We are rapidly approaching the start of AEOI, with the implementation of US FATCA globally as from 1st July 2014. The UK equivalent also starts on 1st July 2014 and is applicable to the UK territories, e.g. BVI, Cayman, Jersey, Guernsey and the Isle of Man.
The Common Reporting Standard (“CRS”) regime, which closely follows FATCA, is also in progress and some, if not all, of the early adopters are looking to report information in relation to 2016 with this information being exchanged in 2017.
The legislation, regulations and guidance for both the US and UK regimes is complex and many areas of practical implementation are not yet totally clear.
In relation to clients of trust and corporate service providers the main points to note are as follows:
- All entities will need to be classified in order to establish who will undertake any required reporting.
- We expect that banks will utilise the new W8-BEN-E form and will request that these are completed for all entities. It is not clear if separate forms will be used to implement the UK regime or whether banks in UK territories will seek to utilise the W8-BEN-E to classify entities for the purpose of the UK Inter-Governmental Agreements (“IGAs”).
- US FATCA applies to US tax residents, US citizens and Green Card holders. The UK IGAs only apply to UK tax residents.
- In many cases both in relation to the US agreements and the UK agreements different classification options will be available and therefore there may be an element of choice as to who makes any relevant reports.
- Depending on the exact nature of any relevant entity and the applicable thresholds there will potentially be reporting in relation to the position as at 31st December 2014. Where entities are wound up between 1st July 2014 and 31st December 2014 the position at the time of winding up may be reported. The reporting for 2014 will be in 2015 for US FATCA and in 2016 for the UK IGA. The reporting will primarily be in relation to settlors of Trusts and shareholders of companies, but it will also potentially include beneficiaries of Trusts, particularly those who have received distributions in the period.
- There is an alternative reporting regime (“ARR”) under the UK IGAs that may be available to UK non-doms claiming the remittance basis.
- The CRS will potentially apply as soon as 1st January 2016 for entities in certain jurisdictions with the first reporting being in 2017 for the position as at 31st December 2016 or the position at the time of winding up if this is between 1st January 2016 and 31st December 2016. The joint statement by the Early Adopters Group published on 19th March 2014 was signed by the following: Argentina, Belgium, Bulgaria, Colombia, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Malta, Mexico, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, the UK, the UK’s Crown Dependencies of Isle of Man, Guernsey and Jersey; and the UK’s Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat, and the Turks & Caicos Islands.
The OECD Declaration on Automatic Exchange of Information in Tax Matters adopted on 6th May 2014 was signed by those listed below. It is not clear whether all will also be early adopters:
Argentina, Australia, Austria, Belgium, Brazil, Canada, the People’s Republic of China, Chile, Colombia, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Saudi Arabia, Singapore, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States and the European Union.