Common Reporting Standard
A new dimension besides FATCA
CRS stands for "Common Reporting Standard" and contains the reporting a due diligence standard that underpins the automatic exchange of financial account information on a global level.
On 24 December 2015, the Luxembourg Parliament transposed in national law the Directive 2014/107/EU.
The new Rules have entered into force on 1 January 2016, with the first wave of requirements, in particular the on-boarding of New Account Holders. The first reporting under CRS law will be performed by the end of June 2017 on 2016 financial account information.
- The aim of the common reporting standard
- New Account holders
- Due diligence regarding preexisting Accounts
- Reporting
- Control and penalties
- Data protection rules
The aim of the common reporting standard
- Much like FATCA provisions, the CRS makes FIs (Financial Institutions) review and collect information on their clients/investors, in order to identify their tax residence, as well as to provide certain account information to relevant foreign tax authorities (via the Luxembourg tax authorities) on an annual basis.
- The CRS will enhance the automatic exchange of information and will establish a common standard for all participating jurisdictions. This will strengthen the fight against tax evasion and will facilitate identification of beneficial owners.
New Account holders
- Luxembourg FI's have to obtain a self-certification mentioning the name, address, tax residence, tax identification number (TIN) and place and date of birth (for individuals) of the account holder upon account opening.
- All account holders subject to CRS review have to issue a self-certification form in which they state their residence for tax purposes and provide their TIN. Without a self-certification, the FI is legally bound to consider the account holder as a reportable person and act accordingly towards the relevant tax authorities.
Due diligence regarding preexisting Accounts
- The law clarifies that Luxembourg FIs must apply their due diligence procedures to all their non-Luxembourg resident clients and investors. It allows Luxembourg FIs to apply the procedures governing new accounts to preexisting accounts.
- Keep in mind that a Reporting Financial Institution may not rely on a self-certification or Documentary Evidence if it knows or suspects that the self-certification or Documentary Evidence is incorrect or unreliable.
Reporting
- Luxembourg FIs have to submit their first reports to the Luxembourg tax authorities no later than 30 June 2017.
- Luxembourg reporting FIs have can file a nil report with the Luxembourg tax authorities even if they haven’t identified any reportable accounts (it is however not required).
Control and penalties
- A reporting Luxembourg FI's omitting to comply with due diligence rules or to introduce procedures in view of reporting are liable to a penalty up to EUR 250,000.
- A reporting Luxembourg FI's omitting to file the required report or if it files a late, incomplete or inaccurate report, it may be liable to a penalty of 0, 5% of the amounts that should have been reported, with a minimum of EUR 1,500.
Data protection rules
- Reporting Luxembourg FIs can't invoke any professional secrecy rules to refuse the reporting of required information.
- Reporting Luxembourg FIs should inform each individual that information will be collected and possibly reported.
- Reporting Luxembourg FIs must communicate to individuals the following:
- The Luxembourg FI is responsible for personal data processing.
- The personal data is intended to be used for the purpose of the CRS.
- The data will be reported to the Luxembourg tax authorities and the tax authorities of the jurisdiction(s) of residence of the Account Holders or Controlling Persons of a Passive NFE.
- The reported individual has the right to access the data/financial information reported to the Luxembourg tax authorities and to rectify it.
- Reported individuals have to reply to each information request sent to them. The Reporting Luxembourg FI must also inform them what may happen if the fail to answer.
Our CRS services
Compliance & reporting "health check"
Deep dive "health check":
- Define reporting test strategy;
- Roll-out: reporting accuracy and completeness testing;
- Review and adjust controls framework.
Yearly review:
- Provide controls report either based on:
- Agreed-upon-procedures or
- Standard report (ISAE 3000).
CRS Reporting
Reporting solution:
- Collection of reporting data;
- Checking of data format and coherence;
- Onboarding and registration in e-file (i.e. Fundsquare);
- Preparation of Reporting;
- Filing to the Tax authorities.
Regulatory intelligence and technical expertise
Regulatory intelligence:
- Leverage on PwC's CITT ("Customer and Investor Tax Transparency") tool
Technical expertise:
CRS:
- Completion of tax forms;
- Review of tax forms received from clients/counterparts.
- Leverage on PwC international network tax expertise so as to address country specifics.
Implementation and project management
Implementation:
- Perform the regulatory analysis of your entities;
- Provide assistance in the identification of reportable accounts and potential data gaps;
- Define and implement required processes;
- Provide dedicated workshops and trainings through PwC's Academy;
Project management:
- Project planning / monitoring / communication and stakeholder management;
- Preparation / documentation of regular meetings, workshops & Steering Committees;
- Definition of implementation roadmap.
CRS Reporting Solution
According to the CRS Luxembourg law, 24 December 2015, each Luxembourg Reporting Financial Institution will have to file a report to the Luxembourg tax authorities prior to 30 June of each year. This report will have to include each reportable account and has to fulfil certain criteria.
Our Service
We can help you implement a reporting tool in your company or perform a managed service.
Implement a Reporting Tool
PwC has developed a software solution that allows clients to comply with their reporting obligations to the local tax authorities through an automated process.
We can help and support your journey at every step:
- Implementation starting point
- Data validation & testing
- Testing
- Filing with authorities
We deploy the right solution for an effective balance between manual and digital work during the implementation & compliance efforts.
Our reporting tool keeps data in your internal IT environment until the final report is sent to the authorities.
Managed Service
If you'd like to outsource the preparation and/or the filing of your CRS report, we can assist you during the entire process.
We provide you with a user-friendly solution to fulfil your obligations in a timely manner.
We've developed our own reporting tool that allows us to offer you a complete line of services including data collection, validation, reformatting and submission to the tax authorities.
At PwC Luxembourg, we've already assisted our clients to file their FATCA reporting in 2015 and have thus acquired significant experience and knowledge.
We'll act as depositor and we’ll use the official transmission channel to file the CRS reporting to the Administration des Contributions Directes on behalf of our clients.
Contact us
Pierre Kirsch
Tax Partner, PwC Tax Information reporting Sàrl, PwC Luxembourg
Tel: +352 49 48 48 4031
Camille Perez
Director, PwC Tax Information reporting Sàrl, PwC Luxembourg
Tel: +352 62133 46 18
