The Common Reporting Standard: a challenge to anticipate from an operational perspective
As a result of the global move towards transparency, accelerated by the financial crises in the 2008-10 period, the ensuing State budget issues in many jurisdictions, and the significant catalytic effect of US imposed FATCA, the Common Reporting Standard (CRS) developed by the OECD very quickly became the undisputed global standard for automatic exchange of information in tax matters.
The Directive on Administrative Cooperation (DAC) was revised to include the CRS requirements on mandatory automatic exchange of information and was approved shortly thereafter, on 9 December 2014. In Luxembourg, Council Directive 2014/107/UE was transposed into national law in December 2015 to become applicable from 1 January 2016.
Currently, over 100 countries have signed or declared that they are willing to sign the Convention, including all G20 countries, the BRICS, most OECD countries, a number of other financial centres and a growing number of developing countries. The OECD based the CRS on the FATCA Model 1 Intergovernmental Agreement. The principles and methodologies for classifying individuals and entities and the reportable data are consequently similar to FATCA; however, with some significant differences.