Implementation Handbook: Standard for Automatic …

1 Standard for Automatic exchange of financial Information in Tax Matters Implementation . HANDBOOK. Second edition OECD 2017 1. Standard for Automatic exchange of financial Information in Tax Matters Implementation Handbook SECOND EDITION. This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2018), Standard for Automatic exchange of financial Information in Tax Matters - Implementation Handbook - Second Edition, OECD, Paris.

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3 NTable of contentsn Table of contents Background and 6. Part I: An overview of the steps to implement the 12. Requirement 1: Translating the reporting and due diligence rules into domestic law, including rules to ensure their effective 13. Requirement 2: Selecting a legal basis for the Automatic exchange of 41. The legal 41. Requirement 3: Putting in place IT and administrative infrastructure and 45. 1. Collecting and reporting the 46. 2. Receiving the information to 48. 3. Transmitting and receiving 49. Requirement 4: Protect confidentiality and safeguard 52. Part II: Overview of the Common Reporting Standard and due diligence 56.

4 An overview of the Common Reporting 56. Chapter 1: Reporting financial 57. Step 1: Is it an Entity?.. 57. Step 2: Is the Entity in the Participating Jurisdiction?.. 58. Step 3: Is the Entity a financial Institution?.. 60. Step 4: Is the Entity a Non-Reporting financial Institution?.. 60. Chapter 2: Accounts which are financial Accounts and therefore need to be 62. The general rule and the more specific 62. Excluded 63. OECD 2018 3. Implementation Handbook Standard for Automatic exchange of financial Account Information in Tax Matters Chapter 3: financial Accounts which are Reportable 65.

5 Reportable Accounts by virtue of the Account 66. Reportable Accounts by virtue of the Account Holder's Controlling 67. Chapter 4: Due diligence 72. The split between Preexisting Accounts and New 73. Chapter : Due Diligence for Preexisting Individual 74. Chapter : Due Diligence for New Individual 81. Chapter : Due Diligence for Preexisting Entity 84. Chapter : Due Diligence for New Entity 90. Chapter : Other definitions and general due diligence 96. Chapter 5: The information that gets reported and 99. General Chapter 6: Treatment of trusts in the Chapter : Basic features of a Chapter : Determining whether the trust is a Reporting financial Institution or an Chapter : The treatment of a trust that is a Reporting financial Institution in the Chapter : The treatment of a trust that is a Passive Part III: The Standard compared with FATCA Model 1 Annex I CRS-related Frequently Asked 4 OECD 2018.

6 NTable of contentsn BACKGROUND. AND INTRODUCTION. OECD 2017 5. Implementation Handbook Standard for Automatic exchange of financial Account Information in Tax Matters Background and Introduction The purpose of the CRS Handbook The purpose of the CRS Handbook is to assist government officials in the Implementation of the Standard for the Automatic exchange of financial Account Information in Tax Matters ( Standard ) and to provide a practical overview of the Standard to both the financial sector and the public at-large. The Handbook provides a guide on the necessary steps to take in order to implement the Standard .

7 Against that background, the Handbook is drafted in plain language, with a view of making the content of the Standard as accessible as possible to readers. The Handbook provides an overview of the legislative, technical and operational issues and a more detailed discussion of the key definitions and procedures contained in the Standard . This second edition of the Handbook is intended to be a living document and will be further updated and completed over time. Changes reflected in the second edition of the Handbook provide additional and more up-to-date guidance on certain areas related to the effective Implementation of the Standard .

8 This includes revisions to sections pertinent to the legal framework for Implementation of the AEOI, data protection, IT and administrative infrastructures as well as compliance measures. More clarity has been provided in the trust section of the Handbook relation to the identification of Controlling Persons. The objective of the Handbook is to assist stakeholders in the understanding and Implementation of the Standard and should not be seen as supplementing or expanding on the Standard itself. Cross references to the Standard and its Commentary are therefore included throughout the document.

9 The page numbers refer to the pages in the consolidated second edition of the Standard . 6 OECD 2018. nBackground and Introductionn Background to the creation of the Standard for Automatic exchange 1. In 2014, the OECD together with G20 countries and in close cooperation with the EU as well as other stakeholders developed the Standard for Automatic exchange of financial Account Information in Tax Matters, or the Standard . This was in response to the call of the G20 leaders on international community to facilitate cross-border tax transparency on financial accounts held abroad. The Standard intends to equip tax authorities with an effective tool to tackle offshore tax evasion by providing a greater level of information on their residents' wealth held abroad.

10 In order to maximise efficiency and minimise costs the Standard builds on the automated and standardised solutions that jurisdictions previously developed for the purposes of the intergovernmental operationalisation of the US laws commonly known as FATCA. 2. The Standard has now moved from the design to Implementation and application phase with the first exchanges having taken place in September 2017. There are over 100 jurisdictions representing all the major international financial centres that have committed to commence Automatic exchange of information in 2017 or 2018. Within that group there is a small group of jurisdictions that have yet to pass domestic legislation to impose reporting obligations on their financial institutions.