Mexico — Model 1 IGA (signed 2014-04-17)

# Preamble and ratification history

AGREEMENT BETWEEN THE DEPARTMENT OF THE TREASURY
OF THE UNITED STATES OF AMERICA AND THE MINISTRY OF FINANCE AND
PUBLIC CREDIT OF THE UNITED MEXICAN STATES TO IMPROVE
INTERNATIONAL TAX COMPLIANCE INCLUDING WITH RESPECT TO FATCA
Whereas, the Department of the Treasury of the United States of America (the “U.S. Treasury Department”) and the Ministry of Finance and Public Credit of the United Mexican States (the “Ministry of Finance of Mexico”) (collectively, “the Parties”) have a longstanding and close relationship with respect to mutual assistance in tax matters and desire to conclude an agreement to improve international tax compliance by further building on that relationship;
Whereas, the provisions of the Convention on Mutual Administrative Assistance in Tax Matters, done at Strasbourg on January 25, 1988 (the “Mutual Assistance Convention”); Article 27 of the Convention between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, done at Washington on September 18, 1992 (the “Double Tax Convention”) and Article 4 of the Agreement between the United States of America and the United Mexican States for the Exchange of Information with respect to Taxes, done at Washington on November 9, 1989 (the “TIEA”); (hereinafter the “Conventions” refers to the Mutual Assistance Convention, the Double Tax Convention, and the TIEA, and any amendments to those conventions that are in force for both Parties) authorize exchange of information for tax purposes, including on an automatic basis;
Whereas, the United States of America enacted provisions commonly known as the Foreign Account Tax Compliance Act (“FATCA”), which introduce a reporting regime for financial institutions with respect to certain accounts;
Whereas, the United Mexican States enacted several provisions which introduce a reporting regime for Mexican financial institutions, such as some modifications to the Income Tax Law and Federal Fiscal Code with respect to certain accounts;
Whereas, the United Mexican States and the United States of America support the underlying policy goal of domestic legislation to improve tax compliance;
Whereas, the U.S. Treasury Department collects information regarding certain accounts maintained by U.S. financial institutions held by residents of Mexico and is committed to exchanging such information with the Ministry of Finance of Mexico and pursuing equivalent levels of exchange;
Whereas, the Parties are committed to working together over the longer term towards achieving common reporting and due diligence standards for financial institutions;
Whereas, the Parties acknowledge the need to coordinate the reporting obligations under their respective domestic laws to avoid duplicative reporting;
Whereas, the Parties desire to replace the Agreement Between the Ministry of Finance and Public Credit of the United Mexican States and the Department of the Treasury of the United States of America to Improve International Tax Compliance Including with Respect to FATCA, done at Washington on November 19th, 2012; with the present Agreement;
Whereas, the Parties desire to conclude the present Agreement, based on domestic reporting and reciprocal automatic exchange pursuant to the Conventions and subject to the confidentiality and other protections provided for therein, including the provisions limiting the use of the information exchanged under the Conventions;
Therefore, the Parties have agreed as follows:

# Article 1 — Definitions

1. For purposes of this Agreement and any annexes thereto (“Agreement”), the following terms shall have the meanings set forth below:

a) The term “United States” means the United States of America, including the States thereof, but does not include the U.S. Territories. Any reference to a “State” of the United States includes the District of Columbia.

b) The term “U.S. Territory” means American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico, or the U.S. Virgin Islands.

c) The term “IRS” means the U.S. Internal Revenue Service.

d) The term “Mexico” means the United Mexican States.

e) The term “Partner Jurisdiction” means a jurisdiction that has in effect an agreement with the United States to facilitate the implementation of FATCA. The IRS shall publish a list identifying all Partner Jurisdictions.

f) The term “Competent Authority” means:

(1) in the case of the U.S. Treasury Department, the Secretary of the Treasury or his delegate (“U.S. Competent Authority”); and

(2) in the case of the Ministry of Finance of Mexico, the Ministry of Finance and Public Credit and the Tax Administration Service (“Mexican Competent Authority”).

g) The term “Financial Institution” means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.

h) The term “Custodial Institution” means any Entity that holds, as a substantial portion of its business, financial assets for the account of others. An entity holds financial assets for the account of others as a substantial portion of its business if the entity’s gross income attributable to the holding of financial assets and related financial services equals or exceeds 20 percent of the entity’s gross income during the shorter of:

(i) the three (3) year period that ends on December 31 (or the final day of a non-calendar year accounting period) prior to the year in which the determination is being made; or (ii) the period during which the entity has been in existence. i) The term “Depository Institution” means any Entity that accepts deposits in the ordinary course of a banking or similar business. j) The term “Investment Entity” means any Entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer:

(1) trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;

(2) individual and collective portfolio management; or

(3) otherwise investing, administering, or managing funds or money on behalf of other persons.

This subparagraph 1(j) shall be interpreted in a manner consistent with similar language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations.

k) The term “Specified Insurance Company” means any Entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.

l) The term “Mexican Financial Institution” means (i) any Financial Institution resident in Mexico, but excluding any branch of such Financial Institution that is located outside Mexico, and (ii) any branch of a Financial Institution not resident in Mexico, if such branch is located in Mexico.

m) The term “Partner Jurisdiction Financial Institution” means (i) any Financial Institution established in a Partner Jurisdiction, but excluding any branch of such Financial Institution that is located outside the Partner Jurisdiction, and (ii) any branch of a Financial Institution not established in the Partner Jurisdiction, if such branch is located in the Partner Jurisdiction.

n) The term “Reporting Financial Institution” means a Reporting Mexican Financial Institution or a Reporting U.S. Financial Institution, as the context requires.

o) The term “Reporting Mexican Financial Institution” means any Mexican Financial Institution that is not a Non-Reporting Mexican Financial Institution.

p) The term “Reporting U.S. Financial Institution” means (i) any Financial Institution that is resident in the United States, but excluding any branch of such Financial Institution that is located outside the United States, and (ii) any branch of a Financial Institution not resident in the United States, if such branch is located in the United States, provided that the Financial Institution or branch has control, receipt, or custody of income with respect to which information is required to be exchanged under subparagraph (2)(b) of Article 2 of this Agreement.

q) The term “Non-Reporting Mexican Financial Institution” means any Mexican Financial Institution, or other Entity resident in Mexico that is described in Annex II as a Non-Reporting Mexican Financial Institution or that otherwise qualifies as a deemed-compliant FFI (Foreign Financial Institution) or an exempt beneficial owner under relevant U.S. Treasury Regulations.

r) The term “Nonparticipating Financial Institution” means a nonparticipating FFI, as that term is defined in relevant U.S. Treasury Regulations, but does not include a Mexican Financial Institution or other Partner Jurisdiction Financial Institution other than a Financial Institution treated as a Nonparticipating Financial Institution pursuant to paragraph 2(b) of Article 5 of this Agreement or the corresponding provision in an agreement between the United States and a Partner Jurisdiction.

s) The term “Financial Account” means an account maintained by a Financial Institution, and includes:

(1) in the case of an Entity that is a Financial Institution solely because it is an Investment Entity, any equity or debt interest (other than interests that are regularly traded on an established securities market) in the Financial Institution;

(2) in the case of a Financial Institution not described in subparagraph 1(s)(1) above, any equity or debt interest in the Financial Institution (other than interests that are regularly traded on an established securities market), if (i) the value of the debt or equity interest is determined, directly or indirectly, primarily by reference to assets that give rise to U.S. Source Withholdable Payments, and (ii) the class of interests was established with a purpose of avoiding reporting in accordance with this Agreement; and

(3) any Cash Value Insurance Contract and any Annuity Contract issued or maintained by a Financial Institution, other than a noninvestmentlinked, nontransferable immediate life annuity that is issued to an individual and monetizes a pension or disability benefit provided under an account that is excluded from the definition of Financial Account in Annex II.

Notwithstanding the foregoing, the term “Financial Account” does not include any account that is excluded from the definition of Financial Account in Annex II. For purposes of this Agreement, interests are “regularly traded” if there is a meaningful volume of trading with respect to the interests on an ongoing basis, and an “established securities market” means an exchange that is officially recognized and supervised by a governmental authority in which the market is located and that has a meaningful annual value of shares traded on the exchange. For purposes of this subparagraph 1(s), an interest in a Financial Institution is not “regularly traded” and shall be treated as a Financial Account if the holder of the interest (other than a Financial Institution acting as an intermediary) is registered on the books of such Financial Institution. The preceding sentence will not apply to interests first registered on the books of such Financial Institution prior to July 1, 2014, and with respect to interests first registered on the books of such Financial Institution on or after July 1, 2014, a Financial Institution is not required to apply the preceding sentence prior to January 1, 2016.

t) The term “Depository Account” includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the ordinary course of a banking or similar business. A Depository Account also includes an amount held by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon.

u) The term “Custodial Account” means an account (other than an Insurance Contract or Annuity Contract) for the benefit of another person that holds any financial instrument or contract held for investment (including, but not limited to, a share or stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a nonfinancial index, a notional principal contract, an Insurance Contract or Annuity Contract, and any option or other derivative instrument).

v) The term “Equity Interest” means, in the case of a partnership that is a Financial Institution, either a capital or profits interest in the partnership.

