key european regulatory changes regulatory …...firms (jan 2014) ucits v voted first fatca...
TRANSCRIPT
Key European regulatory changes
Nicolas Hennebert, Audit Partner and Eric Centi, Tax Partner, Deloitte Luxembourg
Regulatory turbulence?
1
Agenda
Introduction
A global shift towards tax transparency
UCITS
Alternative Investment Fund Managers Directive (AIFMD): Impacts for Asset Managers in Singapore
© 2015 Deloitte & Touche LLP 2
Introduction
3
Worldwide Investment Funds Assets
Expressed in EUR Tn
Including Funds of Funds
Source: International Investment
Funds Association
Funds domiciles (% of AUM)
Global Market European Market
Source: International Investment Funds Association Source: EFAMA
5
Investment management – Some statistics
Introduction
4 © 2015 Deloitte & Touche LLP
6
Legal forms and asset classes
Luxembourg funds
5
7
Focus on UCITS – Legal forms and asset classes
Luxembourg funds
6
8
Luxembourg funds Focus on Alternative Funds – Legal forms and asset classes
9
Interaction in the IM industry
Singapore and Luxembourg
• Luxembourg funds distributed in Singapore:
− All major international fund houses have at least 1 fund registered for distribution in Singapore, making Singapore the
top place for distribution of Luxembourg investment funds in the Asia Pacific region;
− Over 1800 Luxembourg funds are registered for distribution in Singapore, representing more than 42% of Luxembourg
fund registrations in the entire Asia Pacific region;
− Luxembourg fund registrations in the Asia Pacific region keep growing at a steady rate, driven mainly by registrations in
Singapore (+13% in 2014 vs. +7,15% for the entire Asia Pacific region)
• In contrast, there are still few Singapore players acting as sponsors of Luxembourg funds
− AUM of Luxembourg funds sponsored by Singapore players were approaching USD 2Bn at December 31, 2013, i.e.
3,5% of funds sponsored by Asia Pacific players
− Asset classes remain mainstream and focused on Asian markets
− All the Luxembourg investment funds sponsored by Singapore players have been created with a corporate form, mostly
under the UCITS framework
Sources: ALFI, Monterey Survey and Deloitte analysi
8 © 2015 Deloitte & Touche LLP
Regulatory timeline
© 2015 Deloitte & Touche LLP
2013 2015 2016 2017 2018
Implementation
of Securities Law
Directive
Market Abuse Directive II
Implementation
of AIFMD
Financial Transaction Tax
Securities Law Directive
Solvency II
ELTF
PRIIPS
AIFMD
Short Selling & CDS
Dodd-Frank Act
UCITS V
UCITS VI
MiFID II
MiFID II
EMIR
Venture capital regulation
Implementation
of EMIR
Implementation of MAD ll
Implementation of ESMA
guidelines on ETFs
ESMA guidelines
Automatic exchange of
information
Implementation of
ESMA guidelines on
compliance
Implementation of
EU passport for
European Venture
Capital Funds
Deadline Lux ManCo
Compliance
2015
Implementation of
Solvency II for
firms (Jan 2014)
UCITS V
voted
First FATCA reporting
regarding 2014
Deadline for AIFM to
seek authorisation
Amended EU
Savings Directive
approved
PRIIPS voted
AIFMD EU
passport for non-
EU managers
MiFID II delegated
act
Switch to
automatic
exchange of
information in
Luxembourg
under current
EUSD
UCITS VI
proposition
MiFID II national
transposition
Transposition of
UCITS V in
national regime
MiFID II in
application
Amended EU
savings
directive (but
likely to be
abolished in
view of CRS
reporting as
from 2016)
Solvency II entry
into force
PRIIPS entry into
Luxembourg
AIFMD
end of national
placement regime
General implementation
date for Volcker rule
(conditional extensions
MiFID II EU
Parliament vote
Implementation
of ELTF
CRS
implementatio
n needs to be
ready to go
live
First CRS reporting
regarding 2016
2014
9
