FATCA & CRS Alert 2022-03

The Luxembourgish tax authorities are currently carrying out full scale reviews of the overall FATCA and CRS compliance of Investment Funds and other Luxembourg entities administered or resident in Luxembourg, based on the updated version of the Common Reporting Standard (“CRS”) Frequently Asked Questions (“FAQs”) from 4^th April 2022 (please also see our Newsletter).

In this regard, the tax authorities are sending letters to all investment entities listed in questions 2.3 and 2.4 of the FAQs which have not submitted FATCA and CRS returns or which have submitted incoherent information in their FATCA and CRS returns requesting:

• Clarifications in case of sudden change of entity classification and evidence of non-reporting status under applicable laws;
• Additional missing documents;
• Process and procedures at the level of the entity or Management Company:
• The “Register of Actions” (as introduced by the updated FATCA/CRS law of June 2020);
• Additional information/explanation on incoherent information (number of investors, account balance, account closure) following their review of the FATCA and CRS Reports
• Entity classification check based on entity type and CSSF classification (especially for regulated entities);
• Self-certification forms of investors; and
• Additional information on the account holders’ country of residence.

Considering the increased scrutiny and risks of fines and penalties, it would be highly recommended that Luxembourg Financial Institutions ensure that they are fully compliant with their FATCA and CRS obligations, and if required, remediate to any weaknesses in their FATCA and CRS overall process.

KPMG Luxembourg is well equipped to assist you in this process by carrying out a full review of all the Investment Funds under administration to assess their level of compliance and remediate to any weaknesses identified during the review.

If you have any questions or would like additional advice, please get in touch.