In the case of a trust that is a Financial Institution, an Equity Interest is considered to be held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust. A Specified U.S. Person shall be treated as being a beneficiary of a foreign trust if such Specified U.S. Person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.

w) The term “Insurance Contract” means a contract (other than an Annuity Contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk.

x) The term “Annuity Contract” means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals. The term also includes a contract that is considered to be an Annuity Contract in accordance with the law, regulation, or practice of the jurisdiction in which the contract was issued, and under which the issuer agrees to make payments for a term of years.

y) The term “Cash Value Insurance Contract” means an Insurance Contract (other than an indemnity reinsurance contract between two insurance companies) that has a Cash Value greater than fifty thousand ($50,000) dollars.

z) The term “Cash Value” means the greater of (i) the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan), and (ii) the amount the policyholder can borrow under or with regard to the contract. Notwithstanding the foregoing, the term “Cash Value” does not include an amount payable under an Insurance Contract as:

(1) a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against;

(2) a refund to the policyholder of a previously paid premium under an Insurance Contract (other than under a life insurance contract) due to policy cancellation or termination, decrease in risk exposure during the effective period of the Insurance Contract, or arising from a redetermination of the premium due to correction of posting or other similar error; or

(3) a policy holder dividend based upon the underwriting experience of the contract or group involved. aa) The term “Reportable Account” means a U.S. Reportable Account or a Mexican Reportable Account, as the context requires. bb) The term “Mexican Reportable Account” means a Financial Account maintained by a Reporting U.S. Financial Institution if: (i) in the case of a Depository Account, the account is held by an individual resident in Mexico and more than ten ($10) dollars of interest is paid to such account in any given calendar year; or (ii) in the case of a Financial Account other than a Depository Account, the Account Holder is a resident of Mexico, including an Entity that certifies that it is resident in Mexico for tax purposes, with respect to which U.S. source income that is subject to reporting under chapter 3 of subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code is paid or credited. cc) The term “U.S. Reportable Account” means a Financial Account maintained by a Reporting Mexican Financial Institution and held by one or more Specified U.S. Persons or by a Non-U.S. Entity with one or more Controlling Persons that is a Specified U.S. Person. Notwithstanding the foregoing, an account shall not be treated as a U.S. Reportable Account if such account is not identified as a U.S. Reportable Account after application of the due diligence procedures in Annex I. dd) The term “Account Holder” means the person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. A person, other than a Financial Institution, holding a Financial Account for the benefit or account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account for purposes of this Agreement, and such other person is treated as holding the account. For purposes of the immediately preceding sentence, the term “Financial Institution” does not include a Financial Institution organized or incorporated in a U.S. Territory. In the case of a Cash Value Insurance Contract or an Annuity Contract, the Account Holder is any person entitled to access the Cash Value or change the beneficiary of the contract. If no person can access the Cash Value or change the beneficiary, the Account Holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment under the contract is treated as an Account Holder. ee) The term “U.S. Person” means a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and (ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the United States. This subparagraph 1(ee) shall be interpreted in accordance with the U.S.
Internal Revenue Code. ff) The term “Specified U.S. Person” means a U.S. Person, other than: (i) a corporation the stock of which is regularly traded on one or more established securities markets; (ii) any corporation that is a member of the same expanded affiliated group, as defined in section 1471(e)(2) of the U.S. Internal Revenue Code, as a corporation described in clause (i); (iii) the United States or any wholly owned agency or instrumentality thereof;

(iv) any State of the United States, any U.S. Territory, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing; (v) any organization exempt from taxation under section 501(a) of the U.S. Internal Revenue Code or an individual retirement plan as defined in section 7701(a)(37) of the U.S. Internal Revenue Code; (vi) any bank as defined in section 581 of the U.S. Internal Revenue Code; (vii) any real estate investment trust as defined in section 856 of the U.S. Internal Revenue Code; (viii) any regulated investment company as defined in section 851 of the U.S.
Internal Revenue Code or any entity registered with the Securities Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-64); (ix) any common trust fund as defined in section 584(a) of the U.S. Internal Revenue Code; (x) any trust that is exempt from tax under section 664(c) of the U.S. Internal Revenue Code or that is described in section 4947(a)(1) of the U.S. Internal Revenue Code; (xi) a dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any State; (xii) a broker as defined in section 6045(c) of the U.S. Internal Revenue Code; or (xiii) any tax-exempt trust under a plan that is described in section 403(b) or section 457(g) of the U.S. Internal Revenue Code. gg) The term “Entity” means a legal person or a legal arrangement such as a trust. hh) The term “Non-U.S. Entity” means an Entity that is not a U.S. Person. ii) The term “U.S. Source Withholdable Payment” means any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the United States.
Notwithstanding the foregoing, a U.S. Source Withholdable Payment does not include any payment that is not treated as a withholdable payment in relevant U.S. Treasury Regulations. jj) An Entity is a “Related Entity” of another Entity if either Entity controls the other Entity, or the two Entities are under common control. For this purpose control includes direct or indirect ownership of more than 50 percent of the vote or value in an Entity. Notwithstanding the foregoing, Mexico may treat an Entity as not a Related Entity of another Entity if the two Entities are not members of the same expanded affiliated group as defined in section 1471(e)(2) of the U.S. Internal Revenue Code. kk) The term “U.S. TIN” means a U.S. federal taxpayer identifying number. ll) The term “Mexican TIN” means the Mexican Federal Taxpayer Registry’s identifying number mm) The term “Controlling Persons” means the natural persons who exercise control over an Entity. In the case of a trust, such term means the settlor, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term “Controlling Persons” shall be interpreted in a manner consistent with the Recommendations of the Financial Action Task Force.
2. Any term not otherwise defined in this Agreement shall, unless the context otherwise requires or the Competent Authorities agree to a common meaning (as permitted by domestic law), have the meaning that it has at that time under the law of the Party applying the Agreement, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.

# Article 2 — Obligations to Obtain and Exchange Information with

Respect to Reportable Accounts
1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the information specified in paragraph 2 of this Article with respect to all Reportable Accounts and shall annually exchange this information with the other Party on an automatic basis pursuant to the relevant provisions of either one or more of the Conventions, as appropriate.
2. The information to be obtained and exchanged is: a) In the case of Mexico with respect to each U.S. Reportable Account of each Reporting Mexican Financial Institution:

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and, in the case of a Non-U.S.
Entity that, after application of the due diligence procedures set forth in Annex I, is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;

(2) the account number (or functional equivalent in the absence of an account number);

(3) the name and identifying number of the Reporting Mexican Financial Institution;

(4) the average monthly account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) during the relevant calendar year or other appropriate reporting period or, if the account was closed during such year or period, the average monthly account balance or value during the same year or period up to the time of closure;

(5) in the case of any Custodial Account:

(A) the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and

(B) the total gross proceeds from the sale or redemption of property paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder;

(6) in the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and

(7) in the case of any account not described in subparagraph 2(a)(5) or 2(a)(6) of this Article, the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period. b) In the case of the United States, with respect to each Mexican Reportable Account of each Reporting U.S. Financial Institution:

(1) the name, address, and Mexican TIN of any person that is a resident of Mexico and is an Account Holder of the account;

(2) the account number (or the functional equivalent in the absence of an account number);

(3) the name and identifying number of the Reporting U.S. Financial Institution;

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the account; and

(6) the gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 of subtitle A or 61 of subtitle F of the U.S. Internal Revenue Code.

# Article 3 — Time and Manner of Exchange of Information

1. For purposes of the exchange obligation in Article 2 of this Agreement, the amount and characterization of payments made with respect to a U.S. Reportable Account may be determined in accordance with the principles of the tax laws of Mexico, and the amount and characterization of payments made with respect to a Mexican Reportable Account may be determined in accordance with principles of U.S. federal income tax law.
2. For purposes of the exchange obligation in Article 2 of this Agreement, the information exchanged shall identify the currency in which each relevant amount is denominated.
3. With respect to paragraph 2 of Article 2 of this Agreement, information is to be obtained and exchanged with respect to 2014 and all subsequent years, except that: a) In the case of Mexico:

(1) the information to be obtained and exchanged with respect to 2014 is only the information described in subparagraphs 2(a)(1) through 2(a)(4) of Article 2 of this Agreement;

(2) the information to be obtained and exchanged with respect to 2015 is the information described in subparagraphs 2(a)(1) through 2(a)(7) of Article 2 of this Agreement, except for gross proceeds described in subparagraph 2(a)(5)(B) of Article 2 of this Agreement; and

(3) the information to be obtained and exchanged with respect to 2016 and subsequent years is the information described in subparagraph 2(a)(1) through 2(a)(7) of Article 2 of this Agreement; b) In the case of the United States, the information to be obtained and exchanged with respect to 2014 and subsequent years is all of the information identified in subparagraph 2(b) of Article 2 of this Agreement.
4. Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account that is maintained by a Reporting Financial Institution as of June 30, 2014, and subject to paragraph 4 of Article 6, the Parties are not required to obtain and include in the exchanged information the Mexican TIN or the U.S. TIN, as applicable, of any relevant person if such taxpayer identifying number is not in the records of the Reporting Financial Institution. In such case, the Parties shall obtain and include in the exchanged information the date of birth of the relevant person, if the Reporting Financial Institution has such date of birth in its records.
5. Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 of this Agreement shall be exchanged within nine (9) months after the end of the calendar year to which the information relates.
6. The Competent Authorities of Mexico and the United States shall enter into an agreement or arrangement under the mutual agreement procedure provided for in Article 5 of the TIEA, which shall: a) establish the procedures for the automatic exchange of information described in Article 2 of this Agreement; b) prescribe rules and procedures as may be necessary to implement Article 5 of this Agreement; and c) establish as necessary procedures for the exchange of the information reported under subparagraph 1(b) of Article 4 of this Agreement.
7. All information exchanged shall be subject to the confidentiality and other protections provided for in the Conventions, including the provisions limiting the use of the information exchanged.