A global shift towards tax
transparency
10
A global shift towards tax transparency
A move initiated by the US with FATCA
FATCA:
• Aim: tracking down US Persons hiding assets in any
jurisdiction outside the US, directly held or held through
intermediary structures
• Means: obligatory exchange of information on US Persons by
financial intermediaries, directly to the US IRS (non-IGA and
IGA 2 countries), or through local competent authorities (IGA
1 countries)
• Sanctions: punitive 30% withholding for non-participants or
clients not disclosing sufficient information to determine
FATCA status (lighter withholding obligations in IGA 1
countries)
• When: annual exchange of information - first exchange on
2014 taking place in 2015 (generally due May or June 2015 in
IGA 1 countries)
© 2015 Deloitte & Touche LLP
Achieving FATCA compliance:
11
A global shift towards tax transparency
… enhanced by the OECD Common Reporting Standard (CRS)
© 2015 Deloitte & Touche LLP
AS
IA
P
AC
IF
IC
Australia
Brunei Darussalam
China
Hong-Kong
India
Indonesia
Japan
South Korea
Macao
Malaysia
Marshall Islands
Nauru
New Zealand
Philippines
Singapore
Vanuatu E
UR
OP
E
M.
EA
ST
&
A
FR
IC
A Albania
Andorra
Austria
Azerbaijan
Bahrain
Belgium
Bulgaria
Cameroon
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Faroe Islands
Finland
France
Gabon
Georgia
Germany
Ghana
Gibraltar
Greece
Greenland
Guernsey
Hungary
Iceland
Ireland
Isle of Man
Israel
Italy
Jersey
Kazakhstan
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Mauritius
Moldova
Monaco
Morocco
Netherlands
Nigeria
Norway
Poland
Portugal
Qatar
Romania
Russia
San Marino
Saudi Arabia
Seychelles
Slovak Republic
Slovenia
South Africa
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom
United Arab Emirates
AM
ER
IC
AS
Anguilla
Antigua and Barbuda
Argentina
Aruba
Bahamas
Barbados
Belize
Bermuda
Brazil
British Virgin Islands
Canada
Cayman Islands
Chile
Cook Islands
Colombia
Costa Rica
Curacao
Grenada
Guatemala
Mexico
Montserrat
Panama
Saint Kitts and Nevis
Saint Lucia
Saint Martin
Saint Vincent and the Grenadines
Samoa
Turks and Caicos Islands
”Early adopters” – First exchanges by 2017 on calendar year 2016
Jurisdictions undertaking first exchanges by 2018 on calendar year 2017
Other jurisdictions participating in the convention on mutual assistance in tax matters
Jurisdictions that have not indicated a timeline or that have not yet committed
12
Create added value to clients out of this evolution
Tax reporting – Private Banking industry
© 2015 Deloitte & Touche LLP
TAX REPORTING
• More and more complex international and domestics tax environments where tax rules can change
at any time.
• Increasing demand from customers to :
- Understand how financial transactions they carried out impact their domestic tax position;
- Assist them in the preparation of their domestic tax returns.
TAX REPORTING PROCESS
Banking operations:
Dividend & interest payments,
transactions in securities, etc.
Identification of
fiscal events
Determination of the
fiscal results
Production of tax statements
/ returns in accordance with
the local requirements
Shipment of tax statements /
returns to clients in advance
of local filing deadlines
13
Create added value to clients out of this evolution
EU tax reclaims – IM industry
14 © 2015 Deloitte & Touche LLP
EU Tax Reclaims
• Prohibition of discriminatory
treatment between
domestic payment and
cross-border payment
under EU free movement of
capital and freedom of
establishment
• Tax Reclaims opportunities
further several decisions of
the European Court of
Justice
• Reclaims opportunities in
+10 countries
• Substantial refunds granted
by key Member States
(France, Spain, Sweden,
Finland, Belgium etc.)
