Recent developments with regard to CRS (the OECD’s “Common Reporting Standard”) mean that Irish funds need to take steps now to update their application forms and subscription documents. As referred to in Matheson’s November Investment Funds Newsletter, the Irish Finance Bill 2015 contains further provisions putting in place the necessary legislative framework for the implementation in Ireland of the CRS, building on measures introduced in the Finance Act 2014. The implementation of the CRS in Ireland will require Irish investment funds to amend their application forms in order to obtain certain additional information from investors.
The CRS, which will apply in Ireland from 1 January 2016, is a new global standard on the automatic exchange of information which is designed to combat tax evasion. More than 90 countries have now indicated that they will implement CRS reporting in their jurisdiction. It will oblige financial institutions and investment entities (including investment funds) to report certain information in relation to non-resident investors to the local tax authorities. This information will then be passed on by the local tax authorities to the tax authorities of the investors’ country of residence (assuming such countries are also participating in the CRS scheme). Irish regulations enacting the CRS regime will be implemented before year end.
As part of the CRS scheme, investors will need to provide additional information to investment funds, on subscribing for units or shares in the fund. Investment funds will have an obligation to identify and confirm the tax residence status of all new and existing investors in a reporting Irish fund. The requirements under the CRS supplement the current obligations to identify and confirm the status of investors from a US tax perspective under the US Foreign Account Tax Compliance Act (“FATCA”). The Irish funds industry representative body, Irish Funds, has now published appropriate self-certification forms incorporating the requirements under both FATCA and CRS for both individuals and entities. The Irish tax authorities and the Irish Data Protection Commissioner have also provided guidance on additional details which should be included in fund application forms and subscription documents.
The Irish tax authorities have advised industry that, in respect of new investors, self-certifications must be obtained and validated at account opening stage or within 90 days of opening the account at the latest. In relation to accounts opened prior to 1 January 2016, it is expected that the Irish implementation regulations will specify the deadline by which the necessary due diligence must be undertaken.
Consequently, Irish funds must update their application forms and / or subscription documents before 1 January 2016 to reflect the CRS. It is also recommended to update fund prospectuses in due course to reflect these new CRS issues. We are happy to work with clients to assist with the review and update of their application forms to meet the CRS requirements.