# Article 4 — Application of FATCA to Mexican Financial Institutions

1. Treatment of Reporting Mexican Financial Institutions. Each Reporting Mexican Financial Institution shall be treated as complying with, and not subject to withholding under, section 1471 of the U.S. Internal Revenue Code if the Ministry of Finance of Mexico complies with its obligations under Articles 2 and 3 of this Agreement with respect to such Reporting Mexican Financial Institution, and the Reporting Mexican Financial Institution, pursuant to Mexican legislation and administrative guidance:

a) identifies U.S. Reportable Accounts and reports annually to the Mexican Competent Authority the information required to be reported in subparagraph 2(a) of Article 2 of this Agreement in the time and manner described in Article 3 of this Agreement;

b) for each of 2015 and 2016, reports annually to the Mexican Competent Authority the name of each Nonparticipating Financial Institution to which it has made payments and the aggregate amount of such payments;

c) complies with the registration requirements applicable to Financial Institutions in Partner Jurisdictions;

d) to the extent that a Reporting Mexican Financial Institution is (i) acting as a Qualified Intermediary (QI) (for purposes of section 1441 of the U.S.

Internal Revenue Code) that has elected to assume primary withholding responsibility under chapter 3 of subtitle A of the U.S. Internal Revenue Code, (ii) a foreign partnership that has elected to act as a withholding foreign partnership (for purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code), or (iii) a foreign trust that has elected to act as a withholding foreign trust (for purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code), withholds 30 percent of any U.S. Source Withholdable Payment to any Nonparticipating Financial Institution; and e) in the case of a Reporting Mexican Financial Institution that is not described in subparagraph 1(d) of this Article and that makes a payment of, or acts as an intermediary with respect to, a U.S. Source Withholdable Payment to any Nonparticipating Financial Institution, the Reporting Mexican Financial Institution provides to any immediate payor of such U.S. Source Withholdable Payment the information required for withholding and reporting to occur with respect to such payment.
Notwithstanding the foregoing, a Reporting Mexican Financial Institution with respect to which the conditions of this paragraph 1 are not satisfied shall not be subject to withholding under section 1471 of the U.S. Internal Revenue Code unless such Reporting Mexican Financial Institution is identified by the IRS as a Nonparticipating Financial Institution pursuant to subparagraph 2(b) of Article 5 of this Agreement.
2. Suspension of Rules Relating to Recalcitrant Accounts. The U.S.
Treasury Department shall not require a Reporting Mexican Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue Code), or to close such account, if the U.S. Competent Authority receives the information set forth in subparagraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 3 of this Agreement, with respect to such account.
3. Specific Treatment of Mexican Retirement Plans. The U.S. Treasury Department shall treat as a deemed-compliant FFIs or exempt beneficial owners, as appropriate, for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, Mexican retirement plans described in Annex II. For this purpose, a Mexican retirement plan includes an Entity established or located in, and regulated by, Mexico, or a predetermined contractual or legal arrangement, operated to provide pension or retirement benefits or earn income for providing such benefits under the laws of Mexico and regulated with respect to contributions, distributions, reporting, sponsorship, and taxation.
4. Identification and Treatment of Other Deemed-Compliant FFIs and
Exempt Beneficial Owners. The U.S. Treasury Department shall treat each Non-Reporting Mexican Financial Institution as a deemed-compliant FFI or as an exempt beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code.
5. Special Rules Regarding Related Entities and Branches That Are Nonparticipating Financial Institutions. If a Mexican Financial Institution, that otherwise meets the requirements of paragraph 1 of this Article or is described in paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a jurisdiction that prevents such Related Entity or branch from fulfilling the requirements of a participating FFI or deemed-compliant FFI for purposes of section 1471 of the U.S.
Internal Revenue Code or has a Related Entity or branch that is treated as a Nonparticipating Financial Institution solely due to the expiration of the transitional rule for limited FFIs and limited branches under relevant U.S. Treasury Regulations, such Mexican Financial Institution shall continue to be in compliance with the terms of this Agreement and shall continue to be treated as a deemed-compliant FFI or exempt beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code, provided that: a) the Mexican Financial Institution treats each such Related Entity or branch as a separate Nonparticipating Financial Institution for purposes of all the reporting and withholding requirements of this Agreement and each such Related Entity or branch identifies itself to withholding agents as a Nonparticipating Financial Institution; b) each such Related Entity or branch identifies its U.S. accounts and reports the information with respect to those accounts as required under section 1471 of the U.S. Internal Revenue Code to the extent permitted under the relevant laws pertaining to the Related Entity or branch; and c) such Related Entity or branch does not specifically solicit U.S. accounts held by persons that are not resident in the jurisdiction where such Related Entity or branch is located or accounts held by Nonparticipating Financial Institutions that are not established in the jurisdiction where such branch or Related Entity is located, and such branch or Related Entity is not used by the Mexican Financial Institution or any other Related Entity to circumvent the obligations under this Agreement or under section 1471 of the U.S. Internal Revenue Code, as appropriate.
6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this Agreement: a) the Ministry of Finance of Mexico shall not be obligated to obtain and exchange information with respect to a calendar year that is prior to the calendar year with respect to which similar information is required to be reported to the IRS by participating FFIs pursuant to relevant U.S.
Treasury Regulations; b) the Ministry of Finance of Mexico shall not be obligated to begin exchanging information prior to the date by which participating FFIs are required to report similar information to the IRS under relevant U.S.
Treasury Regulations; c) the U.S. Treasury Department shall not be obligated to obtain and exchange information with respect to a calendar year that is prior to the first calendar year with respect to which the Ministry of Finance of Mexico is required to obtain and exchange information; and d) the U.S. Treasury shall not be obligated to begin exchanging information prior to the date by which the Ministry of Finance of Mexico is required to begin exchanging information.
7. Coordination of Definitions with U.S. Treasury Regulations.
Notwithstanding Article 1 of this Agreement and the definitions provided in the Annexes to this Agreement, in implementing this Agreement, the Competent Authority of the Ministry of Finance of Mexico may use, and may permit Mexican Financial Institutions to use, a definition in relevant U.S. Treasury Regulations in lieu of a corresponding definition in this Agreement, provided that such application would not frustrate the purposes of this Agreement.

# Article 5 — Collaboration on Compliance and Enforcement

1. Minor and Administrative Errors. A Competent Authority shall notify the Competent Authority of the other Party when the first-mentioned Competent Authority has reason to believe that administrative errors or other minor errors may have led to incorrect or incomplete information reporting or resulted in other infringements of this Agreement. The Competent Authority of such other Party shall apply its domestic law (including applicable penalties) to obtain corrected and/or complete information or to resolve other infringements of this Agreement.
2. Significant Non-compliance. a) A Competent Authority shall notify the Competent Authority of the other Party when the first-mentioned Competent Authority has determined that there is significant non-compliance with the obligations under this Agreement with respect to a Reporting Financial Institution in the other jurisdiction. The Competent Authority of such other Party shall apply its domestic law (including applicable penalties) to address the significant non-compliance described in the notice. b) If, in the case of a Reporting Mexican Financial Institution, such enforcement actions do not resolve the non-compliance within a period of eighteen (18) months after notification of significant non-compliance is first provided, the U.S. Treasury Department shall treat the Reporting Mexican Financial Institution as a Nonparticipating Financial Institution pursuant to this subparagraph 2(b).
3. Reliance on Third Party Service Providers. Each Party may allow Reporting Financial Institutions to use third party service providers to fulfill the obligations imposed on them by a Party pursuant to its domestic legislation and administrative guidance, as contemplated in this Agreement, but these obligations shall remain the responsibility of the Reporting Financial Institutions.
4. Prevention of Avoidance. The Parties shall implement as necessary requirements to prevent Financial Institutions from adopting practices intended to circumvent the reporting required under this Agreement.

