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Agenda

Topics Speakers

1. AEOI Regulatory and Technical

Update

Ruth Kelly-McEwen – State Street

Fiona McGinley – SMT Fund Services

Amanda Murphy – EY

2. Revenue 2018 AEOI Update Deirdre Free – Revenue Commissioners

3. Revenue 2018 AEOI Reporting

Update

Philomena McShane – Revenue

Commissioners

Michelle O’Neill – Revenue

Commissioners

4. AEOI Reporting Lessons Learned &

Practical Challenges impacting

Funds

Valerie Cooke – BNY Mellon

Maeve Kerins – PwC

Kieran Horan – Northern Trust

5. Panel Q&A discussion All

3

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AEOI Regulatory and Technical Update

Ruth Kelly-McEwen – State Street

Fiona McGinley – SMT Fund Services

Amanda Murphy – EY

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AEOI Regulatory and Technical update

• OECD AEOI Updates

• European Union AEOI Update

• Impact of 4th and 5th AML Directive on AEOI

• GDPR and FATCA/CRS

• Updated CRS Handbook – (effective AEOI compliance & audit

framework)

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OECD MDR EU DAC 6

Background/

Purpose

• Provide Tax authorities with advanced

information on arrangements that purport to

circumvent CRS and offshore structures that

disguise the Beneficial owners of offshore

assets.

• Work in tandem with CRS to identify

taxpayers who do not declare assets and

income

• EU DAC 6 requires disclosure of potentially

aggressive “cross border” tax planning arrangements

(broader than OECD MDR on CRS).

Key Points • Intermediaries or (taxpayers) to identify and

report to local tax authorities avoidance

arrangements or Opaque offshore structures

that meet certain “hallmarks”.

• If no intermediary, reporting obligation falls to

the taxpayer

• Exchange of information between

jurisdictions

• Potential retrospective review and

disclosures required back to 29 October 2014

• Penalties for non-compliance.

• EU based intermediaries or (taxpayers) are required to

disclose and report to the local tax authorities

potentially aggressive tax planning arrangements that

meet certain “hallmarks”.

• If no intermediary, reporting obligation falls to the

taxpayer

• Local Tax authorities will exchange information with

other EU Tax authorities.

• Local penalties applied for non-compliance

Timing • Reporting required 30 days of the

arrangement or structure is available or

“relevant services” are provided.

• Reporting required within 30 days of the cross border

arrangements being made available or “relevant

services” are provided

• Member States to implement Directive by

31December 2019, with 1 July 2020 start date

• first exchanges by Tax authorities by 31 October 2020

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OECD MDR EU DAC 6

Open points /

Specific

considerations

• Definition of ‘Intermediary’ and ‘Relevant

Services’ are very broad and includes

‘administration and compliance services’.

• Alternative Funds likely to be considered

“Opaque Offshore Structures” and in-scope

• Will all OECD MDR requirements be

transmitted into DAC 6?

• Definition of Intermediary very broad could include

fund promoters and other service providers to fund

products).

• EU DAC 6 targets aggressive cross border

arrangements but no clear definition of the term

arrangement.

• How will DAC 6 will be transmitted into local

legislation?

Common

Considerations

• Additional information required on retrospective review requirements

• Many legitimate financial transactions (such as transfers to non-CRS Jurisdictions) and

legitimate changes of beneficial ownership could be in scope

• Financial institutions likely to over-report due to subjective nature of rules/definitions.

• Local guidance will be required

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OECD consultation on misuse of residence by Investment schemes to

circumvent CRS.

• OECD introducing new anti-avoidance rules to target individuals using fictional residencies they

have obtained from a jurisdiction through investment in the jurisdictions to avoid CRS

• OECD and have identified a set of rules to apply to these jurisdictions such as (No physical

presence is required to obtain a residence permit or such presence is not controlled, etc.) and

are compiling a list of in-scope jurisdictions.

Impact on Funds implementing CRS Due-diligence rules

• Potential enhancements to CRS due diligence to identify residence by Investment schemes.

AML Updates impacting AEOI Due-Diligence

• 4AMLD Ireland-Currently awaiting the updated final 4AMLD regulations to be published. Funds

need to consider any changes in line with FATCA/CRS Due diligence obligations.

• 5AMLD –The EU Parliament passed changes on 19 April clearing the way for the directive to be

implemented. Proposals also include; permitting public sharing of Beneficial Ownership data on

Corporations and for those with a “Legitimate interest” for Trusts”, enhanced customer Due

diligence on virtual currencies, virtual currency exchange platforms and custodian wallet

providers.

