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Regulatory Reporting

Automatic Exchange of Information (AEoI) – FATCA & CRS.

The Automatic Exchange of Information in tax matters is the new way to exchange information between countries and demonstrates a worldwide approach to international regulatory and tax compliance. It focuses on two reporting regimes US FATCA (Foreign Account Tax Compliance Act) and the CRS (the Common Reporting Standard for Automatic Exchange of Financial Account Information in Tax Matters) issued by the OECD.

The intergovernmental implementation of the US FATCA (FATCA) regime in 2010 acted as a catalyst for the move towards a truly global model for Automatic Exchange of Information (AEoI) in a multilateral context. The OECD have followed with the Common Reporting Standard (CRS) to improve tax compliance worldwide and move closer towards complete tax transparency. This had led to many bilateral and multilateral agreements between governments to automatically disclose and exchange information about financial accounts held by foreign tax residents in one jurisdiction to another.

CRS and FATCA are confusing and complicated to implement. Fiduciaries need to know what to do, how to do it, and what the deadlines are.

 

FATCA (Foreign Account Tax Compliance Act)

With the Foreign Account Tax Compliance Act (FATCA), which entered into force on 18 March 2010, the USA aims to ensure that all foreign accounts held by U.S. taxpayers subject to taxation in the USA are taxed. FATCA requires annual reports from foreign financial institutions (FFI) regarding their client relationships with US persons.


In order to meet the regulatory requirements of FATCA, our specialists offer comprehensive advisory services – from the qualification of legal entities under FATCA to the annual compliance obligation of those liable under FATCA.

 

Our specialists can support you in the following FATCA duties:

  • Qualification of legal entities under FATCA
  • Completion of US forms (W-8BEN-E, W-8IMY, W-8BEN etc.) or bank forms for those banks with which the legal entity maintains a banking relationship
  • Introduction of FATCA compliance systems in order to meet the annual FATCA compliance requirements
  • Identification of individuals and transactions subject to reporting
  • Timely reporting to the relevant authorities in the USA or the corresponding authority in a contracting state of the USA
  • Communication with the authorities and banks

Common Reporting Standard (CRS)

The Common Reporting Standard (CRS) developed by the Organisation for Economic Cooperation and Development (OECD) is the result of the consistent development of the exchange of information of tax-related data among governments. The exchange of information is intended to enable the correct taxation of income and assets, and is an effective tool against tax evasion. The CRS involves the automatic exchange of information and replaces the previous model of information exchange on request as the new, globally dominant standard. Switzerland and more than 100 other countries have or have planned to introduce the Common Reporting Standard (CRS) as at 2017 or 2018. In concept, it is based on FATCA  and envisages an annual exchange of data between tax authorities. The tax authorities receive the corresponding data from the local financial institutions.

Although the Common Reporting Standard (CRS) follows a model OECD agreement, in practice implementation involves a lot of details and specific factors that have to be taken into account. This requires an early analysis of the individual situation by our tax, legal and accounting experts. Careful legal and tax planning is based on efficient accounting preparation of the data that is to be transferred via modern digital tools. These are essential for the timely, cost-effective and factually correct transfer of the relevant data.

We can support you in fulfilling your obligations in the following ways:

  • Classification of entities for CRS
  • CRS impact assessment to include recommendation if remedial action is required
  • Identification of reportable accounts and the information to be reported under each regime
  • Due diligence processes and compliance programs: assistance in implementation
  • Timely reporting to relevant tax authorities

How can we help?

We have a team of experts who really understand FATCA and CRS. We provide support to our international clients by ensuring regulatory compliance at each stage of the lifecycle of the client’s corporate structure and the impact analysis of FATCA and CRS on tax disclosure and international reporting for both individuals and corporate entities. We have extensive experience in helping financial institutions with fulfilment of their regulatory due diligence obligations to successful, automated submission of their regulatory reports.

 

LBA Partners’ Regulatory Services Team has one main purpose: To make fiduciaries’ lives easier by making FATCA and CRS as simple to implement as possible. A secondary purpose is to aid advisors and financial intermediaries in understanding precisely how FATCA and CRS impact the fiduciaries they serve.

 

Let’s face it:

-       FATCA and CRS are incredibly complicated and can be very frustrating;

-   Few except the very largest fiduciary companies can afford a full-time, in-house expert to implement these automatic exchange-of-information (AEOI) regimes;

-       External AEOI expertise concentrating on the fiduciary industry is hard to come by and expensive;

-    While legal advice may be necessary in some cases, many advisors fail to provide the practical information and tools fiduciaries need to actually put FATCA and CRS into practice. LBA Partners’ Regulatory Services was formed to fulfill this precise need.