1. FATCA and CRS Update

2. FATCA Overview
A withholding agent must withhold 30% of any withholdable payment to a Foreign Financial Institution (“FFI”) unless:
Financial Institution complies with the terms of an FFI Agreement
Financial Institution is treated as a deemed-compliant entity and U.S. accounts reported to the IRS
Financial Institution is located in a jurisdiction with an Intergovernmental Agreement (“IGA”) and is compliant with the terms of the IGA
A withholding agent is also required to withhold 30% of any withholdable payment to a non-financial foreign entity (“NFFE”), unless:
The NFFE identifies its substantial or controlling U.S. owners, or
Payment is made to an excepted or active NFFE

3. FATCA – Deadlines and Reminders
Annex 1 of the Bermuda/U.S. IGA contains a number of specific due diligence obligations to be completed for “pre-existing” and “new” accounts
Accounts in existence on June 30, 2014 (for individual accounts) or December 31, 2014 (for entity accounts) are treated as “pre-existing”
Due diligence procedures are required to be completed for “new” accounts at the time of account opening
Deadlines for review of “preexisting” accounts are as follows:
High value (>$1M) individual accounts required to have been reviewed by June 30, 2015
All other individual accounts required to be reviewed by June 30, 2016
Accounts held by entities required to be reviewed by June 30, 2016

4. FATCA – Deadlines and Reminders
Certain account holder information required to be reported by March 31 each year
U.S. account holders
Passive NFFEs with U.S. controlling persons
Direct reporting NFFEs (including nil reports)
Sponsored entities (including sponsored direct reporting NFFEs) required to apply for a FATCA identification number (GIIN) by December 31, 2016
Responsible officer (RO) certification of FATCA compliance to be submitted by June 30, 2018
RO must certify compliance with due diligence obligations and compliance with the terms of the FI agreement

5. CDOT – Deadlines and Reminders
UK FATCA (CDOT) applies similar requirements to U.S. FATCA to financial institutions based in the Crown Dependencies and Overseas Territories
Due diligence procedures and deadlines are broadly similar to the U.S. FATCA provisions
Procedures for “new” accounts completed at account opening
“Pre-existing” accounts required to be reviewed by June 30, 2015 (high value individual accounts) or June 30, 2016 (lower value individual accounts and entity accounts)
Bermuda financial institutions required to complete CDOT reporting for the 2014 and 2015 reporting periods by September 30, 2016

6. Common Reporting Standard (CRS)
Global standard for automatic exchange of financial account information, more than 100 countries have committed to CRS with many committing to January 2016 adoption (including Bermuda)
CRS was based on the Model 1 U.S. IGA, many similarities to FATCA
Bermuda financial institutions are required to identify account holders who are tax resident in CRS jurisdictions, and to report account holder information annually to the Bermuda MoF for further reporting to CRS jurisdictions
An entity’s obligations under CRS vary depending on whether it is classified as a financial institution or as a passive or active non-financial entity (NFE)
The definition of “financial institution” is broadly similar under FATCA and CRS, and includes depository and custodial institutions, certain investment entities, and specified insurance companies

7. CRS – Passive NFEs
Passive NFEs must provide information regarding “controlling persons” to financial institutions, which disclose the information to tax authorities in CRS jurisdictions where controlling persons are tax resident
A NFE is generally treated as “passive” if more than 50% of its assets are passive income producing (i.e. interest, dividends etc.)
Many non-public insurance companies were classified as passive NFEs for FATCA and CDOT purposes, but passive classification is less likely for Bermuda insurance companies under CRS
Pursuant to Annex E of the Bermuda MCAA, “passive income” does not include income derived by (re)insurance companies from financial assets held as reserves or necessary surplus to satisfy insurance regulators or rating agencies in writing (re)insurance business

8. CRS – Deadlines and Reminders
CRS contains a number of specific due diligence obligations to be completed for “pre-existing” and “new” accounts
Accounts in existence on December 31, 2015 are treated as “pre-existing”
Due diligence procedures are required to be completed for “new” accounts as a condition to account opening
Deadlines for review of “preexisting” accounts are as follows:
High value (>$1M) individual accounts required to be reviewed by December 31, 2016
All other individual and entity accounts required to be reviewed by December 31, 2017
CRS reporting due by September 30, 2017 (for the 2016 year) and annually thereafter