Agreement between Switzerland and EU for automatic exchange of information in tax matters: signing and consultation period

On 27 May 2015, the agreement between Switzerland (Link – Switzerland) and the EU (Link – European Union) for Automatic Exchange of Information (“AEoI”) in tax matters was signed in Brussels.  Switzerland and the 28 EU member states intend to collect financial account data starting in 2017 and exchange it from 2018 once the necessary legal basis has been created.   The agreement was signed by Swiss State Secretary Jacques de Watteville, Finance Minister Jānis Reirs from Latvia, representing the EU Presidency, and EU Commissioner Pierre Moscovici. The agreement on the AEoI in tax matters will apply for all 28 EU member states. The OECD’s global AEoI standard has been included in full in the new agreement.

The agreement signed is a protocol of amendment to replace the taxation of savings agreement between Switzerland and the EU that has been in force since 2005, but it includes the existing withholding tax exemption for cross-border payments of dividends, interest and royalties between related entities.  It is interesting to note that the Federal Council’s press release notes that given that various EU member states have launched or enhanced tax regularisation programmes recently, “the regularisation of the past with neighbouring countries and the main EU member states can be considered settled to a large extent”.

In addition, the Federal Council has also initiated the start of a consultation period regarding the EU AEoI agreement.  Interested parties and the cantons have until 17 September 2015 to comment on the AEoI agreement with the EU. Thereafter, the Federal Council will submit the agreement to Parliament for approval.  Parallel to this, work is continuing on the legal basis for the automatic exchange of information with foreign countries. The Federal Council will adopt the dispatches on the AEoI Act, the Multilateral Competent Authority Agreement and the OECD/Council of Europe administrative assistance convention for the attention of Parliament in the weeks ahead.

Finally, the European Commission is currently concluding negotiations for similar agreements with Andorra, Liechtenstein, Monaco and San Marino, which are expected to be signed before the end of 2015.

Spain releases draft CRS regulations for commentary until 15 June

On 27 May 2015, the Ministry of Finance and Public Administration (Ministerio de Hacienda Y Administraciones Públicas) has released a draft decree on the implementation of CRS and transposition of the Directive on Administrative Cooperation (Link – Spanish) highlighting Spain’s commitment to meeting timeline prescribed by the European Commission. Commentary related to the draft decree will be accepted through 15 June 2015.

Qatar ratifies FATCA Agreement with the U.S.

According to the official website of the Qatari Ministry of Foreign Affairs, the Emir Sheikh Tamim bin Hamad Al-Thani issued an instrument of ratification concerning the Intergovernmental Agreement with U.S. to improve international tax compliance and to implement FATCA (Link). The IGA Model 1 Agreement was signed in Doha on 7 January 2015 (Link).

Revised timeline for Cayman Reporting Financial Institutions…again

On 20 May 2015, in response to continued system development and ongoing maintenance issues, the Cayman Department for International Tax Cooperation (DITC) issued another update (Link) revising the timeline for Cayman Reporting Financial Institutions. Under the new guidance, Cayman Reporting Financial Institutions must complete the required notification and FATCA year-end reporting by Friday, 29 May and Friday, 26 June respectively. The update is expected to provide flexibility to the financial services industry in satisfying its FATCA reporting requirements under the terms of the U.S-Cayman Islands FATCA IGA.

European Parliament News: Money laundering rules will be tightened to fight tax evasion on terrorist financing

In a press release on 20 May 2015 from the European Parliament (Link), it was announced that the fourth money laundering directive will require EU member states to keep central registers of information on ultimate beneficial owners of corporate and other legal entities, including trusts.  This marks the first time that such an obligation will be placed on EU member states. A key development across Europe is the adoption of the EU Directive aimed at strengthening the prevention of money laundering and terrorist financing (“4th MLD”). The 4th MLD was approved by the EU Council on 20 April and by the EU Parliament on 20 May 2015. The new rules are focused on stricter due diligence, tighter checks over cash payments and the provision of additional information accompanying transfers of funds to ensure traceability. In addition, specific requirements of a central register of the ultimate beneficial owners (“UBO”) of EU companies was described in accordance with the above. Member states will have two years to transpose the requirements into national law.

IDES News: FATCA Reports with production data should not be transmitted to the IDES test environment

The IRS has reminded IDES users that they should always transmit FATCA Reports containing production data to the IDES production environment.  FATCA Reports with production data should not, under any circumstances, be transmitted to the IDES test environment.  FATCA Reports with production data submitted to the IDES test environment will not be processed and must be re-transmitted to the IDES production environment. Similarly, users should ensure that FATCA Reports with test data are transmitted to the IDES test environment only.

A Frequently Asked Question and answer regarding this can be found on the IDES FAQs and ICMM FAQs.:

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