The OECD’s Automatic Exchange of Information Common Reporting Standard
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- From 1 January 2016 a new tax information exchange regime will apply to private equity funds; the OECD's Automatic Exchange of Information Common Reporting Standard ("CRS"). Around 100 countries will participate in the CRS, including the Cayman Islands, Jersey, Guernsey and the UK. Notably the U.S. is not participating, instead it proposes working through its FATCA Intergovernmental Agreements to obtain a network of bilateral information exchanges.
- For Sponsors in participating countries this means that from 1 January 2016 there will be an increased compliance burden. Practically this means that a new tax form will need to be incorporated into subscription documents, existing investors asked to provide further information and additional reports made to their local tax authority/authorities.
- For Investors, the effect is that more information will need to be disclosed, CRS is not only globally broader than FATCA but definitionally too. In particular, it is worth noting that an Investor cannot avoid the reach of CRS simply by residing in a non-participating country (such as the U.S.) as in many cases, the CRS requires the Sponsor to look through such entity to the controlling persons.
- The attached infographic shows which countries will be exchanging tax information and from when and provides key information about the regime.
- If you have any queries about CRS and how it will impact you or would like to engage in a more detailed discussion, please do not hesitate to contact either Richard Ward, Matt Saronson, Cecile Beurrier or Ceinwen Rees in our London office.