1. Withholdable Payment
A withholdable payment is nothing but a payment of either: U.S. source income that is predetermined or determinable, annual or periodical (FDAP) income; or gross proceeds from the sale or other disposition (including redemption) of property that can create U.S. source interest or dividend income.
2. Requirements for withholding under the FATCA
A withholding agent needs to withhold 30% on a withholdable payment made against a Non-Financial Foreign Entity (NFFE) or Foreign Financial Institution (FFI), unless the FFI or NFFE meets certain criteria. Additionally an FFI must withhold 30% on any passthru payment it makes to an intractable account holder, and also to the payments it makes to another FFI until that FFI meets certain requirements.
3. Withholding agent / Intermediary
A withholding agent/intermediary is an individual, trust, corporation, partnership, association, or any such entity, including foreign partnership, foreign intermediary or U.S. branch of certain foreign banks and insurance companies that has a receipt, control, disposal or custody payment of any withholdable payment.
4. Exceptions to withholdable payments
Offshore Payments of US Source FDAP Income (until 1/1/17). Payments made by a withholding agent prior to 1/1/15 to a reporting Model 1 FFI so long as it also offers the country wherein the payee is a reporting Model 1 FFI, regardless of whether the certificate contains a GIIN for the payee (includes preexisting obligations, offshore obligations, payments that do not constitute U.S. source FDAP income (requires the provision of the payee’s GIIN)).
5. FATCA withholding vs. current withholding
Though FATCA withholding is at 30%, it applies to various types of income than the current U.S. withholding regime and it relates regardless of statutory or treaty exemptions or reductions.
6. Withholding Deposits
Deposits should be made with the help of an Electronic Federal Tax Payment System (EFTPS).