Impact of the OECD Common Reporting Standard on Irish Section 110 SPVs

Ireland is one of the early adopters of the OECD Common Reporting Standard (CRS) for the automatic exchange of tax information, and Irish implementing legislation is in effect since 1 January 2016. The first CRS annual reporting by financial institutions/Irish Section 110 companies, relates to the 2016 calendar year and the returns will need to be filed by end-June 2017. I am sharing here some personal thoughts on the impact of CRS on Irish Section 110 SPVs from a corporate services provider perspective; please consult with a tax advisor for formal guidance.
The CRS framework is broadly similar to the recently implemented reporting requirements of the US Foreign Account Tax Compliance Act (FATCA), with some notable differences:

• Much larger numbers of reporting financial institution are affected and exemptions from reporting are not as wide as in FATCA. Active Section 110 entities will usually be classified as reporting financial institutions for CRS purposes.
• No FATCA-type egistration. Reporting is to local tax authorities, i.e., the Irish Revenue Commissioners, rather than with foreign tax authorities.
• Reportable account classification is based on tax residency, instead of nationality/citizenship. Irish Section 110 SPVs engaged in listed securitisation transactions will normally not have reportable accounts and accordingly will file CRS returns with nil balances.
• No minimum balance threshold applies for review/reporting. A USD250,000 threshold for pre-existing accounts may be specifically applied at the discretion of local jurisdictions .
• Unlike FATCA, CRS is not centred on withholding tax and does not contain punitive withholding tax penalties. However, Irish legislation will enable the Revenue Commissioners to apply significant penalties for non-compliance.

For all new clients of Irish corporate services providers, on-boarding procedures (AML/KYC analysis) and IT systems should already have been modified to take account of CRS requirements. In addition, SPV administration agreements must now incorporate specific provisions for CRS reporting.