OECD CRS - Advise Technologies

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account information between relevant tax authorities in 80 signatory jurisdictions.1 ... interest, dividends, or other i
OECD CRS CRS

, the Common Reporting Standard developed by the OECD, creates a global standard for the automatic exchange of financial account information between relevant tax authorities in 80 signatory jurisdictions.1 Although the CRS is similar to US FATCA, the two are unrelated, and many financial institutions (FIs) will be subject to the requirements of both.

Who must report? Reporting FIs include custodial institutions, depository institutions, investment entities, and specified insurance companies. The following institutions are exempt from reporting:  governmental entities, international organizations or central banks and affiliated pensions funds  broad or narrow participation retirement funds and qualified credit card issuers  entities that present a low risk of tax evasion  exempt collective investment vehicles2  trusts with a reporting FI trustee

Important Dates – Early Signatory Jurisdictions 1 January 2016

31 December 2016 March 2017

Accounts existing prior to this date are Pre-existing Individual or Pre-existing Entity Accounts. Those opened on or after this date are New Individual or New Entity Accounts. Due diligence deadline for Higher Value Pre-existing Individual Accounts Initial reporting to competent authorities expected to begin

30 September 2017

Deadline for initial exchange of information between competent authorities

31 December 2017

Due diligence deadline for Lower Value Pre-existing Individual Accounts and Pre-existing Entity Accounts

Due Diligence The CRS sets forth due diligence procedures by which FIs are to identify Reportable Accounts, which are accounts held by one or more Reportable Persons or by a Passive Non-Financial Entity (NFE) with one or more Controlling Person(s) that is a Reportable Person. A Reportable Person is an individual or entity that is a tax resident of a signatory jurisdiction. Lower Value ($1M) Pre-existing Individual Accounts – FIs must apply enhanced due diligence procedures, which requires an electronic records search. A paper record search and an actual knowledge test by the relationship manager may also be required to determine the account holder’s tax residency. A self-certification is required in case of conflicting indicia. New Individual Accounts – FIs are required to obtain a self-certification establishing the account holder’s tax residency. Pre-existing Entity Accounts3 – FIs must determine whether an entity is a Reportable Person by reviewing available customer information, including AML/KYC documentation. FIs may also use public information or self-certification to determine an entity’s tax residence. FIs are also required to determine whether an entity is a Passive NFE, and if so, the tax residency of Controlling Persons. This must be done via a self-certification unless passive status can be determined by customer or public information. New Entity Accounts – FIs must make the same assessments as for Pre-existing Entity Accounts. There is no de minimis account balance threshold.

Reporting FIs must report annually5 to their local competent authorities, which will in turn exchange information on Reportable Accounts with the relevant authority of each signatory jurisdiction by 30 September each year. The CRS XML schema is based on the US FATCA schema but also contains elements of the OECD standard transmission format.6 As the CRS represents a minimum set of requirements, each signatory jurisdiction has discretion to implement a wider approach. Consequently, variance in reporting schema is expected.

Information to be Exchanged4 Name, address, Tax Identification Number (TIN), date and place of birth of each Reportable Person Account number (or functional equivalent) Name and identifying number of Reporting FI Account balance as of the end of the relevant calendar year or at the time of account closure Total gross amount credited to account during the calendar year, including interest, dividends, or other income, as well as proceeds from sale or redemption of financial assets

1

As of 16 February 2016, 80 jurisdictions have signed the Multilateral Competent Authority Agreement. An investment entity that is regulated as a collective investment vehicle, provided that all of its interests are held by or through other exempt entities or individuals or entities that are not Reportable Persons. 3 Each signatory jurisdiction may allow FIs to apply a $250,000 de minimis threshold for review of Pre-existing Entity Accounts. 4 The OECD is considering additional fields proposed by the European Commission, which may be implemented at a later date. 5 FIs must report on accounts that were identified as reportable during the previous calendar year. Reporting deadlines vary with each jurisdiction. 6 The CRS User Guide and Schema is available at www.oecd.org/tax/automatic-exchange/common-reporting-standard/schema-and-user-guide/. 2

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© March 2016 - Advise Technologies