The British Virgin Islands ("BVI") International Tax Authority ("ITA") has issued a set of guidance notes (the "CRS Guidance Notes") to assist in the interpretation of the OECD's Standard for Automatic Exchange of Financial Information in Tax Matters ("CRS") as implemented in the BVI through the Mutual Legal Assistance (Tax Matters) Act, 2003 (as amended) ("MLAT"). A copy of the CRS Guidance Notes can be found on the Maples group's AEOI microsite.
The CRS Guidance Notes provide useful and practical guidance on a number of areas of interpretation and supplement the Commentary and Implementation Handbook issued by the OECD. In particular, they clarify the following:
(a) There are separate notification and reporting requirements.
(b) The notification of all existing BVI reporting financial institutions ("RFIs") under CRS must be completed by 30 April 2017. Each RFI need only enrol once by making a notification through the existing BVIFARS portal established for the UK and US FATCA reporting regimes. RFIs established from 2017 onwards will need to enrol by 30 April of the year following their year of formation.
(c) Reporting must be made annually and must be undertaken through the BVIFARS portal. The first reporting period is in respect of the year to 31 December 2016 and the reporting deadline for that period is 31 May 2017. Subsequent reporting will be required by 31 May of each year in respect of the prior calendar year. The ITA will issue a press release when the BVIFARS portal is available to accept notifications and reporting under CRS.
(d) The term "Participating Jurisdiction" means:
"A jurisdiction: (a) with which an agreement is in place pursuant to which it will provide the information specified in Section I of the CRS; and (b) which is identified in a published list."
The BVI has chosen to identify as Participating Jurisdictions all jurisdictions which have committed to commence exchanging information in 2017 or 2018 in order that RFIs do not need to change their due diligence procedures each time an automatic exchange agreement is entered into with Participating Jurisdictions.
(e) The term "Reportable Jurisdiction" means:
"A jurisdiction: (a) with which an agreement is in place pursuant to which there is an obligation in place to provide the information specified in Section I of the CRS; and (b) which is identified in a published list."
These comprise jurisdictions which have a competent authority agreement (CAA) in place with the BVI and those jurisdictions that have completed the formalities required under the multilateral competent authority agreement (MCAA) entered into under CRS by the BVI in October 2014. Such jurisdictions must have completed all confidentiality and legal requirements as stipulated in the CRS for such arrangements. The ITA will publish a list of Reportable Jurisdictions in due course.
(f) The reporting requirements under MLAT in relation to UK FATCA/CDOT will transition into CRS. However, both UK FATCA/CDOT and CRS due diligence and reporting requirements will technically apply in respect of the 2017 reporting year, and the requirements as between the regimes may differ in some cases. However, there will be no need for duplicate reporting. The approach to be undertaken in respect of any particular account will be to report the more onerous reporting obligation. From 2018 reporting in respect of UK accounts will be done solely under the CRS regime
(g) With the repeal of the EU Savings Directive ("EUSD") 2003/48/EC the reporting obligation under MLAT in respect of the EUSD will cease on 31 December 2016 and be subsumed into UK FATCA/CDOT and CRS reporting from that point onward.
(h) The CRS allows for certain optionality with respect to the application of the due diligence rules by RFIs and the Guidance Notes discuss 16 instances where such options can be found in BVI law.
(i) Investment Managers and Advisors will be regarded as not having any financial accounts and so not required to report, provided they meet the "solely because" test in the definition of Financial Account in the CRS.
(k) When determining an entity's status as an active or passive NFE, the rules of the jurisdiction in which the account is maintained determine the entity's status under CRS.
(l) Pension Funds relying on the definitions of Broad Participation Retirement Fund or Narrow Participation Retirement Fund will be Non-Reporting Financial Institutions under CRS; however, they will be required to submit an annual declaration to the ITA in order to satisfy the requirements of the CRS.
(m) Dormant accounts with a balance not exceeding US$1,000 may be treated as excluded accounts for the purposes of CRS.
If you have any questions regarding CRS, its implementation and how it impacts you, please speak with your usual Maples and Calder or MaplesFS contact. Additionally, you may contact any one of the above members of our AEOI team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.