EU Tax Reclaims opportunities
Refund experienced to date
FOKUS BANK DENKAVIT AMURTA ABERDEEN SANTANDER
2004 2006 2007 2009 2012 2014
EMS DFA
Create added value to clients out of this evolution
Tax treaty reclaims – IM and Private Banking industries
© 2015 Deloitte & Touche LLP
• In search for new profit sources,
personal cross border investment
becomes an attractive option
• Each time an investment is realised on a
cross border basis, there is a risk that
the income can be taxed twice
• It is common that a dividend payment is
taxed in the country of source by way
of withholding tax (WHT) in a first
instance and then subject to income
taxation in the investor’s country of
residence by way of a tax assessment
• Most of the countries agree via Double
Taxation Treaty (DTT) to levy lower
withholding tax rates on dividend and
interest outbound payments than the
default rate applicable to foreign
investors
• Increasing number of DTTs signed
worldwide offer opportunities for the
investors to benefit from preferential
tax rates
• Depending on the income source
country the refund methods may differ
Tax Relief
• Upfront benefit offered
through applicable DTT tax
rate on taxable events
• Subject to client’s country of
residence and validity of the
tax documentation provided
to the local depositary bank
Tax Reclaim
• Immediate deduction of
the withholding tax at a
maximum rate applicable to
foreign investors
• Benefit of the tax treaty rate
can be reclaimed via tax
reclaim procedure defined
by local tax authorities
TAX RELIEF & RECLAIM
Euro Stoxx 50
Country profile
France
Germany
Italy
Netherlands
Spain
Belgium
Ireland
38%
26%
10%
8%
12%
2%
2%
38
26
10
8
12
2
2
Non weighted yield
per country
Domestic dividend
Withholding Tax Rate
30%
26.4%
20%
15%
21%
25%
20%
5.7
4.2
1.5
1.2
1.8
0.3
0.3
100
Usual reduced WHT
rate under DTTs
15%
15%
15%
15%
15%
15%
15%
(15)
11.4
6.9
2
1.2
2.52
0.5
0.4
(24.9)
75.1 85
Gross Yield
~ 10%
WHT Leakage
Net Yield
Example
15
UCITS
16
Second-biggest investment fund domicile in the world
Luxembourg UCITS around the world
UCITS distribution is accepted by the
regulator
Countries that very recently opened
up to UCITS distribution, or that are
working on a cooperation agreement
TOP DOMICILES FOR
CROSS-BORDER UCITS
Bermuda 100%
Canada 71%
Chile 68%
Mexico 50%
Panama 48%
Peru 98%
Brazil tbc
Hong Kong 72%
Japan 60%
Lebanon 75%
Macao 73%
Singapore 69%
South Korea 96%
Taiwan 76%
UAE 70%
Australia tbc
China tbc
Oman tbc
World map shows the penetration ratio
of Luxembourg UCITS among all
foreign investment funds authorised in
a selection of countries
© 2015 Deloitte © 2015 Deloitte & Touche LLP 17
The evolution of the UCITS framework
Success story continued
© 2015 Deloitte & Touche LLP
• Key Investor Information
Document
• Management Company
Passport
• Cross-border mergers
• Master-feeder structure
• Simplified notification
process
UCITS IV
UCITS V
2010
• Harmonisation of the
depositary function ensuring
that investors receive the
same level of protection of
their assets in custody
across all EU MS
• Rules on the remuneration
of risk takers and senior
management
• Minimum harmonisation of
the sanctions regime for
breach of the main investor
protection sanctions in the
UCITS Directive
2015 UCITS VI
• Eligible assets and the use of
derivatives
• Assessment of the criteria for efficient
portfolio management (EPM) techniques
need to be modified
• Opportunity for OTC derivative
transactions to be dealt with when
assessing UCITS limits on counterparty
risk
• Extraordinary liquidity management
rules and need of a common framework
liquidity bottlenecks in exceptional
cases
• Discussion about the introduction of a
depositary passport and areas which
require further harmonisation
• Specific regulatory framework for
Money Market Funds (MMF) and
assessment of whether produce a
systemic risk and require EU
harmonisation
• Long term investments and how these
can be available to retail investors
201?