# Article 6

Mutual Commitment to Continue to Enhance the Effectiveness of Information Exchange and Transparency
1. Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with Mexico. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with Mexico by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.
2. Treatment of Passthru Payments and Gross Proceeds. The Parties are committed to work together, along with Partner Jurisdictions, to develop a practical and effective alternative approach to achieve the policy objectives of foreign passthru payment and gross proceeds withholding that minimizes burden.
3. Development of Common Reporting and Exchange Model. The Parties are committed to working with Partner Jurisdictions, and the Organisation for Economic Co-operation and Development, on adapting the terms of this Agreement and other agreements between the United States and Partner Jurisdictions to a common model for automatic exchange of information, including the development of reporting and due diligence standards for financial institutions.
4. Documentation of Accounts Maintained as of June 30, 2014. With respect to Reportable Accounts maintained by a Reporting Financial Institution as of June 30, 2014: a) The U.S. Treasury Department commits to establish, by January 1, 2017, for reporting with respect to 2017 and subsequent years, rules requiring Reporting U.S. Financial Institutions to obtain and report the Mexican TIN of each Account Holder of a Mexican Reportable Account as required pursuant to subparagraph 2(b)(1) of Article 2 of this Agreement; and b) The Ministry of Finance of Mexico commits to establish, by January 1, 2017, for reporting with respect to 2017 and subsequent years, rules requiring Reporting Mexican Financial Institutions to obtain the U.S. TIN of each Specified U.S. Person as required pursuant to subparagraph 2(a)(1) of Article 2 of this Agreement.

# Article 7

Consistency in the Application of FATCA to Partner Jurisdictions
1. Mexico shall be granted the benefit of any more favorable terms under Article 4 or Annex I of this Agreement relating to the application of FATCA to Mexican Financial Institutions afforded to another Partner Jurisdiction under a signed bilateral agreement pursuant to which the other Partner Jurisdiction commits to undertake the same obligations as Mexico described in Articles 2 and 3 of this Agreement, and subject to the same terms and conditions as described therein and in Articles 5 through 9 of the
Agreement.
2. The U.S. Treasury Department shall notify the Ministry of Finance of Mexico of any such more favorable terms, and such more favorable terms shall apply automatically under this Agreement as if such terms were specified in this Agreement and effective as of the date of signing of the agreement incorporating the more favorable terms, unless the Ministry of Finance of Mexico declines in writing the application thereof.

# Article 8 — Consultations and Amendments

1. In case any difficulties in the implementation of this Agreement arise, either Party may request consultations to develop appropriate measures to ensure the fulfillment of this Agreement.
2. This Agreement may be amended by written mutual agreement of the Parties. Unless otherwise agreed upon, such an amendment shall enter into force from the date of its signature by both Parties.

# Article 9 — Annexes

The Annexes form an integral part of this Agreement.

# Article 10 — Term of Agreement

1. This Agreement shall enter into force on the next day following its signature. Upon entry into force of this Agreement, the Agreement Between the Ministry of Finance and Public Credit of the United Mexican States and the Department of the Treasury of the United States of America to Improve International Tax Compliance Including with Respect to FATCA, done at Washington on November 19th, 2012, and which entered into force on January 1, 2013, shall be superseded by this Agreement and therefore terminate.
2. Either Party may terminate the Agreement by giving notice of termination in writing to the other Party. Such termination shall become effective on the first day of the month following the expiration of a period of twelve (12) months after the date of the notice of termination.
3. The Parties shall, prior to December 31, 2016, consult in good faith to amend this Agreement as necessary to reflect progress on the commitments set forth in Article 6 of this Agreement.
In witness whereof, the undersigned, being duly authorized thereto by their respective Governments, have signed this Agreement.
Done at, Mexico City in duplicate, in the Spanish and English languages, both texts being equally authentic, this 9th day of April. 2014.
FOR THE DEPARTMENT OF THE FOR THE MINISTRY OF FINANCE
TREASURY OF THE UNITED STATES AND PUBLIC CREDIT OF THE
OF AMERICA: UNITED MEXICAN STATES:

# Annex I

PROCEDURES FOR IDENTIFYING AND REPORTING ON U.S. REPORTABLE
ACCOUNTS AND ON PAYMENTS TO CERTAIN NONPARTICIPATING FINANCIAL
INSTITUTIONS
I. General
A. The Ministry of Finance of Mexico shall require, pursuant to domestic legislation and through administrative guidance, that Reporting Mexican Financial Institutions apply the due diligence procedures contained in this Annex I to identify U.S. Reportable Accounts and accounts held by Nonparticipating Financial Institutions.
B. For purposes of the Agreement,
1. All dollar amounts are in U.S. dollars and shall be read to include the equivalent in other currencies.
2. Except as otherwise provided herein, the balance or value of an account shall be determined as of the last day of the calendar year or other appropriate reporting period.
3. Where a balance or value threshold is to be determined as of June 30, 2014 under this Annex I, the relevant balance or value shall be determined as of that day or the last day of the reporting period ending immediately before June 30, 2014, and where a balance or value threshold is to be determined as of the last day of a calendar year under this Annex I, the relevant balance or value shall be determined as of the last day of the calendar year or other appropriate reporting period.
4. Subject to subparagraph E(1) of section II of this Annex I, an account shall be treated as a U.S. Reportable Account beginning as of the date it is identified as such pursuant to the due diligence procedures in this Annex I.
5. Unless otherwise provided, information with respect to a U.S.
Reportable Account shall be reported annually in the calendar year following the year to which the information relates.
C. As an alternative to the procedures described in each section of this Annex I, Mexico may allow Reporting Mexican Financial Institutions to rely on the procedures described in relevant U.S. Treasury Regulations to establish whether an account is a U.S. Reportable Account or an account held by a Nonparticipating Financial Institution. Mexico may allow Reporting Mexican Financial Institutions to make such election separately for each section of this Annex I either with respect to all relevant Financial Accounts or, separately, with respect to any clearly identified group of such accounts (such as by line of business or the location of where the account is maintained).
II. Preexisting Individual Accounts. The following rules and procedures apply for identifying U.S. Reportable Accounts among Preexisting Accounts held by individuals (“Preexisting Individual Accounts”).
A. Accounts Not Required to Be Reviewed, Identified, or Reported.
Unless the Reporting Mexican Financial Institution elects otherwise, either with respect to all Preexisting Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Mexico provide for such an election, the following Preexisting Individual Accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:
1. Subject to subparagraph E(2) of this section, a Preexisting Individual Account with a balance or value that does not exceed fifty thousand ($50,000) dollars as of June 30, 2014.
2. Subject to subparagraph E(2) of this section, a Preexisting Individual Account that is a Cash Value Insurance Contract and an Annuity Contract with a balance or value of two hundred and fifty thousand ($250,000) dollars or less as of June 30, 2014.
3. A Preexisting Individual Account that is a Cash Value Insurance Contract or an Annuity Contract, provided the law or regulations of Mexico or the United States effectively prevents the sale of such a Cash Value Insurance Contract or Annuity Contract to U.S. residents (such as if the relevant Financial Institution does not have the required registration under U.S. law, and the law of Mexico requires reporting or withholding with respect to insurance products held by residents of Mexico).
4. Any Depository Account with a balance of fifty thousand ($50,000) dollars or less.
B. Review Procedures for Preexisting Individual Accounts With a
Balance or Value as of June 30, 2014, that Exceeds Fifty Thousand
($50,000) Dollars (Two Hundred and Fifty Thousand ($250,000)
Dollars for a Cash Value Insurance Contract or Annuity Contract),
But Does Not Exceed One Million ($1,000,000) Dollars (“Lower Value
Accounts”)

1. Electronic Record Search. The Reporting Mexican Financial Institution must review electronically searchable data maintained by the Reporting Mexican Financial Institution for any of the following U.S. indicia:

a) Identification of the Account Holder as a U.S. citizen or resident;

b) Unambiguous indication of a U.S. place of birth;

c) Current U.S. mailing or residence address (including a U.S. post office box);

d) Current U.S. telephone number;

e) Standing instructions to transfer funds to an account maintained in the United States;

f) Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or g) An “in-care-of” or “hold mail” address that is the sole address the Reporting Mexican Financial Institution has on file for the Account Holder. In the case of a Preexisting Individual Account that is a Lower Value Account, an “in-care-of” address outside the United States or “hold mail” address shall not be treated as U.S. indicia.

