Common Reporting Standard – Lining up for take-off
On Tuesday 15 December, Deloitte Luxembourg gathered around 150 business professionals from various sectors at Utopolis to this year’s last episode of the conference cycle covering the full spectrum of the Common Reporting Standards (CRS).
While cinema technicians were preparing the premiere of the new Star Wars movie next door, the conference participants took a deep dive into the specific features and expected consequences of the Common Reporting Standard to get ready for its implementation on 1 January 2016.
Identifying the concerns and priorities of the market
Over the past months, Deloitte Luxembourg has organized several breakfast events dedicated to financial industry professionals from the banking, investment management, insurance and PSF/CSP industries, who are impacted by the CRS obligations. The aim of the events was to share insights, predictions and specific analyses. During these events, the Deloitte CRS specialists collected input and feedback from the industry professionals to better understand their specific concerns. Last week’s major event at Utopolis addressed and provided feedback on these specific points.
“Based on the multiple exchanges we have had with market players over the past months, our conclusion is that the CRS maturity level in Luxembourg is still varied. Through dedicated working sessions, we have identified the chosen market approach and the specific obstacles with which the different industries are currently struggling. The conference not only provided an overview of the latest regulatory developments, but also summarized the main feedback received from the various industries as to implementation strategies, issues and identified solutions,” explains Pascal Eber, Advisory & Consulting Partner at Deloitte Luxembourg.
In less than two weeks’ time, the CRS obligations will come into effect, bringing substantial changes to a wide range of financial industry professionals, including market players in the banking, funds, insurance and PSF/CSP industries.
“When it comes to the implementation of the CRS based automatic exchange of information obligations, the following priorities are on top of the agenda: firstly, the new onboarding procedures that need to go live on 1 January 2016, secondly, and in direct relation with these onboarding procedures, the update of the legal documentation such as general terms of business and subscription documentation, and finally the strategic choices to make in respect of the CRS due diligence on pre-existing accounts,” comments Alain Verbeken, Tax Director at Deloitte Luxembourg.
Another important topic at the conference was the discussion around the infrastructure required to effectively exchange information with the Luxembourg tax authorities.
“The reporting volume is expected to increase substantially and each organization will need to make decisions as to whether investments should be made in internal IT infrastructure, whether external reporting modules will be acquired and integrated in the existing systems, or whether an outsourced reporting solution would be contracted with external parties. Although the first CRS reporting is only due in June 2017, larger institutions in particular cannot afford to wait and should put in place solutions as quickly as possible,” adds Alain Verbeken.
Sharing information
The CRS is a single global standard for automatic exchange of information in tax matters, obliging financial institutions to collect financial account information on account holders (and controlling persons of certain types of entity account holders) who are tax resident in another CRS partner jurisdiction, and to report this information to the financial institution’s local tax authorities. The automatic exchange of information as outlined in the CRS is built on the foundations of FATCA Model 1, and is expected to have a broad impact in many jurisdictions.
“The CRS will impose reporting obligations and exchange of information standards that will radically change the reporting environment. The financial institutions need to take steps in order to ensure full compliance with these reporting obligations,” concludes Pascal Eber.
For more information on CRS and FATCA, please visit the dedicated Deloitte Luxembourg website:www2.deloitte.com/lu/crs.
