Common Reporting Standards

Common Reporting Standards

The OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard is a big step towards a globally coordinated approach to disclosure of income earned by individuals and organizations. The Common Reporting Standard ("CRS") comes into effect in Bermuda on January 1, 2016 with the first reporting due in 2017 for the period ending December 31, 2016.

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Reporting

Below is a summary of CRS challenges for Bermuda entities:

  • A major increase in reporting requirements – These initiatives involve governments obtaining information from their financial institutions and exchanging data automatically with other nations. Financial institutions (and other investment entities) will have significant additional reporting responsibilities, which may vary in format and timing from jurisdiction to jurisdiction, with potential penalties for those unable or unwilling to comply fully.
  • Collecting complex and varied information – Financial institutions will need to collect account holder status and tax residency, which may differ from FATCA, and use that information to drive the gathering and reporting of interest, dividends, account balance, income from certain insurance products, and sales proceeds from financial assets for certain non-resident account holders. 
  • A big impact on systems and culture – Financial institutions need to keep abreast of new regulations around the world, manage relationships with multiple tax authorities, and educate staff and clients on reporting requirements and account opening procedures.
  • More than just an enhanced version of FATCA – FATCA is much narrower in scope than the CRS. The lack of account balance thresholds for reviewing account holders and the expansion of those financial institutions subject to the CRS, together with the search for non-resident account holders from more than 40 jurisdictions, makes the scale of the CRS a multiple of what it was for FATCA. This is especially true for those financial institutions that took a tactical approach to their FATCA solution, either by creating temporary manual processes or by excluding US persons.

If you have any questions on the CRS, please contact a member of our team.

© 2017 KPMG, a group of Bermuda limited liability companies which are member firms of the KPMG network of independent member firms affiliated with KPMG International Coopertive (“KPMG International”), a Swiss entity. All rights reserved.

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