The Common Reporting Standard (CRS) update

The Common Reporting Standard is a comprehensive and co-ordinated global framework designed to tackle tax evasion. It is the most complex and far-reaching international tax initiative to date, but who will it affect and what does it all mean? Davina Ross, Louvre Group’s Compliance Officer, explains.

Louvre Group has taken a timely and proactive stance on the Common Reporting Standard (CRS) requirements. Guernsey is one of the first wave of countries to adopt the standards and Louvre is committed to working with its clients and the authorities to ensure compliance.

The OECD’s CRS asks participating tax authorities to obtain particular financial information from the financial institutions in their jurisdictions and then share that information with other participating countries. 

The objective of the CRS is to tackle tax evasion in the participating countries.

The CRS sets out the financial account information to be exchanged, the financial institutions required to report and the different types of accounts and taxpayers covered, as well as the due diligence procedures to be followed by financial institutions.

Global Commitment

More than 100 countries have committed to the CRS and over half of these have, like Guernsey, committed to the first exchange of information in 2017. These ‘early adopters’ will be joined by the other jurisdictions in 2018.

It’s anticipated that the CRS will have a global reach, so it’s likely to impact on all of Louvre’s clients in some way, whatever their country of residence.

For example, Switzerland has signed an agreement for the introduction of the Automatic Exchange of Information (AEOI) with over 100 partner states.

The legal foundations for introducing the AEOI have been approved by the Federal Council and should come into force on 1 January 2017 so that data can be collected from 2017 and exchanged from 2018.

Who is Affected?

Under the CRS guidelines, Louvre Group is required to gather information from all ‘controlling persons’ of the structures it administers. A ‘controlling person’ is defined as the ‘beneficial owner’ - someone who has direct or indirect control over a particular entity.

In the case of trusts, the beneficial owner includes the settlor, beneficiaries, trustees and protectors. The information reported will include the account holder’s identity, personal details, tax identification number and place of residence. Louvre is required to supply the reportable account details and all the remittances made to that account.

Louvre’s Response

Louvre Trust started using updated on-boarding procedures for new clients in January this year, and the first returns under the CRS rules will be made by June 2017.

Louvre is already….

• Identifying clients who will be affected by the CRS;
• Considering how best to comply on behalf of entities that Louvre administers;
• Amending existing procedures.

Louvre will supply the information to the Guernsey Tax Office which will in turn report to the relevant participating tax authority.

If the controlling person or beneficial owner is resident in a jurisdiction that is currently not committed to the CRS, they will not yet be affected by these changes. However, more and more countries are expected to sign up in the future.

Louvre’s other offices in Geneva, Hong Kong and Dubai will all be coming on board with the CRS by 2018, as these jurisdictions have all committed to the information exchange.

Register of Beneficial Ownership

As part of a global shift towards greater tax transparency, Guernsey has agreed to cooperate with the UK authorities to supply information on company beneficial owners on request.

The beneficial owner is the person who could benefit economically from the reportable account – or, in the case of Louvre Trust, the wealth management structures we establish and administer on behalf of our clients.

The UK now has a central register of company beneficial ownership and Guernsey's Policy and Resources Committee has published a consultation paper on the setting up of a central register of company beneficial ownership of companies.

Louvre will keep its clients informed on the progress of the proposed register and how it might affect individuals.

Want to know more about the CRS? Contact your Louvre relationship officer in one of our seven offices.