• Alignment of the UCITS regime with
the alternatives regime to provide
retail investors with an increased
level of protection.
• New custodian rules (for
Alternatives and UCITS) are a key
step towards harmonisation, a
number of challenges still need to
be addressed.
• Expected benefits are increased
investor protection against non-
financial risks, clarification of
custodian roles and responsibilities,
more consistency across alternative
and UCITS funds and reduction of
regulatory uncertainty across EU
member states
• Major challenges will reside in the
maintenance of a pragmatic
operating model for the investment
fund sector, ensuring responsibility
of those entities controlling the
assets, avoid duplication of tasks in
the asset servicing value chain,
• Clarification on specific investment
types and ensuring continuous
access to various markets
UCITS I 1988
• Substance requirements for
Management Companies
and self-managed
investment funds
• Fund-of Funds
• Cash funds
• Some use of derivatives
allowed
• Money Market Funds
UCITS III
2002
• Creation of a pan-European harmonised framework for
Undertakings for Collective investment in Transferable
Securities
• Introduction of the passport for EU-wide distribution of
UCITS to retail investors
• Strong emphasis on investor protection
THE ORIGINS THE CURRENT STATUS IN THE MAKING....
18
UCITS V Not only a depositary regime
© 2015 Deloitte & Touche LLP
Depositary regime Remuneration provisions Sanctions regime
Key aims of UCITS V
• Harmonise UCITS depositary regime clarifying duties and liability
• Harmonise remuneration rules with other sectors
• Harmonise sanctions regime for UCITS breaches
• Eligibility criteria
- credit institution or MiFID authorised investment firm subject to extensive
conditions, with a 2 year grandfathering period
• “Safekeeping”
- distinguishing between custody duties and asset monitoring duties (see
AIFMD) and depositary oversight
• Liability
- For UCITS depositaries liability currently extends to “unjustifiable failure”
to perform its duties (left to the Courts to interpret)
• “Strict Liability” for assets held in custody
- in the event of loss anywhere in the sub-custody network these assets
must be returned (financial instrument of an identical type or of
corresponding amount) by the depositary “without undue delay”
• Discharge of liability
- “external event beyond its reasonable control, the consequences of
which would have been unavoidable despite all reasonable efforts to the
contrary”
• Insolvency
- Assets held on behalf of the UCITS will not form part of the body of
assets available to the depositary's creditors
• Remuneration policies
- Should promote sound and effective risk management, discourage risk
taking and avoid conflicts of interest
• Applies to staff whose professional activities may have a material
impact on the risk profile of the UCITS:
- senior management,
- risk takers,
- individuals performing controlled functions, or
- any employee receiving total remuneration which takes them in the
same remuneration bracket as senior management and risk takers
• Applies only to staff within the UCITS management company,
not to delegated portfolio managers
• Rules for guaranteed variable remuneration
• Rules for fixed and variable components of total
remuneration
• Rules on pension benefits
• Rules for payments related to termination of employment
• Minimum catalogue of administrative sanctions, fines and
measures
• Minimum list of sanctioning criteria
• Whistle-blowing mechanisms for national regulators and
management companies
• National regulators will be required to publish details of
sanctionable offences detailing the nature of the breach and the
party involved
Draft
paper
Commission
proposal
Parliament
& Council
EU
trilogues
Adopted Technical
measures
Implemented
Commission
consultation
Commission
proposal
Adoption by
parliament
Transposition
in national
regime
Entry into
force
Dec 2010 Jul 2012 Apr 2014 Jul 2014 2016
19
UCITS VI
Rolling back complexity?
© 2015 Deloitte & Touche LLP
Only days after the release of the UCITS
V proposal, the European Commission
published a consultation document on
UCITS on 26 July 2013. This was a very
open-ended consultation, inspired largely
by the regulatory concerns over the
potential risks and impacts of “shadow
banking”.