• Other jurisdictions: Luxembourg has updated its legislation for 4AMLD, and there have also

been updates in AML legislation in Cayman, the UK and Hong Kong which will impact on CRS

Due-diligence.

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GDPR and the impact on FATCA/CRS

GDPR FATCA and CRS

GDPR requires that both the fund (as data

controller) and administrator (as data

processor) to consider and document on what

basis they are processing personal data,

including data gathered and held for

FATCA/CRS.

An inventory of all personal data must be

created under GDPR (which would include that

information gathered for FATCA/CRS

purposes) See DPC website for more detail on

what should be included in the inventory.

GDPR provides an opportunity to develop an

organised and strategic approach to collecting

and maintaining investor data

New legislation introduced by Finance Act 2017

governs Revenue’s processing of taxpayer

information and taxpayer’s rights in relation to such

processing. This legislation is contained in section

851B of the Taxes Consolidation Act 1997 and

provides that Revenue’s processing of taxpayer

information has a legal basis that is compatible

with GDPR

Reminder of “Wider Approach” to CRS Due

Diligence where all Investors required to provide a

Self-Certification and TIN at the time of account

opening (See Revenue CRS FAQ)

Irish Funds Industry Standard Self-Certs include

Data protection wording and Customer Information

notices

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• Prevent circumvention of CRS by introducing anti-

abuse provisions such as MDR,

• Requiring FI’s to keep detailed records, and

procedures to comply with CRS

• Effective enforcement including penalties

Emphasis on

effective

implementation

Promoting and

Reviewing CRS

compliance by

Reporting FI’s

• Effective communication with FIs

• Risk-assessment of policies, procedures and IT

Systems of FI’s

• Identifying Risk of non-compliance by FI’s

• Establishing a list of in scope Reporting Fi's

• Pre-requisite compliance in relation to AML/KYC

obligations.

• Review of internal controls framework maintained

by the FI including AML/KYC processes

• Review sample accounts

• Combined methodologies for multi-phase

compliance review

Compliance Review

Process

OECD Handbook second edition-Key updates

• The OECD Handbook second edition released on 8 April 2018, introduces a new section

covering effective implementation of CRS and provides a framework to assist Tax

Administrations with enforcing compliance by Financial Institutions with CRS due-diligence and

reporting obligations.

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• Oversight of the due diligence and reporting

requirements.

• Written policies and procedures for CRS DD

including compliance with AML/KYC.

• Adequate training and monitoring programs for

CRS compliance.

• Maintenance of sufficient systems for due

diligence, record keeping and reporting

• Periodic, independent, risk-based testing of

controls

• Spot check approach – sampling process

• Documentation quality and retention

Review methodologies-

Examples of Internal

controls

Importance of Data

Quality

• Importance of transmitting the data and

appropriate information disposal policies.

• Confidentiality and data safeguard standards in

place prior to receiving CRS information.

OECD Handbook second edition-Key updates

2018 AEOI Update

Deirdre Free

Exchange of Information Branch

DAC6

• Requires Intermediaries to report details of Cross-border

Arrangements that include at least one indicator which

are known as 'Hallmarks‘

• Annex I, Category D - DAC2 Avoidance and Beneficial

Ownership

• Generic Hallmark and Specific Hallmarks

DAC6

Current state of play and key dates

• 31 December 2019 - transposition

• 1 July 2020 - application

• 31 October 2020 - first exchanges

• Reporting obligation includes arrangements, the first

step of which was implemented after the Directive enters

into force

•Report by 31 August 2020

DAC6

Implementation in Ireland

• Finance Bill 2019

• Primary legislation and regulations

• Electronic filing solution

• Further information - EUR -LEX website

• https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=consil:ST_6804_2018_INIT

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=consil:ST_6804_2018_INIT

OECD MDR

OECD MDR

Current state of play

• Adopted in March 2018

• Align implementation with DAC6

• Electronic filing solution

• Further information – OECD website

• https://www.oecd.org/tax/exchange-of-tax-

information/model-mandatory-disclosure-rules-for-crs-

avoidance-arrangements-and-opaque-offshore-

structures.pdf

https://www.oecd.org/tax/exchange-of-tax-information/model-mandatory-disclosure-rules-for-crs-avoidance-arrangements-and-opaque-offshore-structures.pdf