2. If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic search, then no further action is required until there is a change in circumstances that results in one or more U.S. indicia being associated with the account, or the account becomes a High Value Account described in paragraph D of this section.
3. If any of the U.S. indicia in subparagraph B (1) of this section are discovered in the electronic search, or if there is a change in circumstances that results in one or more U.S. indicia being associated with the account, then the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.
4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this section, a Reporting Mexican Financial Institution is not required to treat an account as a U.S. Reportable Account if: a) Where the Account Holder information unambiguously indicates a U.S. place of birth, the Reporting Mexican Financial Institution obtains, or has previously reviewed and maintains a record of:

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);

(2) A non-U.S. passport or other government-issued identification evidencing the Account Holder’s citizenship or nationality in a country other than the United States; and

(3) A copy of the Account Holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:

(A) The reason the Account Holder does not have such a certificate despite renouncing U.S. citizenship; or

(B) The reason the Account Holder did not obtain U.S. citizenship at birth. b) Where the Account Holder information contains a current U.S. mailing or residence address, or one or more U.S. telephone numbers that are the only telephone numbers associated with the account, the Reporting Mexican Financial Institution obtains, or has previously reviewed and maintains a record of:

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder’s non-U.S. status. c) Where the Account Holder information contains standing instructions to transfer funds to an account maintained in the United States, the Reporting Mexican Financial Institution obtains or has previously reviewed and maintains a record of:

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder’s non-U.S. status. d) Where the Account Holder information contains a currently effective power of attorney or signatory authority granted to a person with a U.S. address, has an “in care of” address or “hold mail” address that is the sole address identified for the Account Holder, or has one or more U.S. telephone numbers (if a non-U.S. telephone number is also associated with the account), the Reporting Mexican Financial Institution obtains, or has previously reviewed and maintains a record of:

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); or

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder’s non-U.S. status.
C. Additional Procedures Applicable to Preexisting Individual Accounts
That Are Lower Value Accounts
1. Review of Preexisting Individual Accounts that are Lower Value Accounts for U.S. indicia must be completed by June 30, 2016.
2. If there is a change of circumstances with respect to a Preexisting Individual Account that is a Lower Value Account that results in one or more U.S. indicia described in subparagraph B(1) of this section being associated with the account, then the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account unless subparagraph B(4) of this section applies.
3. Except for Depository Accounts described in subparagraph A(4) of this section, any Preexisting Individual Account that has been identified as a U.S. Reportable Account under this section shall be treated as a U.S. Reportable Account in all subsequent years, unless the Account Holder ceases to be a Specified U.S. Person.
D. Enhanced Review Procedures for Preexisting Individual Accounts
With a Balance or Value That Exceeds One Million ($1,000,000)
Dollars as of June 30, 2014, or December 31 of 2015 or Any
Subsequent Year (“High Value Accounts”)
1. Electronic Record Search. The Reporting Mexican Financial Institution must review electronically searchable data maintained by the Reporting Mexican Financial Institution for any of the U.S. indicia described in subparagraph B(1) of this section.

2. Paper Record Search. If the Reporting Mexican Financial Institution’s electronically searchable databases include fields for, and capture all of the information described in, subparagraph D(3) of this section, then no further paper record search is required. If the electronic databases do not capture all of this information, then with respect to a High Value Account, the Reporting Mexican Financial Institution must also review the current customer master file and, to the extent not contained in the current customer master file, the following documents associated with the account and obtained by the Reporting Mexican Financial Institution within the last five (5) years for any of the U.S. indicia described in subparagraph B(1) of this section:

a) The most recent documentary evidence collected with respect to the account;

b) The most recent account opening contract or documentation;

c) The most recent documentation obtained by the Reporting Mexican Financial Institution pursuant to AML/KYC Procedures or for other regulatory purposes;

d) Any power of attorney or signature authority forms currently in effect; and e) Any standing instructions to transfer funds currently in effect.

3. Exception Where Databases Contain Sufficient Information. A Reporting Mexican Financial Institution is not required to perform the paper record search described in subparagraph D(2) of this section if the Reporting Mexican Financial Institution’s electronically searchable information includes the following:

a) The Account Holder’s nationality or residence status;

b) The Account Holder’s residence address and mailing address currently on file with the Reporting Mexican Financial Institution;

c) The Account Holder’s telephone number(s) currently on file, if any, with the Reporting Mexican Financial Institution;

d) Whether there are standing instructions to transfer funds in the account to another account (including an account at another branch of the Reporting Mexican Financial Institution or another Financial Institution);

e) Whether there is a current “in care of” address or “hold mail” address for the Account Holder; and f) Whether there is any power of attorney or signatory authority for the account.

4. Relationship Manager Inquiry for Actual Knowledge. In addition to the electronic and paper record searches described above, the Reporting Mexican Financial Institution must treat as a U.S.
Reportable Account any High Value Account assigned to a relationship manager (including any Financial Accounts aggregated with such High Value Account) if the relationship manager has actual knowledge that the Account Holder is a Specified U.S. Person.

5. Effect of Finding U.S. Indicia.

a) If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the enhanced review of High Value Accounts described above, and the account is not identified as held by a Specified U.S. Person in subparagraph D(4) of this section, then no further action is required until there is a change in circumstances that results in one or more U.S. indicia being associated with the account.

b) If any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the enhanced review of High Value Accounts described above, or if there is a subsequent change in circumstances that results in one or more U.S. indicia being associated with the account, then the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.

c) Except for Depository Accounts described in subparagraph A(4) of this section, any Preexisting Individual Account that has been identified as a U.S. Reportable Account under this section shall be treated as a U.S. Reportable Account in all subsequent years, unless the Account Holder ceases to be a Specified U.S.

Person.
E. Additional Procedures Applicable to High Value Accounts.
1. If a Preexisting Individual Account is a High Value Account as of June 30, 2014, the Reporting Mexican Financial Institution must complete the enhanced review procedures described in paragraph D of this section with respect to such account by June 30, 2015. If based on this review such account is identified as a U.S. Reportable Account on or before December 31, 2014, the Reporting Mexican Financial Institution must report the required information about such account with respect to 2014 in the first report on the account and on an annual basis thereafter. In the case of an account identified as a U.S.
Reportable Account after December 31, 2014, and on or before June 30, 2015, the Reporting Mexican Financial Institution is not required to report information about such account with respect to 2014, but must report information about the account on an annual basis thereafter.
2. If a Preexisting Individual Account is not a High Value Account as of June 30, 2014, but becomes a High Value Account as of the last day of 2015 or any subsequent calendar year, the Reporting Mexican Financial Institution must complete the enhanced review procedures described in paragraph D of this section with respect to such account within six (6) months after the last day of the calendar year in which the account becomes a High Value Account. If based on this review such account is identified as a U.S. Reportable Account, the Reporting Mexican Financial Institution must report the required information about such account with respect to the year in which it is identified as a U.S. Reportable Account and subsequent years on an annual basis, unless the Account Holder ceases to be a Specified U.S. Person.
3. Once a Reporting Mexican Financial Institution applies the enhanced review procedures described in paragraph D of this section to a High Value Account, the Reporting Mexican Financial Institution is not required to re-apply such procedures, other than the relationship manager inquiry described in subparagraph D(4) of this section, to the same High Value Account in any subsequent year.
4. If there is a change of circumstances with respect to a High Value Account that results in one or more U.S. indicia described in subparagraph B(1) of this section being associated with the account, then the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.
5. A Reporting Mexican Financial Institution must implement procedures to ensure that a relationship manager identifies any change in circumstances of an account. For example, if a relationship manager is notified that the Account Holder has a new mailing address in the United States, the Reporting Mexican Financial Institution is required to treat the new address as a change in circumstances and, if it elects to apply subparagraph B(4) of this section, is required to obtain the appropriate documentation from the Account Holder.
F. Preexisting Individual Accounts That Have Been Documented for Certain Other Purposes. A Reporting Mexican Financial Institution that has previously obtained documentation from an Account Holder to establish the Account Holder’s status as neither a U.S. citizen nor a U.S. resident in order to meet its obligations under a QI, withholding foreign partnership, or withholding foreign trust agreement with the IRS, or to fulfill its obligations under chapter 61 of Title 26 of the United States Code, is not required to perform the procedures described in subparagraph B(1) of this section with respect to Lower Value Accounts or subparagraphs D(1) through D(3) of this section with respect to High Value Accounts.
III. New Individual Accounts. The following rules and procedures apply for identifying U.S. Reportable Accounts among Financial Accounts held by individuals and opened on or after July 1, 2014 (“New Individual Accounts”).
A. Accounts Not Required to Be Reviewed, Identified or Reported.
Unless the Reporting Mexican Financial Institution elects otherwise, either with respect to all New Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Mexico provide for such an election, the following New Individual Accounts are not required to be reviewed, identified, or reported as U.S.
Reportable Accounts:
1. A Depository Account unless the account balance exceeds fifty thousand ($50,000) dollars at the end of any calendar year or other appropriate reporting period.
2. A Cash Value Insurance Contract unless the Cash Value exceeds fifty thousand ($50,000) dollars at the end of any calendar year or other appropriate reporting period.
B. Other New Individual Accounts. With respect to New Individual Accounts not described in paragraph A of this section, upon account opening (or within ninety (90) days after the end of the calendar year in which the account ceases to be described in paragraph A of this section), the Reporting Mexican Financial Institution must obtain a self-certification which may be part of the account opening documentation, that allows the Reporting Mexican Financial Institution to determine whether the Account Holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the Account Holder is also a tax resident of another jurisdiction) and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Mexican Financial Institution in connection with the opening of the account, including any documentation collected pursuant to AML/KYC Procedures.
1. If the self-certification establishes that the Account Holder is resident in the United States for tax purposes, the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account and obtain a self-certification that includes the Account Holder’s U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).
2. If there is a change of circumstances with respect to a New Individual Account that causes the Reporting Mexican Financial Institution to know, or have reason to know, that the original self-certification is incorrect or unreliable, the Reporting Mexican Financial Institution cannot rely on the original self-certification and must obtain a valid self-certification that establishes whether the Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting Mexican Financial Institution is unable to obtain a valid selfcertification, the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account.
IV. Preexisting Entity Accounts. The following rules and procedures apply for purposes of identifying U.S. Reportable Accounts and accounts held by a Nonparticipating Financial Institutions among Preexisting Accounts held by Entities (“Preexisting Entity Accounts”).
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported.
Unless the Reporting Mexican Financial Institution elects otherwise, either with respect to all Preexisting Entity Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Mexico provide for such an election, a Preexisting Entity Account with an account balance or value that does not exceed two hundred and fifty thousand ($250,000) dollars as of June 30, 2014, is not required to be reviewed, identified, or reported as a U.S. Reportable Account until the account balance or value exceeds one million ($1,000,000) dollars.
B. Entity Accounts Subject to Review. A Preexisting Entity Account that has an account balance or value that exceeds two hundred and fifty thousand ($250,000) dollars as of June 30, 2014, and a Preexisting Entity Account that does not exceed two hundred and fifty thousand ($250,000) dollars as of June 30, 2014, but the account balance or value of which exceeds one million ($1,000,000) dollars as of the last day of 2015 or any subsequent calendar year, must be reviewed in accordance with the procedures set forth in paragraph D of this section.
C. Entity Accounts With Respect to Which Reporting is Required. With respect to Preexisting Entity Accounts described in paragraph B of this section, only accounts that are held by one or more Entities that are Specified U.S. Persons, or by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or residents, shall be treated as U.S.
Reportable Accounts. In addition, accounts held by Nonparticipating Financial Institutions shall be treated as accounts for which aggregate payments as described in paragraph 1(b) of Article 4 of the Agreement are reported to the Mexican Competent Authority.
D. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting is Required. For Preexisting Entity Accounts described in paragraph B of this section, the Reporting Mexican Financial Institution must apply the following review procedures to determine whether the account is held by one or more Specified U.S. Persons, by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or residents, or by Nonparticipating Financial Institutions:
1. Determine Whether the Entity is a Specified U.S. Person. a) Review information maintained for regulatory or customer relationship purposes (including information collected pursuant to AML/KYC Procedures) to determine whether the information indicates that the Account Holder is a U.S. Person. For this purpose, information indicating that the Account Holder is a U.S.
Person includes a U.S. place of incorporation or organization, or a U.S. address. b) If the information indicates that the Account Holder is a U.S.
Person, the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account unless it obtains a self-certification from the Account Holder (which may be on an IRS Form W-8 or W-9, or a similar agreed form), or reasonably determines based on information in its possession or that is publicly available, that the Account Holder is not a Specified U.S. Person.
2. Determine Whether a Non-U.S. Entity is a Financial Institution. a) Review information maintained for regulatory or customer relationship purposes (including information collected pursuant to AML/KYC Procedures) to determine whether the information indicates that the Account Holder is a Financial Institution. b) If the information indicates that the Account Holder is a Financial Institution, or the Reporting Mexican Financial Institution verifies the Account Holder’s Global Intermediary Identification Number on the published IRS FFI list, then the account is not a U.S. Reportable Account.
3. Determine Whether a Financial Institution is a Nonparticipating
Financial Institution Payments to Which Are Subject to
Aggregate Reporting Under Subparagraph 1(b) of Article 4 of the

