Form 7004 will be not part of the standard-service in the first year. We strongly recommend that every QI or other entity file form 7004 in time, i.e. before March 15, 2024. Form 7004 can be still filed in paper form for the tax return 1042 for the tax period 2023. For the next year our software provider plans to implement form 7004. Naturally, we will assist banks/brokers with extensions on an individual basis.

Form 1042 as a tax return has to be "signed". As a substitute for the signature of the taxpayer on the electronic form 1042, the taxpayer signs form 8879 instead creating a PIN that an authorized transmitter captures to file the tax return in the name of the taxpayer. Form 8879 has to be collected every year anew.

If US withholding tax was already withheld by another withholding agent the QI or other entity receives a form 1042-S that certifies the withholding tax credit (“box 10”). The data of these forms will be processed as well so that the credit can be offset against the tax liability. This is particularly relevant for QI-2-banks that have not assumed primary withholding obligation.

The QI has to provide form 8879, the complete data and forms 1042-S received in time so that we can process form 1042/945 and file it timely to the Internal Revenue Service.

Provided that form 7004 was filed and form 1042 is due September 15 of the year following the tax period, we strongly encourage the QIs/entities to provide the data as soon as the forms 1042-S are filed electronically (March 15 or April 14 if extended), but not later than August 15. Otherwise, we cannot guarantee a timely filing.

No. Our service is currently limited to forms 1042 and 945.

Financial Institutions which have filing requirements for form 1042 and 945 but are not Qualified Intermediaries. Our services are not limited to German institutions (which very often have Luxembourg subsidiaries anyways).  

Experienced personal team: QI-rules are only applied outside the US. Thus, while being determined by US-rules, a "foreign" team with US-affinity may actually be better suited to understand the frictions of local law with US-rules (e.g. § 871(m) IRC or rules wrt. publicly traded partnerships - PTP). 

Cordula Clarner is an economist and advises QI since inception in 2001, Oliver v. Schweinitz since 2010.  Cordula and Oliver worked for 6 years as colleagues at PwC before later joining Schalast as a team.

Oliver v. Schweinitz is admitted to both the the New York bar and the German bar ("Rechtsanwalt"). He is a German-tax advisor ("Steuerberater") and often represents clients with respect to filing issues and compliance-questions (in particular wrt. the periodic certifications). As a certifying acceptance agent (CAA) listed under SCHALAST by the IRS he may assist with obtaining ITINs (Acceptance agents - Germany | Internal Revenue Service). He is also admitted as a public preparer before the IRS. Thus, the team can represent you also in case the filing is not accepted by the IRS. For formal tax litigation in the US, we would, however, suggest to work in collaboration with another US-counsel based in the US.

Both of us are regular speakers on the topic (https://www.bzlive.de/admin_uploads/dokumente/4961/QI_Flyer.pdf) and have published on QI-topics (https://www.isbn.de/ebook/9783934803763/das-neue-qualified-intermediary-agreement; https://www.internationaltaxreview.com/article/2a69ixqe8r3jlfugze7ep/how-fatca-will-impact-financial-services-in-germany). Naturally, we are also familiar with affiliated issues of information reporting (Common Reporting Standard / FATCA) or international tax issues / tax treaty interpretation. We have both assisted at the discussions of BIAC-group to "Working Party Nr. 10" of the OECD.

Independence: QI-Banks typically qualify as "public interest entities" under EU rules (https://eur-lex.europa.eu/EN/legal-content/summary/rules-for-statutory-audit-of-public-interest-entities.html). The effect of such classification varies under national law implementation but generally has the effect that tax support such as the one offered here by Schalast may require special waivers or be outright prohibited. Under general audit principles (also applicable for US-companies), auditors may not audit their own work. Large QIs (with FDAP greater USD 5 Mio.) must perform a "periodic review", typically performed by one of the Big4-audit firms.  As the advice to QI is - other than through Schalast - often done via so-called "Big4" audit works, the "eligibility" of further tax-related work may be curtailed by the above-mentioned rules. Schalast is a mid-size law-firm without such restrictions thus also thereby allowing for greater flexibility with respect to hiring "Big4"-companies for other type of work.

Price: We believe we can set competitive prices. Our pricing will vary depending on the size/complexity of the financial institution and -notably- the number of QI-EINs for which an e-filing will have to be done. Where - in particular - transaction banks enable bulk filing, we will give discounts if invoicing and processing is performed via the respective transaction bank.

Accountability: We are a professional services firm based in Germany. Our engagement letter will be based on German law with German courts having jurisdiction, i.e. we come from a jurisdiction known for its reliability and feasible legal costs. Our engagement letters generally limit our liability to EUR 10m., should a higher threshold be required, extra-insurance costs would have to be borne by the respective client.

Scalability: Admittedly, Schalast is a mid-size firm with some 120 employees and ca. 80+ professionals. However, we at Schalast are familiar with advising large IT-projects and have been awarded for our work in particular wrt. FinTechs (https://www.schalast.com/en/about-us/awards.php). Oliver further in his past career has co-founded a start-up in AML-outsourcing that now is part of AML Right Source LLC (https://www.amlrightsource.com/news/aml-rightsource-acquires-passcon ). Thus, we are familiar with scaling and will do so as this offering will require.