Shadow banking refers to non-bank credit
activity, which performs important
functions the financial system. The
consultation paper covered eight wide-
ranging areas and sought more
information on market practices. This
initial consultation paper has been
dubbed “UCITS VI” as it is seen as the
origin of a further set of amendments to
the UCITS Directive.
Since that consultation paper, two areas
(money market funds and long-term
investments) have been addressed
separately outside of the UCITS
framework. The delay in adopting UCITS
V has undoubtedly impacted further
progress on UCITS VI, which has yet to
issue as a formal proposal.
Consultation Commission
proposal
Parliament &
Council EU trilogues Adopted
Technical
measures Implemented
Eligible assets EPM techniques Liquidity
management
OTC
derivatives
Addressing
UCITS IV
Depositary
passport
Money market
funds
Long term
investments
Money Market Funds
Regulation
European Long Term
Investment Fund
OVERVIEW CURRENT STATUS
Rowback on eligible assets
• The UCITS III reforms enabled UCITS to gain exposure to a range of otherwise ineligible assets through the use of derivatives structuring.
• A look though to underlying assets or a limitation on the scope of derivatives that may be used could have a significant impact on the investment profiles of many UCITS.
• Many UCITS employing leverage under the commitment approach would be unable to comply with the 100% global exposure limit of NAV if they used the commitment approach.
• The reforms could lead some providers to exit UCITS in favour of setting up more flexible AIFs.
• It is unclear whether grandfathering would be provided for existing UCITS.
KEY CONSIDERATIONS
AREAS COVERED IN THE ORIGINAL UCITS VI CONSULTATION
20
AIFMD: Impacts for Singaporean
Asset Managers
21
The Alternative Investment Fund Managers Directive (AIFMD) is an important piece of EU-wide
regulation that governs many aspects of the organisation, supervision, responsibilities and
delegation possibilities relating to Alternative Funds (AIFs).
AIFMD
Overview
© 2015 Deloitte & Touche LLP
Key Objectives
• Extend appropriate regulation
and oversight to all
alternative actors
• Improve financial stability
• Monitor systemic risk
• Increase transparency
towards and protection of
investors and stakeholders
• Create a European market
for alternative investments
via passports for
management and marketing
activities
1 Who is impacted?
• Managers
- Alternative Investment Fund
Management Companies
• Investors
- Professional Investors
- Retail investors are not in
scope
• Funds
- Retail non-UCITS funds
- Non-EU funds managed or
marketed in the EU
• Depositary
• Other Service Providers
How?
• AIFM will need to apply for
authorisation in order to
manage AIF
• AIFMD introduces a
“passport” enabling AIFMs to
offer their management
services and market their
AIFs throughout the EU
• Regulation of publically
distributed AIFs in the EU to
professional investors
• Effective marketing across EU
2 3
AIFMD HAS AN IMPLICIT
EXTRA-TERRITORIAL
COMPONENT:
Asset managers will be impacted
if they:
• Have alternative Investment
Management Activities within
the European Union, or
• Have Alternative Investment
Funds domiciled in the
European Union (regardless of
the location of your investment
management activities), or
• Market one of your
Alternative Investment Fund
to European Investors
(regardless of the domicile of
your fund or location of your
investment management
activities).