Agreement.

a) Subject to subparagraph D(3)(b) of this paragraph, a Reporting Mexican Financial Institution may determine that the Account Holder is a Mexican Financial Institution or other Partner Jurisdiction Financial Institution if the Reporting Mexican Financial Institution reasonably determines that the Account Holder has such status on the basis of the Account Holder’s Global Intermediary Identification Number on the published IRS FFI list or other information that is publicly available or in the possession of the Reporting Mexican Financial Institution, as applicable. In such a case, no further review, identification, or reporting is required with respect to the account.

b) If the Account Holder is a Mexican Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution, then the account is not a U.S. Reportable Account, but payments to the Account Holder must be reported as contemplated in subparagraph 1(b) of Article 4 of the Agreement.

c) If the Account Holder is not a Mexican Financial Institution or other Partner Jurisdiction Financial Institution, then the Reporting Mexican Financial Institution must treat the Account Holder as a Nonparticipating Financial Institution payments to which are reportable under subparagraph 1(b) of Article 4 of the Agreement, unless the Reporting Mexican Financial Institution:

(1) Obtains a self-certification (which may be on an IRS Form W-8 or similar agreed form) from the Account Holder that it is a certified deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; or

(2) In the case of a participating FFI or registered deemedcompliant FFI, verifies the Account Holder Global Intermediary Identification Number on a published IRS FFI list.
4. Determine Whether an Account Held by an NFFE Is a U.S.
Reportable Account. With respect to an Account Holder of a Preexisting Entity Account that is not identified as either a U.S.

Person or a Financial Institution, the Reporting Mexican Financial Institution must identify (i) whether the Account Holder has Controlling Persons, (ii) whether the Account Holder is a Passive NFFE, and (iii) whether any of the Controlling Persons of the Account Holder is a U.S. citizen or resident. In making these determinations the Reporting Mexican Financial Institution must follow the guidance in subparagraphs D(4)(a) through D(4)(d) of this section in the order most appropriate under the circumstances.

a) For purposes of determining the Controlling Persons of an Account Holder, a Reporting Mexican Financial Institution may rely on information collected and maintained pursuant to AML/KYC Procedures.

b) For purposes of determining whether the Account Holder is a Passive NFFE, the Reporting Mexican Financial Institution must obtain a self-certification (which may be on an IRS Form W-8 or W-9, or on a similar agreed form) from the Account Holder to establish its status, unless it has information in its possession or that is publicly available, based on which it can reasonably determine that the Account Holder is an Active NFFE.

c) For purposes of determining whether a Controlling Person of a Passive NFFE is a U.S. citizen or resident for tax purposes, a Reporting Mexican Financial Institution may rely on:

(1) Information collected and maintained pursuant to
AML/KYC Procedures in the case of a Preexisting Entity
Account held by one or more NFFEs with an account balance or value that does not exceed one million ($1,000,000) dollars; or

(2) A self-certification (which may be on an IRS Form W-8 or W-9, or on a similar agreed form) from the Account Holder or such Controlling Person in the case of a Preexisting Entity Account held by one or more NFFEs with an account balance or value that exceeds one million ($1,000,000) dollars. d) If any Controlling Person of a Passive NFFE is a U.S. citizen or resident, the account shall be treated as a U.S. Reportable Account.
E. Timing of Review and Additional Procedures Applicable to
Preexisting Entity Accounts.
1. Review of Preexisting Entity Accounts with an account balance or value that exceeds two hundred and fifty thousand ($250,000) dollars as of June 30, 2014 must be completed by June 30, 2016.
2. Review of Preexisting Entity Accounts with an account balance or value that does not exceed two hundred and fifty thousand ($250,000) dollars as of June 30, 2014, but exceeds one million ($1,000,000) dollars as of December 31, 2015 or a subsequent year, must be completed within six (6) months after the last day of the calendar year in which the account balance or value exceeds one million ($1,000,000) dollars.
3. If there is a change of circumstances with respect to a Preexisting Entity Account that causes the Reporting Mexican Financial Institution to know, or have reason to know, that the self-certification or other documentation associated with an account is incorrect or unreliable, the Reporting Mexican Financial Institution must redetermine the status of the account in accordance with the procedures set forth in paragraph D of this section.
V. New Entity Accounts. The following rules and procedures apply for purposes of identifying U.S. Reportable Accounts and accounts held by Nonparticipating Financial Institutions among Financial Accounts held by Entities and opened on or after July 1, 2014 (“New Entity Accounts”).
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported.
Unless the Reporting Mexican Financial Institution elects otherwise, either with respect to all New Entity Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Mexico provide for such election, a credit card account or a revolving credit facility treated as a New Entity Account is not required to be reviewed, identified, or reported, provided that the Reporting Mexican Financial Institution maintaining such account implements policies and procedures to prevent an account balance owed to the Account Holder that exceeds fifty thousand ($50,000) dollars.
B. Other New Entity Accounts. With respect to New Entity Accounts not described in paragraph A of this section, the Reporting Mexican Financial Institution must determine whether the Account Holder is: (i) a Specified U.S. Person; (ii) a Mexican Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemedcompliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; or (iv) an Active NFFE or Passive NFFE.
1. Subject to subparagraph B(2) of this section, a Reporting Mexican Financial Institution may determine that an Account Holder is an Active NFFE, a Mexican Financial Institution, or other Partner Jurisdiction Financial Institution if the Reporting Mexican Financial Institution reasonably determines that the Account Holder has such status on the basis of the Account Holder’s Global Intermediary Identification Number or other information that is publicly available or in the possession of the Reporting Mexican Financial Institution, as applicable.
2. If the Account Holder is a Mexican Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution, then the account is not a U.S.
Reportable Account, but payments to the Account Holder must be reported as contemplated in subparagraph 1(b) of Article 4 of the
Agreement.
3. In all other cases, a Reporting Mexican Financial Institution must obtain a self-certification from the Account Holder to establish the Account Holder’s status. Based on the self-certification, the following rules apply: a) If the Account Holder is a Specified U.S. Person, the Reporting Mexican Financial Institution must treat the account as a U.S.
Reportable Account. b) If the Account Holder is a Passive NFFE, the Reporting Mexican Financial Institution must identify the Controlling Persons as determined under AML/KYC Procedures, and must determine whether any such person is a U.S. citizen or resident on the basis of a self-certification from the Account Holder or such person. If any such person is a U.S. citizen or resident, the Reporting Mexican Financial Institution must treat the account as a U.S. Reportable Account. c) If the Account Holder is: (i) a U.S. Person that is not a Specified U.S. Person; (ii) subject to subparagraph B(3)(d) of this section, a Mexican Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; (iv) an Active NFFE; or

