On April 6, 2017 the OECD released an updated version of its document titled: “CRS-related Frequently Asked Questions”. The document contains a list of frequently asked questions (FAQs) on the application of the Common Reporting Standard (CRS). According to the OECD these FAQs were received from business and government delegates and the answers to such questions are meant to clarify the CRS and assist in ensuring consistency in implementation.
In the update as released on April 6. 2017 a.o. the following additional CRS-related FAQs were added:
In SECTION I: GENERAL REPORTING REQUIREMENTS
· 10. Qualification of usufruct for CRS purposes - How may a usufruct (a legal right to use and derive profit from property) to be treated for CRS purposes?
In SECTIONS II-VII: DUE DILIGENCE REQUIREMENTS
· 5. Identification of Controlling Persons of Passive NFEs with Financial Institutions in the chain of legal ownership - For purposes of determining the Controlling Persons of a Passive NFE, does the CRS allow a Reporting Financial Institution to not determine/report such Controlling Person on the basis that there is a Reporting Financial Institution in the ownership chain between the Passive NFE and the Controlling Person?
· 6. AML/KYC Procedures and due diligence for CRS purposes - With respect to the due diligence procedures set out in Sections III-VII, what are the consequences of a change in the AML/KYC Procedures to be applied by Financial Institutions?
· 23. Look-through requirement for widely-held CIVs and pension funds in the form of trusts in non-participating jurisdictions - When determining the Controlling Persons for New Entity Accounts as part of the application of the “lookthrough” requirement pursuant to Section VI(2) with respect to an Investment Entity described in Section VIII(A)(6)(b) resident in a non-Participating Jurisdiction that is a widely-held, regulated, trust-type Collective Investment Vehicle (CIV) or a trust-type pension fund, do Reporting Financial Institutions need to go beyond the information collected and maintained pursuant to domestic AML/KYC Procedures which are as a minimum consistent with Recommendations 10 and 25 of the FATF Recommendations (as adopted in February 2012)?
· 24. Application of New Account procedures to Preexisting Accounts – relationship manager inquiry - Pursuant to Section II(E) jurisdictions may allow Reporting Financial Institutions to apply the due diligence procedures for New Accounts also to Preexisting Accounts. In such cases, is a Reporting Financial Institution required to apply the relationship manager inquiry, where a self-certification has been obtained under the New Account due diligence procedures?
· 25. Confirming the validity of self-certifications - If an Individual Account Holder indicates on a self-certification that he or she does not have a jurisdiction of residence for tax purposes, may the Financial Institution rely on other documentation at its disposal, in particular an address, to determine the residence for tax purposes?
In SECTION VIII: DEFINITIONS
A. REPORTING FINANCIAL INSTITUTIONS
· 4. Reliance on Model 1 FATCA IGA definition of Investment Entity for purposes of CRS - Can jurisdictions rely on the definition of Investment Entity used in the Model 1 FATCA IGA for the purposes of implementing the CRS?
· 8. E-money providers – qualification as a Depository Institution - What is the status of electronic money providers for CRS purposes?
C. FINANCIAL ACCOUNT
· 7. Excluded Accounts - low-value electronic money accounts - Under what conditions can electronic money accounts that are Depository Accounts be Excluded Accounts pursuant to Section VIII(C)(17)(g)?
· 8. Determination of Equity Interest in the case of a widely-held CIV that is a Reporting Financial Institution - Certain CIVs that are Reporting Financial Institutions and that are organised in the form of a trust have the characteristics of publicly offered CIVs: the trustee and the beneficiaries are unrelated parties; the interests in the CIV are unitised; the CIV is required to keep an up-to-date register of the registered unit holders; certain registered unit holders are Custodial Institutions who maintain the units in the CIV on behalf of the investors in a Custodial Account; and the units are freely transferable financial instruments. Can such CIV treat the registered unit holders as their Account Holders for purposes of the CRS?
· 9. Investment Entity – definition of Financial Account - According to Section VIII(C)(1)(b), an Equity or Debt Interest in a Financial Institution other than those described in Section VIII(C)(1)(a) is considered a Financial Account only if the class of interests was established with a purpose of avoiding reporting under the CRS. How does this rule apply to Debt or Equity Interests held in an Entity that is an Investment Entity, solely because it is an investment advisor or an investment manager?
D. REPORTABLE ACCOUNT
· 5. Definition of Active NFE – stock regularly traded on an established securities market - The term Active NFE includes an NFE the stock of which is regularly traded on an established securities market or an NFE that is a Related Entity of an Entity the stock of which is regularly traded on an established securities market. Can an Entity other than a corporation have “stock which is regularly traded on an established securities market”?
The answers to the abovementioned questions as drafted by the OECD can be found in the OECD’s document titled: “CRS-related Frequently Asked Questions”.
Click here to be forwarded to the document titled: “CRS-related Frequently Asked Questions” as available on the website of the OECD, which will open in a new window.
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