The scope is wide, the impacts
are significant. Asset managers
are well advised to carefully
assess if and to what extent they
are impacted by AIFMD
22
AIFMD key compliance areas
Considerable and extensive impacts
SCOPE
Almost everyone is impacted
All the Managers of :
• Private equity funds
• Hedge funds
• Real estate funds
• Retail non-UCITS funds
• Non-EU funds managed or marketed in the EU
Potential exclusions
Thresholds:
• Asset managed by the AIFM is not exceeding
€100 million (or ≤ 500 million if unleveraged and
5 year lock-up period)
• Sub-threshold AIFMs are still subject to
registration and regulatory reporting under
AIFMD
Vehicle types:
• Holding companies
• Securitisation SPVs
• Pension funds
• Employee savings scheme
AIFM
Authorisation
as AIFM
Organisational
rules Distribution
Remuneration
Risk,
liquidity,
valuation
Reporting
and disclosures
Delegation
Depositary and
prime broker
arrangements
Conduct of
business
rules
Capital
and
professional
indemnity
AREAS REGULATED BY AIFMD
KEY CHANGEMENT
MANAGEMENT AREAS
• Cost minimisation
• Business strategy
• Regulatory
• Tax
• Organisational
• Operational
• People
• Processes
© 2015 Deloitte & Touche LLP 23
Distribution under AIFMD
AIFMD
© 2015 Deloitte & Touche LLP
AIFM AIF Distribution AIFMD Scope Compliance Cost EU Market Access
• Distribution only via passport
• Only in home state of AIF
• Reverse solicitation
• National Placement Regime **
• Passport (only as of 2015 *)
Not applicable
• Reverse solicitation
• National Placement Regime **
• Passport (only as of 2015 *)
• Only in home state of AIF
• Reverse solicitation
• National Placement Regime **
• Passport (only as of 2015 *)
AIFMD does not apply
EU
EU
Non-EU
EU
Non-EU
EU
Non-EU
Non-EU
EU
Non-EU
EU
Non-EU
EU
Non-EU
Access to EU
Investors
depends on
the domicile of
the AIFM and
of the AIF:
* Passport anticipated end 2015 / early 2016 depending on ESMA opinion to be issued in July 2015
** Member states may decide at their own discretion to end National Placement regimes anytime prior to 2018
24
Conclusion
© 2015 Deloitte & Touche LLP
2013 2015 2016 2017 2018
Implementation
of Securities Law
Directive
Market Abuse Directive II
Implementation
of AIFMD
Financial Transaction Tax
Securities Law Directive
Solvency II
ELTF
PRIIPS
AIFMD
Short Selling & CDS
Dodd-Frank Act
UCITS V
UCITS VI
MiFID II
MiFID II
EMIR
Venture capital regulation
Implementation
of EMIR
Implementation of MAD ll
Implementation of ESMA
guidelines on ETFs
ESMA guidelines
Automatic exchange of
information
Implementation of
ESMA guidelines on
compliance
Implementation of
EU passport for
European Venture
Capital Funds
Deadline Lux ManCo
Compliance
2015
Implementation of
Solvency II for
firms (Jan 2014)
UCITS V
voted
First FATCA reporting
regarding 2014
Deadline for AIFM to
seek authorisation
Amended EU
Savings Directive
approved
PRIIPS voted
AIFMD EU
passport for non-
EU managers
MiFID II delegated
act
Switch to
automatic
exchange of
information in
Luxembourg
under current
EUSD
UCITS VI
proposition
MiFID II national
transposition
Transposition of
UCITS V in
national regime
MiFID II in
application
Amended EU
savings
directive (but
likely to be
abolished in
view of CRS
reporting as
from 2016)
Solvency II entry
into force
PRIIPS entry into
Luxembourg
AIFMD
end of national
placement regime
General implementation
date for Volcker rule
(conditional extensions
MiFID II EU
Parliament vote
Implementation
of ELTF
CRS
implementatio
n needs to be
ready to go
live
First CRS reporting
regarding 2016
2014
25
Speakers’ profile
26
Audit Partner, Deloitte Luxembourg
+352 451 454 911
Nicolas is a Financial Services Audit Partner
with Deloitte Luxembourg. He specialises in
the audit of investment funds vehicles
including the Undertakings for Collective
Investment in Transferable Securities
(UCITS), alternative investment funds and
their advisory, and management companies
for more than 15 years. His clients include
large asset manager houses as well as
smaller boutiques from the Australian, French,
Japanese, U.K. and U.S. local markets. He
also leads a taskforce focusing on net asset
value (NAV) errors and their resolutions.
Nicolas is Belgian and a Chartered
Accountant. He speaks French, English and
Spanish.
