SECTION 1. PURPOSE AND SCOPE

Sec. 1.01. General Obligations. When the IRS enters into a QI Agreement with a foreign person or a U.S. person to cover a foreign branch, that foreign person (or foreign branch) becomes a QI. QI is a

withholding agent under chapters 3 and 4, and a payor under chapter 61 and section 3406, for amounts that it pays to its account holders.

If QI is an FFI, the requirements QI has agreed to as a participating FFI, registered deemed-compliant FFI, or registered deemed-compliant Model 1 IGA FFI continue to apply in addition to the requirements under this Agreement. If QI acts as a QI with respect to an account, this Agreement will reference QI’s chapter 4 obligations when necessary to facilitate coordination with a QI’s obligations under chapters 3, 4, and 61, and section 3406, with respect to such account holders. A participating FFI’s (including a reporting Model 2 FFI’s) obligations are provided in the FFI agreement, a registered deemed-compliant FFI’s (other than a reporting Model 1 FFI) obligations are provided in § 1.1471–5(f)(1) or the applicable Model 2 IGA, and the obligations of a reporting Model 1 FFI or a registered deemed-compliant Model 1 IGA FFI are provided in the applicable Model 1 IGA. For purposes of chapter 4, QI must comply with its FATCA requirements as a participating FFI, registered deemedcompliant FFI, or registered deemedcompliant Model 1 IGA FFI (as applicable) with respect to all financial accounts that it maintains, irrespective of whether QI acts as a QI with respect to an account holder, as well as the requirements of a withholding agent for any payee that is a nonparticipating FFI or NFFE that is not an account holder. If QI is an FFI, QI must also, pursuant to this Agreement, assume primary reporting responsibility for purposes of section 1472, for certain indirect account holders for which it acts as a QI.

If QI is an NFFE acting as a QI on behalf of its shareholders, the requirements QI has agreed to as a direct reporting NFFE apply in addition to the requirements under this Agreement, and, to the extent necessary to facilitate coordination of its direct reporting NFFE obligations with its obligations as a QI, the direct reporting NFFE obligations are incorporated into this Agreement. A direct reporting NFFE’s obligations are provided in § 1.1472–1(c)(3). For purposes of chapter 4, if QI is an NFFE acting as a QI on behalf of its shareholders, QI must comply with the requirements of a direct reporting

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NFFE with respect to any shareholder that is a substantial U.S. owner as defined in § 1.1473–1(b). If QI is an NFFE acting on behalf of persons other than its shareholders, QI must assume primary reporting responsibility for purposes of section 1472 for any person for which it acts as a QI.

For purposes of chapters 3 and 61 and section 3406, QI must act in its capacity as a QI pursuant to this Agreement for those accounts that QI holds with a withholding agent and that QI has designated as accounts for which it acts as a QI. QI is not required to act as a QI for all accounts that it holds with a withholding agent. However, QI must, as part of its QI Agreement, materially comply with the requirements of a withholding agent or payor, as applicable to a nonqualified intermediary (NQI) under chapters 3 and 61 and section 3406, for any account for which it does not (or cannot) act as a QI and for any payee that is not an account holder. If QI designates an account as one for which it will act as a QI, it must act as a QI for all payments made to that account and obtain the documentation required under section 5 of this Agreement for such account. When QI acts as a QI for an account and assumes primary chapter 3 withholding responsibility for payments to the account, QI must also assume primary withholding responsibility for withholdable payments made to such account for chapter 4 purposes. If QI acts as a QI with respect to payments of substitute interest, as described in section 3.03(A) of this Agreement, it must act as a QI and assume primary withholding responsibility for all such payments of substitute interest.

If QI acts as a sponsoring entity on behalf of a sponsored FFI (as defined in § 1.1471–1(b)(121)) or sponsored direct reporting NFFE (as defined in § 1.1471– 1(b)(123)), it must comply with the due diligence, withholding, reporting, and compliance requirements of a sponsoring entity in addition to its requirements under this Agreement.

If QI acts as a QDD, it must act as a QDD for all payments made as a principal with respect to potential section 871(m) transactions and all payments received as a principal with respect to potential section 871(m) transactions and underlying securities, excluding any payments received by the QDD to the extent the pay

ment is treated as income effectively connected with the conduct of a trade or business within the United States within the meaning of section 864. In addition, a QI must act as a QDD for any securities lending or sale-repurchase transactions (as defined in § 1.871–15(a)(13)) QI enters into that are section 871(m) transactions. For purposes of this Agreement, a QDD is deemed to make and receive payments pursuant to those securities lending and sale-repurchase transactions as a principal. A QI may not act as a QDD when it receives or makes payments as an intermediary. A QI acting as a QDD must assume primary chapter 3 and chapter 4 withholding responsibility and primary Form 1099 reporting and backup withholding responsibility under section 3406 for payments made as a QDD with respect to any potential section 871(m) transaction provided the amount paid is an amount subject to chapter 3 or 4 withholding or a reportable payment under chapter 61. A QI acting as a QDD (other than a QDD that is a foreign branch of a U.S. financial institution) also must satisfy its QDD tax liability as determined under section 3.09 of this Agreement. The QDD (other than a QDD that is a foreign branch of a U.S. financial institution) must report both its withholding tax liability under chapters 3 and 4 and its QDD tax liability on Form 1042. A U.S. financial institution with a foreign branch that acts as a QDD must file the appropriate U.S. income tax return ( e.g., Form 1120, U.S. Corporation Income Tax Return ) for the tax year covered by the QI Agreement to report and pay its tax liability under chapter 1 and would not have a separate QDD tax liability.

Sec. 1.02. Parties to the Agreement. This Agreement applies to: (A) QI; and (B) The Internal Revenue Service.

If QI is an FFI, QI can only designate an account that it holds as a QI designated account if the branch of QI that holds the account operates in a KYC jurisdiction identified under the QI Agreement. QI may add any jurisdiction in which it operates a branch that is not initially included in its QI application without prior IRS approval if the jurisdiction is one for which the IRS will enter into a qualified intermediary agreement ( i.e ., the jurisdic

tion is identified on the IRS’s Approved KYC List) and QI updates its information on the FATCA registration website with respect to such branch prior to treating such branch as a qualified intermediary. A branch of a QI that is not subject to the provisions of this Agreement remains subject to the rules of chapters 3, 4, and 61 and section 3406, as provided in section 1.01 of this Agreement.