January 2017, provided the renewal is executed prior to 31 March 2017, via the FATCA registration website and will be effective for a period of three years.

The main changes set forth in the proposed revised QI Agreement other than the introduction of the Qualified Derivatives Dealer (QDD) status are discussed in this blog post.

Joint Account Treatment (Section 4.05)

The relief under the joint account treatment has been an integral part of the QI Agreement since the publication of Rev. Proc. 2003-64. It provides QIs with operational simplifications when dealing with payments to nonwithholding foreign partnerships or grantor/simple trusts through the application of the same withholding rate for all payments to the partnership or trust and the elimination of the requirement to disclose each partner, owner or beneficiary separately via pool reporting.

The proposed revised QI Agreement modifies the eligibility criteria for the joint account treatment, enhances the applicable documentation requirements and introduces new disclosure obligations to the IRS that soften the anonymity granted to partnerships and trusts. The amendments generally diminish the attractiveness of the joint account treatment.

Beneficial Owner’s claim of Treaty Benefits (Section 5.03)

Although many QIs hoped that the limitation on benefits (LOB) certification would not be applicable to treaty statements, which can be collected together with Documentary Evidence as an alternative to the Form W-8BEN-E, the proposed revised QI Agreement dashed such hopes: The LOB certifications are also applicable to treaty statements.

All treaty statements collected after 1 January 2017 must include the appropriate LOB certification as described on Form W-8BEN-E. Existing treaty statements must be renewed accordingly prior to 1 January 2019 (unless there is a change in circumstances requiring an earlier renewal).

Positive relief provided in the proposed revised QI Agreement regarding the LOB certification is that the client’s claim is subject to only an actual knowledge (and not a reason to know) standard. Consequently and unless the instructions for the requester of Forms W-8 provide otherwise, QIs need to reject Forms W-8BEN-E and treaty statements only if they know that the LOB claim is incorrect, but not if there are only indications that it might be.

Compliance Procedure (Section 10)

The current QI Agreement replaced the previous external audit requirement with an internal compliance and review program. The compliance framework under the current QI Agreement consists of four main pillars:

  • Designation of a Responsible Officer (RO);
  • Implementation of a compliance program (i.e. policies, procedures, training, etc.);
  • Periodic reviews; and
  • Periodic certifications.

As the compliance procedures introduced in the current QI Agreement posed many concerns among commentators, the proposed revised QI Agreement provides further clarification on the timing of the periodic review, the applicable sampling methodology, the eligibility criteria for the waiver from the periodic review as well as on the factual information that must be reported to the IRS as part of the periodic certification.


The proposed revised QI Agreement provides welcome direction on the anticipated amendments. However, given the extended scope of the changes and the approaching effective date, existing QIs do not have much time left to implement them. Moreover, as with any update to an existing complex system, the refinements build on an existing structure and assume a familiarity with past standards.

Accordingly, the institutional knowledge of the QI regime within each financial institution must be maintained. Otherwise, each revision is akin to the re-introduction of the entire regime.


Robin King blog

Robin King, Financial Services Tax

Robin is an Manager working in Financial Services Tax. He is currently advising leading Swiss universal and private banks, acting as subject matter expert in the area of QI, FATCA and CRS. Robin is the author of several articles on CRS. Prior to joining Deloitte, he worked as a cross-border tax compliance expert at a Swiss private bank.



Elena Bonsembiante, Financial Services Tax

Elena is a QI, FATCA and CRS specialist and an Italian certified public accountant. She is leading as assistant manager several QI, FATCA and CRS projects for middle sized banks in the French and Italian speaking areas. Prior to joining Deloitte Switzerland, she worked for Deloitte Italy and other Italian Tax Firms. 



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