OECD publishes a Common Reporting Standard (CRS) Implementation Handbook

On August 7, 2015 the OECD published a Common Reporting Standard Implementation Handbook (Hereafter: the Handbook). According to the introduction included in the Handbook, the purpose of the Handbook is to assist government officials in the implementation of the Standard for the Automatic Exchange of Financial Account Information in Tax Matters (hereafter the “Standard”). In a statement issued with respect to the publication of the Handbook, the OECD states that “this first edition of the Handbook provides practical guidance to assist government officials and financial institutions in the implementation of the Standard.” In the same statement the OECD states that the Handbook is intended to be a “living” document which will be updated on a regular basis.

The Handbook consists out of 3 Parts and 1 Annex.

• Part I provides an overview of the steps required for a government to implement the Standard and the key conceptual considerations in this process.
• Part II contains a more detailed discussion on the conceptual framework contained in the Standard, including the key definitions and procedures it contains.
• Part III highlights differences between the FATCA IGA and the Standard and indicates whether a single approach could be adopted by governments for both systems of reporting.
• Annex I contains frequently asked questions (FAQs) on the application of the CRS. (According to the Handbook an up-to-date list of FAQs will be published at regular intervals on the Automatic Exchange Of Information) AEOI Portal.

The subjects discussed in the Handbook include a.o. the following:

• BACKGROUND AND INTRODUCTION
  • The purpose of the CRS Handbook
  • Background to the creation of the Standard for Automatic Exchange
  • The automatic information exchange framework
  • The Standard for Automatic Exchange
  • This Handbook
• PART I: AN OVERVIEW OF THE STEPS TO IMPLEMENT THE STANDARD
  • Requirement 1: Translating the reporting and due diligence rules into domestic law, including rules to ensure their effective implementation
    • Key points to consider when translating the CRS into domestic law
      • The use of primary legislation, secondary legislation and guidance
      • Optional provisions
      • Substantive additional detail
      • Wider approach to implementing the Standard
      • Transitional challenge resulting from staggered adoption of CRS
      • Jurisdiction-specific low risk institutions and accounts
      • Differences to FATCA
      • Effective implementation
    • Requirement 2: Selecting a legal basis for the automatic exchange of information
      • The legal instrument
      • The Model Competent Authority Agreement
    • Requirement 3: Putting in place IT and administrative infrastructure and resources
      • Collecting and reporting the information
      • Receiving the information to send
      • Sending the information
      • Receiving the information
    • Requirement 4: Protect confidentiality and safeguard data
      • Breaches of confidentiality
    • PART II: OVERVIEW OF THE COMMON REPORTING STANDARD AND DUE DILLIGENCE RULES
      • An overview of the Common Reporting Standard
        • Reporting Financial Institutions
          • Step 1: Is it an Entity?
          • Step 2: Is the Entity in the Participating Jurisdiction?
          • Step 3: Is the Entity a Financial Institution?
          • Step 4: Is the Entity a Non-Reporting Financial Institution?
        • Accounts which are Financial Accounts and therefore need to be reviewed
          • The general rule and the more specific categories
          • Excluded Accounts
        • Financial Accounts which are Reportable Accounts
          • Reportable Accounts by virtue of the Account Holder
          • Reportable accounts by virtue of the Account Holders’ Controlling Persons
        • Due diligence procedures
          • Due Diligence for Preexisting Individual Accounts
          • Due diligence for New Individual Accounts
          • Due Diligence for Preexisting Entity Accounts
          • Due Diligence for New Entity Accounts
          • Other definitions and general due diligence rules
        • The information that gets reported and exchanged
        • Treatment of trusts in the CRS
          • Basic features of a trust
          • Determining whether the trust is a Reporting Financial Institution or a NFE
          • The treatment of a trust that is a Reporting Financial Institution in the CRS
          • The treatment of a trust that is a NFE
        • PART III: THE STANDARD COMPARED WITH FATCA MODEL 1 IGA
          • Nexus for Reporting Financial Institutions
          • Definition of Investment Entity
          • Categorisation of Financial Institutions
          • Collective Investment Vehicle
          • Other low-risk Non-Reporting Financial Institutions
          • The categories of Non-Reporting Financial Institutions
          • Financial Asset
          • Debt or Equity Interests in an Investment Entity
          • Cash Value Insurance Contract
          • Cash Value
          • Certain excluded retirement savings accounts
          • Preexisting Account
          • Depository Accounts due to non-returned overpayments
          • Low-risk Excluded Accounts
          • Reportable Jurisdiction Persons
          • Non-Reportable Persons
          • Passive NFEs and Controlling Persons
          • The definition of a Passive NFE
          • Related Entity
          • Controlling Persons
          • Application of the due diligence procedures
          • Thresholds for Preexisting Individual Accounts
          • New Accounts
          • Citizenship indicia for Preexisting Individual Accounts
          • Telephone number indicia
          • Standing instructions
          • Hold mail or incare-of addresses as indicia
          • Self-certification
          • Unreliable or incorrect self-certifications after change in circumstances
          • Preexisting Entity Accounts
          • Currency translation
          • Dormant Accounts
          • Double or multiple residency
          • Reporting of average monthly balances
          • Exclusion for the passive income definition
          • Validity of documentary evidence
          • Preexisting Account that becomes High Value Account
          • Date and place of birth
          • Account closure
          • TIN
          • Verbal Self-Certification
        • ANNEX I — CRS-RELATED FREQUENTLY ASKED QUESTIONS
          • SECTION I: GENERAL REPORTING REQUIREMENTS
            • Reporting balance or value
            • Aggregation and excluded accounts
            • Account Holder Information
          • SECTIONS II-VII: DUE DILIGENCE REQUIREMENTS
            • Documentary Evidence
            • Residence address test – requirement to manually review Documentary Evidence
            • Residence address test – two residence addresses
            • Reliance on AML/KYC procedures for identifying Controlling Persons
            • Obligations of a Financial Institution to establish tax residency
            • The Validation of TINs
            • Self-Certification – meaning of “positively affirmed”
            • Verbal self-certification
            • Self-certification with yes/no response
            • Self-certification provided on the basis of a PoA
            • Reason to Know
            • New Accounts of Pre-existing Account Holders
            • The relationship manager test
            • Reliance on Service Providers
            • Determination of CRS Status of Entities
          • SECTION VIII: DEFINITIONS
            • REPORTING FINANCIAL INSTITUTIONS
              • Entities and Cash Pooling Activities
              • Holding Company or Treasury Centre of Financial Group
              • Investment Entity
              • Indirect Investment in Real Estate
            • NON-REPORTING FINANCIAL INSTITUTIONS
              • The status of a Central Bank/International Organisation/Governmental Entity
              • Low Risk Non-reporting Financial Institutions
              • Depository Accounts held by a Central Bank
            • FINANCIAL ACCOUNT
              • Debt Interest
              • Excluded Account
              • Excluded Account – Dormant accounts
            • REPORTABLE ACCOUNT
              • Reporting of certain Controlling Persons
              • Passive Non-Financial Entities
              • Passive Income
            • OTHER ISSUES
              • Data Safeguards – ISO-27000