А Non-Financial Entity, or NFE, is a company that’s not primarily engaged in financial activities, such as banking or investment services. ‘Admin’ > ‘Create an invoice’. From there you’ll be able to add a new customer or select an existing one.
NFE is a term that’s commonly used in the context of tax compliance – usually in relation to the Foreign Account Tax Compliance Act (FATCA), and the Common Reporting Standard (CRS).
What is an Active NFE?
An Active NFE earns a significant portion of its income from manufacturing, sales, providing services, or anything else that can be considered ‘active business operations’.‘Admin’ > select the 3 dots next to ‘Invoices & Bills’ > ‘Invoice template’ > ‘VAT number’.
Active NFEs get more than 50% of their gross income from active trade or business, or have more than 50% of their assets in operational business activities that generate income.
What is a Passive NFE?‘Admin’ > select the 3 dots next to ‘Invoices & Bills’ > ‘Invoice template’.
To download an invoice or a transaction receipt, go to 'Admin' > 'Invoices & Bills' > select an invoice > 'View invoice' > 'Share'.
A Passive NFE gets more than 50% of its earnings as passive income – from interest, rents, dividends, and royalties.
There are different reporting requirements under FATCA and CRS, depending on whether a company is an Active or a Passive NFE. Understanding the difference between the two company types is crucial for international tax compliance.