(v) a Passive NFFE none of the Controlling Persons of which is a U.S. citizen or resident, then the account is not a U.S.
Reportable Account and no reporting is required with respect to the account. d) If the Account Holder is a Nonparticipating Financial Institution (including a Mexican Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution), then the account is not a U.S. Reportable Account, but payments to the Account Holder must be reported as contemplated in subparagraph 1(b) of Article 4 of the Agreement.
VI. Special Rules and Definitions. The following additional rules and definitions apply in implementing the due diligence procedures described above:
A. Reliance on Self-Certifications and Documentary Evidence. A Reporting Mexican Financial Institution may not rely on a self-certification or documentary evidence if the Reporting Mexican Financial Institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable.
B. Definitions. The following definitions apply for purposes of this Annex I.
1. AML/KYC Procedures. “AML/KYC Procedures” means the customer due diligence procedures of a Reporting Mexican Financial Institution pursuant to the anti-money laundering or similar requirements of Mexico to which such Reporting Mexican Financial Institution is subject.
2. NFFE. An “NFFE” means any Non-U.S. Entity that is not an FFI as defined in relevant U.S. Treasury Regulations or is an Entity described in subparagraph B(4)(j) of this section, and also includes any Non-U.S. Entity that is established in Mexico or another Partner Jurisdiction and that is not a Financial Institution.
3. Passive NFFE. A “Passive NFFE” means any NFFE that is not (i) an Active NFFE, or (ii) a withholding foreign partnership or withholding foreign trust pursuant to relevant U.S. Treasury Regulations.

4. Active NFFE. An “Active NFFE” means any NFFE that meets any of the following criteria:

a) Less than 50 percent of the NFFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50 percent of the assets held by the NFFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;

b) The stock of the NFFE is regularly traded on an established securities market or the NFFE is a Related Entity of an Entity the stock of which is traded on an established securities market;

c) The NFFE is organized in a U.S. Territory and all of the owners of the payee are bona fide residents of that U.S. Territory;

d) The NFFE is a government (other than the U.S. government), a political subdivision of such government (which, for the avoidance of doubt, includes a state, province, county, or municipality), or a public body performing a function of such government or a political subdivision thereof, a government of a U.S. Territory, an international organization, a non-U.S. central bank of issue, or an Entity wholly owned by one or more of the foregoing;

e) Substantially all of the activities of the NFFE consist of holding (in whole or in part) the outstanding stock of, and providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an Entity shall not qualify for NFFE status if the Entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;

f) The NFFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFFE shall not qualify for this exception after the date that is twenty-four (24) months after the date of the initial organization of the NFFE;

g) The NFFE was not a Financial Institution in the past five (5) years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a Financial Institution;

h) The NFFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution;

i) The NFFE is an “excepted NFFE” as described in relevant U.S.

Treasury Regulations; or j) The NFFE meets all of the following requirements:

(1) It is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labor organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare;

(2) It is exempt from income tax in its jurisdiction of residence;

(3) It has no shareholders or members who have a proprietary or beneficial interest in its income or assets;

(4) The applicable laws of the NFFE’s jurisdiction of residence or the NFFE’s formation documents do not permit any income or assets of the Entity to be distributed to, or applied for the benefit of, a private person or noncharitable Entity other than pursuant to the conduct of the NFFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFFE has purchased; and

(5) The applicable laws of the NFFE’s jurisdiction of residence or the NFFE’s formation documents require that, upon the NFFE’s liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organization, or escheat to the government of the NFFE’s jurisdiction of residence or any political subdivision thereof.
5. Preexisting Account. A “Preexisting Account” means a Financial Account maintained by a Reporting Financial Institution as of June 30, 2014.
C. Account Balance Aggregation and Currency Translation Rules.
1. Aggregation of Individual Accounts. For purposes of determining the aggregate balance or value of Financial Accounts held by an individual, a Reporting Mexican Financial Institution is required to aggregate all Financial Accounts maintained by the Reporting Mexican Financial Institution, or by a Related Entity, but only to the extent that the Reporting Mexican Financial Institution’s computerized systems link the Financial Accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances or values to be aggregated.
Each holder of a jointly held Financial Account shall be attributed the entire balance or value of the jointly held Financial Account for purposes of applying the aggregation requirements described in this paragraph 1.
2. Aggregation of Entity Accounts. For purposes of determining the aggregate balance or value of Financial Accounts held by an Entity, a Reporting Mexican Financial Institution is required to take into account all Financial Accounts that are maintained by the Reporting Mexican Financial Institution, or by a Related Entity, but only to the extent that the Reporting Mexican Financial Institution’s computerized systems link the Financial Accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances or values to be aggregated.
3. Special Aggregation Rule Applicable to Relationship Managers.
For purposes of determining the aggregate balance or value of Financial Accounts held by a person to determine whether a Financial Account is a High Value Account, a Reporting Mexican Financial Institution is also required, in the case of any Financial Accounts that a relationship manager knows, or has reason to know, are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity) by the same person, to aggregate all such accounts.
4. Currency Translation Rule. For purposes of determining the balance or value of Financial Accounts denominated in a currency other than the U.S. dollar, a Reporting Mexican Financial Institution must convert the dollar threshold amounts described in this Annex I into such currency using a published spot rate determined as of the last day of the calendar year preceding the year in which the Reporting Mexican Financial Institution is determining the balance or value.
D. Documentary Evidence. For purposes of this Annex I, acceptable documentary evidence includes any of the following:
1. A certificate of residence issued by an authorized government body (for example, a government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a resident.
2. With respect to an individual, any valid identification issued by an authorized government body (for example, a government or agency thereof, or a municipality), that includes the individual’s name and is typically used for identification purposes.
3. With respect to an Entity, any official documentation issued by an authorized government body (for example, a government or agency thereof, or a municipality) that includes the name of the Entity and either the address of its principal office in the jurisdiction (or U.S.
Territory) in which it claims to be a resident or the jurisdiction (or U.S.
Territory) in which the Entity was incorporated or organized.
4. With respect to a Financial Account maintained in a jurisdiction with anti-money laundering rules that have been approved by the IRS in connection with a QI agreement (as described in relevant U.S.
Treasury Regulations), any of the documents, other than a Form W-8 or W-9, referenced in the jurisdiction’s attachment to the QI agreement for identifying individuals or Entities.
5. Any financial statement, third-party credit report, bankruptcy filing, or U.S. Securities and Exchange Commission report.
E. Alternative Procedures for Financial Accounts Held by Individual Beneficiaries of a Cash Value Insurance Contract. A Reporting Mexican Financial Institution may presume that an individual beneficiary (other than the owner) of a Cash Value Insurance Contract receiving a death benefit is not a Specified U.S. Person and may treat such Financial Account as other than a U.S. Reportable Account unless the Reporting Mexican Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Specified U.S. Person. A Reporting Mexican Financial Institution has reason to know that a beneficiary of a Cash Value Insurance Contract is a Specified U.S. Person if the information collected by the Reporting Mexican Financial Institution and associated with the beneficiary contains U.S. indicia as described in subparagraph (B)(1) of section II of this Annex I. If a Reporting Mexican Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Specified U.S. Person, the Reporting Mexican Financial Institution must follow the procedures in subparagraph B(3) of section II of this Annex I.
F. Reliance on Third Parties. Regardless of whether an election is made under paragraph C of section I of this Annex I, Mexico may permit Reporting Mexican Financial Institutions to rely on due diligence procedures performed by third parties, to the extent provided in relevant U.S. Treasury Regulations.