DAC6/OECD MDR

Key considerations

• Capturing information

•Arrangements implemented after the Directive

enters into force (DAC6)

•Promoter is required to disclose arrangements

entered into after 29 October 2014 (OECD MDR)

• Scope

• Technical capability

Beneficial Ownership

Current state of play

• Two Registers

•Corporates - CRO

•Trusts - Revenue

• Electronic solution

• Information available for exchange

Implementation Handbook

Implementation Handbook

• Additional resource for CRS guidance

• Developed at Working Party 10

• Sections of interest:

•Compliance

•Trusts

•Comparison with FATCA

•CRS FAQ’s

• Suggestions for Improvement

FATCA/CRS Compliance

• Commence in Q2 2018

• Undertaken at District level

• Approach

•Risk based

•Feedback from other jurisdictions

• Legal obligation to carry out compliance

FATCA/CRS Compliance

What do we expect

• Robust procedures and records in place

• High quality data

• Proper audit trail of the procedures undertaken for the

review of accounts

• Well trained staff

2018 AEOI Reporting Update

Michelle O’Neill

AEOI Support

Introduction

Role of AEOI

- Support majority of AEOI offerings (FATCA, DAC2-CRS

and DAC4 CbC)

- Provide a single point of contact

- Assist in the completion of the reporting cycle

AEOI Team

- Philomena McShane

- Michelle O’Neill

- Siobhán Casey

Overview

- How to file FATCA and DAC2-CRS returns

- Guidance on filing

- Lessons learned/common queries

- File validation

- Reporting deadlines

- Contact us/distribution group

FATCA Functionality

- Uploading a FATCA XML File

- Nil Return Functionality

FATCA

Uploading a FATCA Return

FATCA Nil Returns

FATCA NIL RETURN FUNCTIONALITY

FATCA Nil Returns

Guidance on FATCA Filing

IRS website and FATCA

User Guide:

• FATCA XML Schema

(V2.0) and user guide

Version 2.0 is available

from the IRS website

https://www.irs.gov/business

es/corporations/fatca-xml-

schemas-and-business-

rules-for-form-8966

https://www.irs.gov/businesses/corporations/fatca-xml-schemas-and-business-rules-for-form-8966

Guidance on FATCA Filing

Revenue Additional Guidance:

- See Revenue’s guide to filing a FATCA return

https://www.revenue.ie/en/companies-and-

charities/documents/aeoi/fatca-guidelines.pdf

- Additional information regarding the format of your

FATCA return can be found in the FATCA validation

changes guide


charities/documents/aeoi/fatca-changes.pdf

- Future guidance

https://www.revenue.ie/en/companies-and-charities/documents/aeoi/fatca-guidelines.pdf

https://www.revenue.ie/en/companies-and-charities/documents/aeoi/fatca-changes.pdf

DAC2-CRS Functionality

- Uploading a DAC2-CRS XML File

- Nil Return Functionality

- Online DAC2-CRS Form

DAC2-CRS

Uploading a DAC2-CRS Return

DAC2-CRS Nil Returns

DAC2-CRS NIL RETURN FUNCTIONALITY

DAC2-CRS Nil Returns

Online DAC2-CRS Form

Guidance on DAC2-CRS Filing

OECD Defined Schema:

• OECD have provided a downloadable guide and XML Schema:

http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/schema-and-user-guide/

• Annex 3 is relevant to XML

http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/schema-and-user-guide/

Guidance on DAC2-CRS Filing

Revenue Additional Guidance:

- See Revenue’s guide to filing a DAC2-CRS return


charities/documents/aeoi/dac2-crs-guidelines.pdf

- Refer to the CRS naming conventions guide for

additional information regarding the format of your

CRS return.


charities/documents/aeoi/crs-naming-conventions.pdf

- Future guidance

https://www.revenue.ie/en/companies-and-charities/documents/aeoi/dac2-crs-guidelines.pdf

https://www.revenue.ie/en/companies-and-charities/documents/aeoi/crs-naming-conventions.pdf

Lessons Learned/Common Queries

- Registration process

- Agent linking

- ROS permissions

- Change of details

- File size (FATCA max. 30MB, DAC2-CRS max. 30MB

or < 20,000 records)

- FATCA (9A’s/9 0’s, DOB)

- GIIN de-registration

- Common FATCA exchange errors

- MessageRefId format

- Supplementary returns

File Validation

- FATCA validator: under consideration

- DAC2-CRS validator available:

https://rospublictest.ros.ie/devsupport/dac2crs.html

- Restricted characters combination

https://rospublictest.ros.ie/devsupport/dac2crs.html

Reporting Deadline

The filing portal is open.

