FATCA & CRS Alert 2020-04

FATCA & CRS Alert 2020-04



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Operational tax updates for Q1 2020

The first quarter of 2020 has been marked with significant changes in the area of operational taxes. Below is an overview of key changes:

  1. FATCA/CRS audits in Luxembourg: A new draft FATCA and CRS law (Nr 7527) was published on 20 February 2020 requiring Financial Institutions to provide evidence of due diligence performed and procedures in place. Read more in our newsletter.

  2. DAC6/MDR: End of January 2020, the EU Commission opened an infringement procedure against 15 Member States (including Luxembourg) for failure to notify national measures internalizing DAC 6. In the meantime, DAC 6 was implemented into Luxembourg domestic tax law. Read more in our newsletter.

  3. Qualified Intermediary (QI): Mid-February, the IRS published new FAQs to remind QIs that, depending on the certification cycle, they should start thinking of selecting a year for the periodic review. Under the QI compliance program, banks are required to organize regular training for their employees. As an alternative to inhouse training, KPMG launched an online e-learning solutions.

  4. U.S. tax compliance: The U.S. Internal Revenue Service (IRS) is increasing its efforts to ensure that non-U.S. entities (including Luxembourg Investment Funds) are compliant with U.S. tax rules. The Tax Authorities’ focus seems to be on the following cases: Limitation of Benefits analysis for treaty access, check-the-box election, K-1 statements, U.S. tax return on Form 1120-F, PFIC statements and overall FATCA compliance. Read more here.

  5. TRACE: There will be legislative changes related to the OECD TRACE Model which Finland is the first country to implement. TRACE, which has many similarities with the QI system, will entail changes to the process by which portfolio investors may claim treaty benefits for dividend paid on Finnish shares held on nominee-registered accounts. Registration with the Register of Authorized Intermediaries should begin on 1 July 2020 and the register will be published on 1 January 2021. Luxembourg custodian banks with Finnish assets under custody should closely monitor TRACE developments.

KPMG tax professionals remain available to address any questions you may have with respect to these changes. 

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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