Nicolas Hennebert
Tax Partner, Deloitte Luxembourg
+352 451 452 162
Eric is a Financial Services Tax Partner with
Deloitte Luxembourg. He has been advising
leading Financial Institutions on Luxembourg
and international tax issues for more than 10
years. Eric has deep expertise in Operational
Taxes where he assists financial institutions
on various topics including Tax Reporting and
Tax Reclaims services as well as Financial
Transaction Taxes. In addition, Eric has strong
experience in group reorganisation (merger,
spin-off, branch business model etc.) and the
acquisition of new business. He was involved
in numerous due diligence engagements to
assess the tax position of target
companies/group and structure the
acquisition.
Eric Centi
Deloitte contacts
© 2015 Deloitte & Touche LLP 27
Appendix
28
FATCA vs CRS – Similarities and differences
Main differences that can lead to complexity
© 2015 Deloitte & Touche LLP
FATCA CRS
IRS registration required unless exempt or (certain) deemed
compliant status. Additional registration may be required to local
tax authorities in certain countries.
No registration required except local specificities to transmit CRS
reports to local tax authorities. Registration
FI scope Broad scope of financial players: banks, certain insurance
companies, funds, certain holding companies... Certain
exceptions apply.
Broad scope of financial players: banks, certain insurance
companies, funds, certain holding companies... Certain FATCA
exceptions not available or defined slightly differently.
Due diligence De minimis threshold: $50.000. No de minimis threshold.
Due diligence
Individuals (for early adopters)
• 31 December 2016 for high value accounts
• 31 December 2017 for low value accounts
> No de minimis threshold
Entities (for early adopters)
• 31 December 2017
> De minimis threshold: $250.000 (subject to local approval), but
no $1.000.000 threshold.
Based on broad US Person definition: US residents and non-
residents meeting the Specified US Person criteria. Based on tax residence(s). Criteria
W-9 or W-8 forms. Possibility to use an equivalent self-
certification in IGA Model 1 juridictions.
Systematic self-certification to collect date & place of birth, tax
residence(s) and TIN(s) unless local authorities allow Financial
Institutions to rely on data gathered for AML/KYC.
Individuals
• 30 June 2015 for high value accounts
• 30 June 2016 for low value accounts
> De minimis threshold of $50.000
Entities
• 31 December 2014 for prima facie FFIs (for non-IGA context)
• 30 June 2016 for other entities
> De minimis threshold of $250.000, and no change in de minimis
status as long as $1.000.000 not exceeded.
New
clie
nts
Documentation
Exis
tin
g c
lients
Documentation
Systematic self-certification to collect date & place of birth, tax
residence(s) and TIN(s).
W-9 or W-8 forms and/or other evidence may be required to cure
US indicia. Possibility to use an equivalent self-certification in IGA
Model 1 jurisdictions.
29
FATCA vs CRS – Similarities and differences
Main differences that can lead to complexity
© 2015 Deloitte & Touche LLP
FATCA CRS
Funds can be sponsored by sponsoring entities No sponsoring regime F
unds Sponsoring
regime
Deemed
Compliant status Variety of deemed-compliant statuses for funds Single deemed-compliant status for funds
• Notion of NPFFI and Recalcitrant is not present under CRS.
• Investment Entities in Non-Partner Jurisdictions and cases where Financial Institutions cannot establish the CRS classification of an entity account
would be treated as Passive NFEs. Consequently, the Controlling Persons of such entities need to be identified and will be subject to automatic
exchange of information if they are reportable for CRS purposes.
New principles under CRS
Investment entity
Panama Fund
Singapore
Bank
Singapore Considered as Passive NFE - Controlling Persons identification
Need to identify, classify and potentially report them
May be considered as Deemed-Compliant or
Reporting Financial Institution depending on its status
When
CRS in
force
Not yet
a CRS
partner
Reporting
• 2015: Account balances or values
• 2016: Previous scope + income
• 2017: Previous scope + gross proceeds
No phased implementation: account balances/values, income
and gross proceeds from day one
Some processes implemented for FATCA will need to be amended to fit with CRS requirements
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