Weekly FATCA Changes & CRS Updates: June 18-24, 2016

June 24, 2016

As countries continue to refine their processes and make FATCA changes, they are also clearing up some CDOT issues and gearing up for CRS to come online for the first time next year. Our expert research team has compiled the relevant updates from all over the map for your viewing pleasure this week.


South Korea and United States Sign Memorandum of Understanding Pursuant to FATCA Agreement

The competent authorities of South Korea and the United States have executed a memorandum of understanding, which serves to clarify and expound upon certain provisions in the original FATCA IGA. The memorandum establishes the following points relative to the IGA:

  • All definitions in Article I of the IGA are to conform with US Treasury regulations.
  • “Depository Account” does not include negotiable debt instruments that are traded on a regulated or OTC market and distributed and/or held through Financial Institutions.
  • “Cash Value” does not include amounts payable under a Life Insurance Contract due to the death of the insured; it does not include any return of an advance premium or premium deposit for an Insurance Contract—for which premium is paid at least annually—if the advance premium/deposit does not exceed the next annual premium.
  • “Investment Entity” does not include an entity with less than 50% gross income attributable to investing and/or trading.
  • “Preexisting Account” includes other financial accounts that are part of a consolidated obligation—regardless of the date entered into.
  • South Korea may apply the “aggregation of Financial Accounts” rules when determining account value or balance.
  • “Financial Institution” does not include credit card issuers that (1) do not accept deposits when a customer makes a payment in excess of balance due, and (2) do not maintain any other Financial Accounts.
  • The “identifying number of the Reporting Korean Financial Institution” is to be the GIIN issued by the IRS. All Korean Financial Institutions are to comply with the requirements to register with the IRS to obtain a GIIN.


India Releases Clarification Notice for FATCA & CRS

India has recently posted a Clarification Notice for FATCA and CRS that concerns obtaining self-certification, the requirements for obtaining a TIN, rules how to properly value the balance of a custodial accounts, and links to where an FI can learn how to submit their FATCA returns.


Guernsey Releases Bulletin 2016/4

Guernsey recently released Bulletin 2016/4, in which the tax authority elaborates on a number of issues involving FATCA, CDOT, and CRS reporting for 2016 and beyond. Highlights of this bulletin include:

  • 2016 Reporting Deadline: A reminder that the reporting deadline for this year is June 30, 2016. The Guernsey Director of Income Tax acknowledges that other jurisdictions have granted extensions, but maintains that no general extension will be granted at this time. Rather, financial institutions concerned with the June 30 due date are encouraged to contact the Director prior to the deadline through IGOR, and each matter will be dealt with on a case-by-case basis.
  • FATCA, CDOT, and CRS Reporting: The Director of Income Tax acknowledges that HMRC has extended the deadline for due diligence on reporting of pre-existing accounts where self-certification is required, but maintains the treatment of undocumented accounts through the existing guidance notes made available this year because many Reporting Guernsey Financial Institutions have already submitted their 2015 reports through IGOR.
    • The Bulletin provides guidance on how to deal with Pre-Existing Entity Accounts, New Accounts, and mandates that FIs should continue to make reasonable efforts to obtain information on their account holders.
    • This method of reporting undocumented accounts will bear an effect on CDOT reporting for the 2015 reportable period, and continue on with CRS reporting starting with the 2016 reportable period and beyond (No report is necessary under FATCA, until undocumented accounts are identified as U.S. Reportable Accounts).
  • Reporting of Trust Documented Trusts: Beginning with 2016 reporting (1/1/16 forward), Reporting Guernsey Financial Institutions will be required to provide the name of a Trust being reported. This runs contrary to guidance currently on IGOR on this topic.


Cyprus Issues Press Releases Extending FATCA Due Dates and FATCA Nil Reports

The Cyprus Tax Department recently issued a press release extending the 2016 FATCA due date from June 30, 2016 to July 15, 2016.

Cyprus also recently issued a press release regarding FATCA nil reports. Specifically, financial institutions which are registered with the Cyprus Tax Department for FATCA reporting must submit a nil report when it is appropriate.


British Virgin Islands Extends Deadline for FATCA Reporting

The British Virgin Islands has recently announced that they will extend the deadline for FATCA reporting from June 17, 2016 to the new date of June 30, 2016 because of an interruption in the BVI Financial Account Reporting System (BVIFARS).

The UK CDOT reporting deadline of July 29, 2016 will remain the same.


Finland Releases New Informational Document on FATCA, CRS, and DAC2 Data Usage

Finland recently published an informational document entitled “Kansainvälisten tietojen käsittely”, or “Handling International Data”. This document summarizes generally how data for the three reporting types is transmitted and handled.


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