FATCA and Common Reporting Standard Upcoming Deadlines and New Requirements
Client Alerts | June 9, 2017
(Including Cayman Master Funds)
June 30, 2017 Notification: U.S. FATCA and Common Reporting Standard
U.S. FATCA notification to the Cayman Islands Tax Information Authority (the “Cayman TIA”) is required for entities that have not previously notified the Cayman TIA and entities that need to update an existing notification (for example, to designate a new principal point of contact).
The AEOI Portal is now accepting Common Reporting Standard (“CRS”) notifications. Each Cayman Islands fund is required to provide the Cayman TIA with certain required information, including the name, address, and CRS classification of the fund. Each Cayman Islands fund must also appoint and provide the name, address, business entity, position and contact details for the “Principal Point of Contact” and the “Authorising Person” for the fund. The Principal Point of Contact and the Authorising Person may not be the same person.
July 31, 2017 Reporting: U.S. FATCA and Common Reporting Standard
U.S. FATCA reporting with respect to 2016, which is limited to the reporting of Specified U.S. Persons, is substantially similar to the reporting that was required in 2016 with respect to 2015. The reporting in 2016, with respect to 2015, included for each Specified U.S. Person, the name, address, U.S. taxpayer identification number, account number (or functional equivalent), the name and identifying number of the fund, the account balance or value, and the total gross proceeds from the sale or redemption of the fund interest paid or credited to the investor.
Because Cayman Islands funds are required, under the Common Reporting Standard, to report any investors with tax residences in any Reportable Jurisdictions, reporting under the Common Reporting Standard is expected to be more extensive than what is required under U.S. FATCA. The Guidance Notes released by the Cayman TIA list forty-eight jurisdictions for which reporting is required in 2017 with respect to 2016. As noted below, a Cayman Islands fund that does not have any investors with a tax residence in a jurisdiction for which reporting is required is still required to file a so-called “nil return.”
December 31, 2017 Due Diligence: Common Reporting Standard
Due diligence for all pre-existing investors (investors in the fund before January 1, 2016) must be completed.
Cayman Islands regulations implementing the CRS (the “CRS Regulations”) require all Cayman Islands funds to establish and maintain written policies and procedures to comply with the CRS Regulations and to implement and comply with those policies and procedures. This is a new requirement; there is no similar requirement under the FATCA intergovernmental agreement between the United States and the Cayman Islands. We recommend that Cayman Islands funds adopt written policies and procedures to comply with the CRS Regulations in a timely manner. Because this is an existing requirement we believe it would be prudent to adopt the written policies and procedures prior to July 31, 2017, the deadline for reporting.
Under the CRS, a Cayman Islands fund that does not have any investors with a tax residence in a Reportable Jurisdiction is required to file a so-called “nil return.” This is a new requirement; there is no similar requirement under the FATCA intergovernmental agreement between the United States and the Cayman Islands.
A Cayman Islands fund that has reporting obligations with respect to Specified U.K. Persons under U.K. CDOT will not be able to use the U.K. CDOT reporting function on the AEOI Portal, but instead should include in its single CRS file the information that is required under U.K. CDOT (in addition to any information that is required under CRS).