The CRS obligations will apply throughout the EU as of 1 January 2016 (with certain transitional rules for Austria), and the EU also reached agreement with Switzerland to apply CRS based exchange of information as from 2017. As more than 90 jurisdictions will participate in the initiative, additional laws will follow to ratify and transpose bilateral or multilateral agreements with other CRS partner jurisdictions in the near future. This OECD initiative is a milestone towards global tax transparency for both individuals and organizations.

“Luxembourg market players need to act now to ensure compliance with CRS obligations from January onwards. Banks, funds, as well as certain insurance companies, non-supervised investment entities and corporate service providers all have to prepare for this change,” explains Pascal Eber, Partner, Advisory & Consulting at Deloitte Luxembourg.
“Our recommendation to these entities is to capitalize as much as possible on efforts carried out in relation to the implementation of FATCA and adapt to the specific reporting obligations imposed by CRS. As the reporting volume is likely to grow exponentially, market players will need to decide whether they will develop their internal IT systems, whether external packages will be integrated, or whether outsourcing of reporting should be considered.”

To help the market players prepare for the CRS, Deloitte Luxembourg will organize a number of events and workshops in the coming months.

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 who are tax resident in another CRS partner jurisdiction, and to report this information to the financial institution’s local tax authorities. The local tax authorities will then exchange this information with the relevant partner jurisdictions’ tax authorities on an annual basis.

The automatic exchange of information as outlined in the CRS is built on the foundations of FATCA Model 1 IGAs. As FATCA was implemented in 2014, and the first FATCA reporting to the Luxembourg tax authorities was due on 31 August 2015, market players have already gained valid reporting experience.
Nonetheless, there are also significant differences between CRS and FATCA, which should not be underestimated.
“Market players really need to act today to achieve CRS readiness on 1 January 2016,” concludes Pascal Eber.

For more information on CRS and FATCA, please visit the dedicated Deloitte Luxembourg website: www2.deloitte.com/lu/crs.