General information concerning deductions of US withholding tax under FATCA
The withholding tax rate is 30 percent, and is in addition to any other US withholding tax. The withholding tax obligation applies to US banks, etc. and non-US financial institutions which have taken on such an obligation by entering into an agreement with the US tax authorities (Qualified Intermediaries - QI). Norwegian financial institutions are not obliged to deduct withholding tax under the Norwegian rules, but they are obliged to disclose information to enable the correct amount of withholding tax to be deducted. They may also be obliged to deduct withholding tax under an agreement established with the US tax authorities; see below.
Norwegian recipients of payments from US sources may be asked to submit form W-8-BEN/W-8-BEN-E to the payer in order to avoid US withholding tax being deducted under FATCA.
Norwegian financial institutions which pay/mediate payments from US sources
In order for withholding tax to function as intended, such tax must also be deducted when the payment is made via a Norwegian financial institution to a financial institution which does not report account information to the US tax authorities. Norwegian financial institutions therefore have special obligations when they execute a payment covered by the US withholding tax obligation to a financial institutions which does not report account information to the US tax authorities, or act as an intermediary in connection with such a payment.
Norwegian financial institutions must provide information upwards within the payment chain, so that the party that is obliged to deduct the withholding tax can make the correct deduction. Norwegian financial institutions must therefore provide the necessary information concerning the payment to the preceding link in the payment chain. The obligation stems from Article 4(1)(e) of the FATCA agreement.
Norwegian financial institutions may undertake to deduct US withholding tax under the FATCA rules. This is done by entering into an agreement directly with the US tax authorities. The basis for the withholding tax obligation will then not be the Norwegian rules, but the so-called "Qualified Intermediary" agreement, which has been established with the US tax authorities.
Financial institutions which have taken on such a withholding tax obligation are exempt from the Norwegian rules to provide information to the previous link in the payment chain. Financial institutions which have entered into a Qualified Intermediary agreement without a withholding tax obligation are not exempt from the obligation to provide information upwards within the payment chain.