SECTION 2. SCOPE

.01 Entities Eligible to Execute a QI Agreement. A QI agreement may be entered into by persons described in §1.1441–1(e)(5)(ii), including foreign fi

nancial institutions (FFIs) (as defined in §1.1471–5(d)), foreign clearing organizations, and foreign branches of U.S. financial institutions and clearing organizations. An eligible entity (as defined in §1.1441–1(e)(6)(ii)) may also enter into a QI agreement for purposes of becoming a qualified derivatives dealer (QDD).

An FFI may apply to enter into a QI agreement if the FFI is able to, and agrees to, satisfy the requirements and obligations of (1) a participating FFI (including a reporting Model 2 FFI), (2) a registered deemedcompliant FFI (including a reporting Model 1 FFI and a nonreporting Model 2 FFI treated as registered deemed-compliant), or (3) a registered deemed-compliant Model 1 IGA FFI (as defined in section 2.17(C) of the 2017 QI Agreement). An FFI that is a certified deemed-compliant FFI (including a nonreporting IGA FFI, as defined in §1.1471–1(b)(83)) may enter into a QI agreement if the FFI is able to and agrees to assume the obligations of, and to be treated as, a participating FFI (including a reporting Model 2 FFI), a registered deemedcompliant FFI (including a reporting Model 1 FFI or a nonreporting Model 2 FFI treated as registered deemed-compliant), or a registered deemed-compliant Model 1 IGA FFI with respect to all accounts that it maintains (even if the FFI does not intend to act as a QI for all of the accounts it maintains). A central bank of issue may enter into a QI agreement provided that it meets and agrees to assume the obligations of, and to be treated as, a participating FFI (including a reporting Model 2 FFI) or registered deemed-compliant FFI (including a reporting Model 1 FFI) with respect to any account that it maintains that is held in connection with a commercial financial activity described in §1.1471–6(h) and for which it receives a withholdable payment (as defined in §1.1471–1(b)(145)). A foreign branch of a U.S. financial institution or clearing organization may also apply to enter into a QI agreement provided that it is a reporting Model 1 FFI or it agrees to assume the requirements and obligations of a participating FFI (including a reporting Model 2 FFI).

An entity that is a territory financial institution (territory FI) (as defined in §1.1471–1(b)(130)) or a nonparticipating

FFI (as defined in §1.1471–1(b)(82)) may not apply to enter into a QI agreement.

A foreign corporation that is a nonfinancial foreign entity or NFFE (as defined in §1.1471–1(b)(80)) that is described in one of the categories in §1.1441–1(e)(5)(ii) may also apply to enter into a QI agreement. An NFFE that seeks to act as an intermediary on behalf of its shareholders should not apply for QI status and instead should apply for withholding foreign partnership status as a reverse hybrid entity. An NFFE that enters into a QI agreement to act an as intermediary on behalf of persons other than its shareholders will be required to satisfy the withholding and reporting requirements of §§1.1472–1(a) and 1.1474–1(i) with respect to any NFFE that is a beneficial owner for whom the QI is acting with respect to a withholdable payment. The QI agreement generally does not apply to a foreign partnership or foreign trust. A foreign partnership or foreign trust may apply for status as a withholding foreign partnership or withholding foreign trust. See §§1.1441–5(c)(2)(ii) and 1.1441– 5(e)(5)(v). .02 Effect on Other Documents. Revenue Procedure 2014-39, 2014-29 I.R.B. 150, is superseded with respect to a QI’s requirements that apply after December 31, 2016. A QI agreement in effect prior to December 31, 2016 expires, in accordance with its terms, on December 31, 2016.