FATCA Compliance Side Letter Clause
(Private Equity Fund)

Summary

This Foreign Account Tax Compliance Act (FATCA) compliance side letter clause for a private equity fund (PEF) is to be used when an investor requests written assurance that the PEF will take steps to minimize FATCA tax incurred by the PEF and the investor. This clause includes practical guidance and drafting notes. This FATCA compliance side letter clause is drafted assuming that the PEF is NOT a domestic limited partnership and is instead an entity domiciled outside the United States, and a Foreign Financial Institution for purposes of FATCA. Note that the legal form and jurisdiction of a PEF can vary, and accordingly, the terms of the FATCA Compliance Side Letter Clause can also take on several formulations, depending on structure. See Onshore/Offshore Structuring Issues for Private Equity Funds for a discussion of PEF structuring variations and FATCA and Private Equity regarding the applicability of FATCA tax to the parties in various structures. This clause should be read in conjunction with the practice notes Private Equity Fund Documents: Drafting and Review and Side Letter Drafting for a Private Equity Fund. This clause assumes that it will be included in a side letter with a PEF. See Side Letter for a Private Equity Fund for an example.