# Annex II

NON-REPORTING MEXICAN FINANCIAL INSTITUTIONS
AND EXCLUDED ACCOUNTS
General
This Annex II may be modified by a mutual written decision entered into between the Competent Authorities of Mexico and the United States: (1) to include additional Entities and accounts that present a low risk of being used by U.S. Persons to evade U.S. tax and that have similar characteristics to the Entities and accounts described in this Annex II as of the date of entry into force of the Agreement; or (2) to remove Entities and accounts that, due to changes in circumstances, no longer present a low risk of being used by U.S. Persons to evade U.S. tax. Any such addition or removal shall be effective on the date of signature of the mutual decision, unless otherwise provided therein. Procedures for reaching such a mutual decision may be included in the mutual agreement or arrangement described in paragraph 6 of Article 3 of the Agreement.
I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated as Non-Reporting Mexican Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution:
A. The Government of Mexico, any political subdivision of Mexico, or any wholly owned agency or instrumentality of Mexico or any one or more of the foregoing, including:
1. Nacional Financiera, S.N.C. (NAFIN)
2. Banco Nacional de Comercio Exterior, S.N.C. (BANCOMEXT)
3. Banco Nacional de Obras y Servicios Públicos, S.N.C. (BANOBRAS)
4. Sociedad Hipotecaria Federal, S.N.C. (SHF)
5. Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero
B. International Organization. Any international organization or wholly owned agency or instrumentality thereof. This category includes any intergovernmental organization (including a supranational organization) (1) that is comprised primarily of non-U.S. governments; (2) that has in effect a headquarters agreement with Mexico; and (3) the income of which does not inure to the benefit of private persons.
C. Central Bank.
1. Banco de México and any of its wholly owned subsidiaries.
II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated as Non-Reporting Mexican Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.
A. Insurance institutions for pension and survival (life annuities), as defined in Article 159, fraction IV of the Social Security Law.
B. Pension Fund of an Exempt Beneficial Owner. A fund established in Mexico by an exempt beneficial owner to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the exempt beneficial owner.
C. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that is a Mexican Financial Institution solely because it is an Investment Entity, provided that each direct holder of an Equity Interest in the Entity is an exempt beneficial owner, and each direct holder of a debt interest in such Entity is either a Depository Institution (with respect to a loan made to such Entity) or an exempt beneficial owner.
III. Small or Limited Scope Financial Institutions that Qualify as Deemed-
Compliant FFIs. The following Financial Institutions are Non-Reporting Mexican Financial Institutions that shall be treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code.
A. Financial Institution with a Local Client Base. A Financial Institution satisfying the following requirements:
1. The Financial Institution must be licensed and regulated as a financial institution under the laws of Mexico;
2. The Financial Institution must have no fixed place of business outside of Mexico. For this purpose, a fixed place of business does not include a location that is not advertised to the public and from which the Financial Institution performs solely administrative support functions;
3. The Financial Institution must not solicit customers or Account Holders outside Mexico. For this purpose, a Financial Institution shall not be considered to have solicited customers or Account Holders outside Mexico merely because the Financial Institution (a) operates a website, provided that the website does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders, or (b) advertises in print media or on a radio or television station that is distributed or aired primarily within Mexico but is also incidentally distributed or aired in other countries, provided that the advertisement does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders;
4. The Financial Institution must be required under the laws of Mexico to identify resident Account Holders for purposes of either information reporting or withholding of tax with respect to Financial Accounts held by residents or for purposes of satisfying Mexico’s AML/KYC Procedures;
5. At least 98 percent of the Financial Accounts by value maintained by the Financial Institution must be held by residents (including residents that are Entities) of Mexico;
6. Beginning on or before July 1, 2014, the Financial Institution must have policies and procedures, consistent with those set forth in Annex I, to prevent the Financial Institution from providing a Financial Account to any Nonparticipating Financial Institution and to monitor whether the Financial Institution opens or maintains a Financial Account for any Specified U.S. Person who is not a resident of Mexico (including a U.S. Person that was a resident of Mexico when the Financial Account was opened but subsequently ceases to be a resident of Mexico) or any Passive NFFE with Controlling Persons who are U.S. residents or U.S. citizens who are not residents of Mexico;
7. Such policies and procedures must provide that if any Financial Account held by a Specified U.S. Person who is not a resident of Mexico or by a Passive NFFE with Controlling Persons who are U.S. residents or U.S. citizens who are not residents of Mexico is identified, the Financial Institution must report such Financial Account as would be required if the Financial Institution were a Reporting Mexican Financial Institution (including by following the applicable registration requirements) or close such Financial Account;
8. With respect to a Preexisting Account held by an individual who is not a resident of Mexico or by an Entity, the Financial Institution must review those Preexisting Accounts in accordance with the procedures set forth in Annex I applicable to Preexisting Accounts to identify any U.S. Reportable Account or Financial Account held by a Nonparticipating Financial Institution, and must report such Financial Account as would be required if the Financial Institution were a Reporting Mexican Financial Institution (including by following the applicable registration requirements) or close such Financial Account;
9. Each Related Entity of the Financial Institution that is a Financial Institution must be incorporated or organized in Mexico and, with the exception of any Related Entity that is a retirement fund described in paragraphs A and B of section II of this Annex II, satisfy the requirements set forth in this paragraph A; and
10. The Financial Institution must not have policies or practices that discriminate against opening or maintaining Financial Accounts for individuals who are Specified U.S. Persons and residents of Mexico.
B. Local Bank. A Financial Institution satisfying the following requirements:
1. The Financial Institution operates solely as (and is licensed and regulated under the laws of Mexico as) (a) a bank or (b) a credit union or similar cooperative credit organization that is operated without profit;
2. The Financial Institution’s business consists primarily of receiving deposits from and making loans to, with respect to a bank, unrelated retail customers and, with respect to a credit union or similar cooperative credit organization, members, provided that no member has a greater than five percent interest in such credit union or cooperative credit organization;
3. The Financial Institution satisfies the requirements set forth in subparagraphs A(2) and A(3) of this section, provided that, in addition to the limitations on the website described in subparagraph A(3) of this section, the website does not permit the opening of a Financial Account;
4. The Financial Institution does not have more than one hundred seventy five million ($175,000,000) dollars in assets on its balance sheet, and the Financial Institution and any Related Entities, taken together, do not have more than five hundred million ($500,000,000) dollars in total assets on their consolidated or combined balance sheets; and
5. Any Related Entity must be incorporated or organized in Mexico, and any Related Entity that is a Financial Institution, with the exception of any Related Entity that is a retirement fund described in paragraph B of section II of this Annex II or a Financial Institution with only low-value accounts described in paragraph C of this section, must satisfy the requirements set forth in this paragraph B.
C. Financial Institution with Only Low-Value Accounts. A Mexican Financial Institution satisfying the following requirements:
1. The Financial Institution is not an Investment Entity;
2. No Financial Account maintained by the Financial Institution or any Related Entity has a balance or value in excess of fifty thousand ($50,000) dollars, applying the rules set forth in Annex I for account aggregation and currency translation; and
3. The Financial Institution does not have more than fifty million ($50,000,000) dollars in assets on its balance sheet, and the Financial Institution and any Related Entities, taken together, do not have more than fifty million ($50,000,000) dollars in total assets on their consolidated or combined balance sheets.
D. Any exempt organization resident of Mexico entitled to the benefits provided in Article 22 of the Convention between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and paragraph 17 of its Protocol.
E. Consistent with paragraph 3 of Article 5 of the Agreement, a fideicomiso, to the extent that the fiduciaria of the fideicomiso is a Reporting Mexican Financial Institution and reports any information required to be obtained and exchanged pursuant to this Agreement with respect to any Controlling Person of the fideicomiso.
F. A fideicomiso that serves solely as escrow for a debt or purchase obligation of the settlor.
G. A fideicomiso the assets of which consist solely of real property.
H. Collective Investment Vehicle. In the case of an Investment Entity established in Mexico that is regulated as a collective investment vehicle,
1. if all of the interests in the collective investment vehicle (including debt interests in excess of fifty thousand ($50,000) dollars) are held by or through one or more exempt beneficial owners, Active NFFEs described in subparagraph B(4) of section VI of Annex I, U.S.
Persons that are not Specified U.S. Persons, or Financial Institutions that are not Nonparticipating Financial Institutions, such Investment Entity shall be treated as a deemed-compliant FFI for purposes of section 1471 of the U.S. Internal Revenue Code, and the reporting obligations of any Investment Entity (other than a Financial Institution through which interests in the collective investment vehicle are held) shall be deemed fulfilled with respect to interests in the Investment Entity; and
2. if the Investment Entity is not described in subparagraph (H)(1) of this section, consistent with paragraph 3 of Article 5 of the Agreement, if the information required to be reported by the Investment Entity under the Agreement with respect to interests in such Investment Entity is reported by the same Investment Entity or another person, the reporting obligations of all other Investment Entities required to report with respect to the interests in the firstmentioned Investment Entity will be deemed fulfilled with respect to such interests.
IV. Accounts Excluded from Financial Accounts. The following accounts are excluded from the definition of Financial Accounts and therefore shall not be treated as U.S. Reportable Accounts.
A. Individual Retirement Accounts. Accounts established with the purpose of receiving and managing resources exclusively for use when the holder reaches the age of 65 or in cases of disability or incapacity of the holder to perform individual paid work, pursuant to laws of social security, under Article 151, fraction V of the Income Tax Law.
B. Insurance Premiums for Retirement. An insurance contract to save resources for retirement, under Article 185 of the Income Tax Law provided that contributions for any year do not exceed the amount that can be deducted for Mexican federal income tax purposes in that year.
C. Certain Pension Accounts.
1. Mandatory Savings administered by Retirement Funds
Administrators (AFORES). A mandatory contributions subaccount in which the employer, employee and state quotas mandated by law are deposited, pursuant to the social security laws, the National Housing Fund Law and LSAR, and for which there are no voluntary or complementary contributions for retirement.
2. Voluntary and Complementary Savings administered by
Retirement Funds Administrators (AFORES). A voluntary and complementary contributions subaccount, provided that said contributions do not exceed fifty thousand ($50,000) dollars in any year.
D. Partner Jurisdiction Accounts. An account maintained in Mexico and excluded from the definition of Financial Account under an agreement between the United States and another Partner Jurisdiction to facilitate the implementation of FATCA, provided that such account is subject to the same requirements and oversight under the laws of such other Partner Jurisdiction as if such account were established in that Partner Jurisdiction and maintained by a Partner Jurisdiction Financial Institution in that Partner Jurisdiction.