"OECD Releases Global Standard for Automatic Exchange of FATCA-Type Information"

by Skadden, Arps, Slate, Meagher & Flom LLP
Contact

As part of a push for greater transparency, the Organization for Economic Cooperation and Development (OECD) released on February 13, 2014, a Common Reporting Standard (CRS) for Automatic Exchange of Financial Account Information, as well as a model Competent Authority Agreement (CAA).1

Under the CRS, countries will annually obtain financial information from domestic financial institutions. Under the CAA, countries will then automatically exchange that information with their exchange partner countries.

The CRS is widely cast and requires:

  • financial institutions, such as banks, custodians, brokers, certain collective investment vehicles and certain insurance companies, to report
  • financial information, such as interest, dividends, income from certain insurance contracts, other investment income, account balances and sales proceeds from financial assets, in relation to
  • reportable accounts held by individuals and entities, including foundations and trusts (passive entities typically will be looked through and the ultimate controllers will be reported on).

The CRS also contains detailed due diligence procedures for financial institutions to identify reportable accounts.

The CRS and CAA are not law — implementing the CRS and CAA is voluntary, and countries wishing to participate will need to translate the CRS into domestic law and enter into the CAA with each exchange partner country. The CAA can be executed within existing legal frameworks, such as any existing double tax treaty (DTT) in place between the relevant countries, or under the OECD Multilateral Convention on Mutual Assistance in Tax Matters (OECD Treaty), which allows for signatory countries to agree on automatic exchange of information.

Comment

Many countries, both OECD and non-OECD, already exchange taxpayer information automatically, using either an applicable DTT, or the exchange of information provisions in the OECD Treaty.

However, FATCA2 has been the catalyst for an increasing level of cooperation and exchange between countries, with an increasing number of jurisdictions entering into intergovernmental agreements (IGAs) with the U.S. in relation to FATCA. In addition, the U.K. has entered into agreements with its Crown Dependencies and Overseas Territories for the provision of FATCA-type information, and a small group of countries (including the U.K., Germany and France) have agreed to exchange FATCA-type information with each other.

The CRS is intended to supplement and expand existing exchange of information arrangements, such as those in place under DTTs and the OECD Treaty. Through standardization, the CRS is meant to provide greater efficiency in reporting, and thus reduce reporting costs for financial institutions. In that regard, the CRS draws extensively from FATCA IGAs, such that similar financial institutions as are covered by FATCA reporting will have to report similar financial information as is required by FATCA reporting, this time in relation to taxpayers resident or located in the exchange partner country.

It is likely that a number of countries, particularly OECD members, will adopt the CRS and CAA, so that financial institutions located in those countries will have to modify the systems that they have in place for FATCA reporting, so that exchange partner country taxpayers are also included.
_________________

1 See http://www.oecd.org/ctp/exchange-of-tax-information/Automatic-Exchange-Financial-Account-Information-Common-Reporting-Standard.pdf.

2 See “Financial Institutions Wrestle With FATCA Implementation” at http://www.skadden.com/insights/financial-institutions-wrestle-fatca-implementation; “Treasury and IRS Move to Implement FATCA as 2014 Start Date Approaches” at http://www.skadden.com/insights/treasury-and-irs-move-implement-fatca-2014-start-date-approaches; and "Treasury and IRS Finalize Highly Anticipated FATCA Regulations" at http://www.skadden.com/insights/treasury-and-irs-finalize-highly-anticipated-fatca-regulations.

Download PDF

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Skadden, Arps, Slate, Meagher & Flom LLP | Attorney Advertising

Written by:

Skadden, Arps, Slate, Meagher & Flom LLP
Contact
more
less

Skadden, Arps, Slate, Meagher & Flom LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.