The current filing deadline for both FATCA and DAC2-CRS

is

30th June 2018.

Contact Us/Distribution Group

Should you have any queries please do not hesitate to

contact us. Our contact details are as follows:

[email protected]

00353 42 9353337

Contact us should you wish to receive mailshots.

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AEOI Reporting Lessons Learned & Practical Challenges impacting Funds

Valerie Cooke – BNY Mellon

Maeve Kerins – PwC

Kieran Horan – Northern Trust

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AEOI Reporting Lessons Learned & Practical

Challenges impacting Irish Funds Industry

Lessons Learned from the FY 2017 reporting

• FI registrations / Tax Agent links and requirement to update fund addresses via local tax

district;

• Reminder to register on time where any new funds/sub-fund launches;

• Message ref/doc ref ID’s – ensure in line with guidance issued from Irish Revenue;

• Option: Umbrella vs sub-fund filings;

• No DAC2/CRS failures and all FIs have been contacted where FATCA re-filings were

required

Considerations in advance of FY 2018 reporting

• FATCA & CRS Schema/Validator changes;

• New CRS requirement for Supplementary 2016 Returns to be filed in Ireland, Irish

Revenue FAQs 19 & 20 issued recently

• Increased volume of reportable accounts for 2018 (incl. pre-existing data). Revenue File

Size of 10MB per submission with a maximum size of 30MB;

• No manual FATCA filing facility will be available & there will be no FATCA offline

validator;

• Manual CRS filing facility will be available again & there will be an offline CRS validator

(some additional disallowed characters);

• FATCA reporting where no US TINs available, permitted to avail of transitionary

measures and default TIN is 9As;

• Technical issues can be raised to Irish Funds AEOI WG for discussion at quarterly

technical meetings with Irish Revenue.

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Refresh on FATCA Sponsoring Entities

• Sponsoring Entity is an entity that registers with the IRS and agrees to

perform the DD, W/H and reporting obligations of one or more FFIs;

• A fund manager may act for funds located in a number of jurisdictions;

Multiple returns relating to one GIIN can be filed and each TA can file a

return on behalf of the SP;

• SP is responsible for reporting in relation to SFs in their respective

jurisdictions.

Reporting obligations

• SP is required to use the GIIN of the SF when carrying out reporting with

respect to the SF;

• Only one SF GIIN can be reported in a FATCA return;

However, where a GIIN has not been obtained for the SF, it is still possible

for the SP to include more than one SF in the FATCA return;

• Reporting - Schema fields

Reporting FI: details of the Sponsored entity (including SF GIIN);

Reporting Group: details of the Sponsoring entity (including SP GIIN).

fresh on FATCA Sponsoring Entities

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Practical Challenges impacting Irish Funds

Industry

What about other jurisdictions?

Irish Funds AEOI WG are constantly monitoring developments in other

jurisdictions.

• Most recently, the Cayman Islands issued revised CRS guidance reducing

the ownership threshold for “CP” from 25% to 10% in line with new AML

Legislation enacted in Cayman.

o FATCA CP ownership threshold of 25% remains unchanged.

o The Cayman Islands have also issued revised self-certifications, these reflect

changes in disclosure requirements of ownership. There is a requirement to

request a revised entity self-certification template from all New Passive NFE’s

from 01 April 2018.

o Existing Passive NFEs must be remediated by 31 December 2018.

o Cayman Portal is now open and ‘AEOI News and Updates page’ has been

updated including a new user guide

http://www.tia.gov.ky/pdf/AEOI_News_&_Updates.pdf

• Supplementary 2016 Returns - Luxembourg requirements are similar to

Ireland. UK/HRMC have taken a slightly different approach where

information is to be included in the 2017 return

• Reminder to register/notify the relevant tax authorities where there are new

FIs.

http://www.tia.gov.ky/pdf/AEOI_News_&_Updates.pdf

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Panel Q&A discussion

Disclaimer: The material contained in this document is for marketing, general information and reference

purposes only and is not intended to provide legal, tax, accounting, investment, financial or other

professional advice on any matter, and is not to be used as such. Further, this document is not intended

to be, and should not be taken as, a definitive statement of either industry views or operational practice.

The contents of this document may not be comprehensive or up-to-date, and neither Irish Funds, nor any

of its member firms, shall be responsible for updating any information contained within this document.

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