The common reporting standard (CRS) is the Organisation for Economic Cooperation and Development's (OECD) model for the automatic exchange of information (AEOI) between jurisdictions world-wide.
The aim is to increase tax transparency and eliminate tax evasion globally.
This column reviews the status of the steps that the Bermuda Government is taking to implement CRS, and addresses issues that Bermuda trustees and family offices should raise with settlors, beneficiaries, protectors and other persons who have a connection with the trusts they oversee.
Until recently, the ability of a taxation authority in one jurisdiction to obtain information regarding its tax residents from financial institutions in other jurisdictions was largely dependent on the existence of a tax information exchange agreement (TIEA) between those jurisdictions. However, accessing information under TIEAs is not straightforward or guaranteed.
With AEOI agreements, the exchange of reportable information between participating jurisdictions is automatic. AEOI represents a drastic change to the approach of exchanging information relating to tax residents' interests in overseas entities or accounts. The information reported under CRS may be used by participating jurisdictions to investigate its tax residents' tax affairs and seek further information under a TIEA.
On 29 October 2014, along with 50 other jurisdictions, Bermuda signed a multilateral competent authority agreement (MCAA), thereby becoming a CRS "early adopter". There are now close to 100 CRS participating jurisdictions.
Article first published in the Royal Gazette in October 2016
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.