The Irish Revenue Commissioners (“Revenue”) have been ramping up their FATCA and CRS compliance review programme over the last number of months with a view to assessing whether Irish entities are complying with the Irish FATCA and CRS provisions. To help facilitate their review, Revenue have been issuing letters to Entities across various sectors via MyEnquiries. See Section 1 below for an overview of the areas being reviewed by Revenue to date.
Separately, the OECD recently published the “Crypto-Asset Reporting Framework (CARF) and Amendments to the Common Reporting Standard”. This new framework will facilitate the automatic exchange of information with respect to Crypto-Assets between countries and was developed in response to a request by the G20 to uphold tax transparency amid an evolving landscape. A timeline has not yet been agreed as to when information must be exchanged under these new rules. See below for further details.
This alert also includes other FATCA/CRS-related developments throughout 2022.
Other recent AEOI developments
1. Revenue AEOI compliance reviews
As noted above, Revenue have been ramping up their FATCA and CRS compliance review programme over the last number of months with a view to assessing whether Irish entities are complying with the Irish FATCA and CRS provisions. To help facilitate their review, Revenue have been issuing letters to Entities across various sectors via MyEnquiries covering:
- Profile interviews with Financial Institutions (“FIs”) – this involves an FI being selected and required to respond to a questionnaire with up to 60+ questions in advance of a meeting with Revenue;
- Failure to file notices to FIs that have registered a FATCA and/or CRS reporting obligation via Revenue Online Service (“ROS”), but have not filed the relevant FATCA and/or CRS Return by the appropriate 30 June deadline; or
- Specific AEOI-related questions, such as querying: (i) an Entity’s FATCA/CRS classification; (ii) an FI’s compliance with a specific aspect of the Irish FATCA and/or CRS provisions; (iii) whether an Entity received certain foreign income and correspondingly paid Irish tax on such foreign income (as appropriate) based on details of foreign income that Revenue have received via information exchanged under CRS by foreign tax authorities; etc.
The above gives an indication as to the nature of the queries being raised by Revenue. Typically, Revenue have been initially issuing letters which reflect a “Level 1 Compliance Intervention”. It is critical that Irish Entities give these letters the proper attention they require, so the matter is not escalated to a Level 2 or 3 Compliance Intervention and to mitigate the risk of penalties being applied.
2. Crypto-Asset Reporting Framework (“CARF”) and amendments to the Common Reporting Standard
On 10 October 2022, the OECD published a new global tax transparency framework to provide for the reporting and exchange of information with respect to Crypto-Assets called the “Crypto-Asset Reporting Framework (CARF) and Amendments to the Common Reporting Standard”.
The CARF consists of rules and commentary covering four main areas as set out below:
- The scope of Crypto-Assets to be covered;
- The Entities and individuals subject to data collection and reporting requirements;
- The transactions subject to reporting, as well as the information to be reported in respect of such transactions; and
- The due diligence procedures to identify Crypto-Asset Users and their Controlling Persons, and to determine the relevant tax jurisdictions for reporting and exchange purposes.
Following the OECD’s first comprehensive review of CRS, amendments to CRS were also agreed to bring in scope certain electronic money products and Central Bank Digital Currencies that are not currently within scope of CRS. This includes indirect investments in Crypto-Assets through derivatives and investment vehicles. Amendments have also been made to improve the operation of CRS based on the experience of governments and businesses located in the 100+ jurisdictions that have implemented CRS to date. In particular, the amendments are designed to strengthen the due diligence procedures and enhance the reporting requirements under CRS, as well as establish new exemptions for genuine non-profit organisations and capital contribution accounts.
The CARF and Amendments to CRS will first need to be adopted into domestic legislation to facilitate the expanded automatic exchange of information. The OECD has advised that work is ongoing to rollout an implementation package to ensure the CARF and amendments to CRS are adopted consistently into each jurisdiction’s domestic legislation. No timelines have been agreed yet in terms of when the first exchange of information under these new provisions must occur.
3. Foreign Account Tax Compliance Act (“FATCA”)
3.1 Updated Reporting Entity Registration Form (FATCA and CRS)
On 17 August 2022, Revenue issued an updated Reporting Entity Registration Form. The Form simply included an updated postal address where the populated form can be mailed.
4. Common Reporting Standard (“CRS”)
4.1 Participating Jurisdictions List
On 23 May 2022, Revenue published an updated List of Participating Jurisdictions for CRS and DAC2 purposes, bringing the total number of Participating Jurisdictions to 115.
4.2 MCAA Signatories
On 28 July 2022, the OECD published a revised list of MCAA Signatories, bringing the total number of signatories to 117.
4.3 Status of Commitments for Automatic Exchange of Financial Account Information
On 3 October 2022, the OECD published a revised table summarising the Status of Commitments for the Automatic Exchange of Information (AEOI), with 121 jurisdictions committed to exchanging information by agreed timelines.
5. Updated guidance on Approved Profit Share Schemes ("APSS") for FATCA and CRS
As a reminder, Revenue also published updated Chapter 10 – Approved Profit Share Schemes (APSS) guidance via Tax and Duty Manual “Share Schemes Manual – Chapter 10” to address how an APSS should be treated for Irish FATCA and CRS purposes. The update included:
- Section 10.6.10.3 was added to confirm that any trust that has been established for the sole purpose of an APSS should be considered an “Excluded Product” for Irish FATCA reporting purposes and an “Excluded Account” for Irish CRS reporting purposes.
- It was noted that, for FATCA purposes, an APSS is listed as an Exempt Product under Annex II, Part III (B) of the Ireland – US FATCA Intergovernmental Agreement (“the IGA”). Whereas for CRS purposes, provided the necessary conditions are met, an APSS should fall within the definition of a “Non-Retirement Tax-Favored Account” under subparagraph C(17)(b), Section VIII of the Standard for Automatic Exchange of Financial Account Information in Tax Matters (“the Common Reporting Standard”).
- The guidance specifically stated that the trust is considered an FI in its own right for Irish FATCA and CRS purposes and should also be registered for FATCA and CRS reporting purposes on ROS. Additionally, if a trust is established for the sole purpose of a specific profit-sharing scheme, then the trust only holds non-reportable Financial Accounts and is required to file nil returns for FATCA and CRS annually with Revenue. However, if under any circumstance the trust also holds a Reportable Account, that account should be reported on the trust’s FATCA return and/or CRS return.
- Finally, it was noted that trustees for an APSS can be individuals and/or corporate trustees and if a corporate trustee is an FI for FATCA and/or CRS in its own right, then that corporate trustee must separately register and report for FATCA and/or CRS purposes accordingly.
Previous AEOI Updates can be found on our AEOI webpage at www.kpmg.ie/aeoi.
Get in touch
If you have any queries on AEOI or its implementation, please contact Kevin Cohen of our Financial Services team. We'd be delighted to hear from you.