CRS: Revised guidelines

Deloitte Malta Tax Alert

On 14 February 2017, the Commissioner for Revenue published Version 1.4 of the Guidelines for the implementation of the EU Council Directive 2014/107/EU of 9 December 2014, amending Directive 2011/16/EU, as regards mandatory automatic exchange of information in the field of taxation (DAC2) in Malta and the Common Reporting Standard (‘CRS’) issued in terms of Article 96(2) of the Income Tax Act (Chapter 123 of the Laws of Malta) (the ‘Revised Guidelines’).

The Revised Guidelines provide for, inter alia, further direction on the interpretation of the Depository Institution and Investment Entity definitions for the purposes of CRS as implemented in Malta along with updates to the list of Non-EU Reportable Jurisdictions with information on the intended first information exchange year in relation to those jurisdictions as well as providing clarification on the with respect to the CRS classification of trusts.

As a result of the updates to the guidance on Depository Institution for CRS purposes, subject to certain limitations, qualifying electronic money institutions and payment service providers regulated by the Financial Institutions Act (Chapter 376 of the Laws of Malta) will not be considered as falling within the definition of a Depository Institution for the purposes of CRS as implemented in Malta on the basis that the activities which they conduct do not constitute accepting deposits in the ordinary course of their business. This does not preclude such entities from falling to be considered as Financial Institutions under one or more of the other categories of a Financial Institution for CRS purposes.

Furthermore, subject to certain conditions, an entity falling within the definition of an Investment Entity as a result of its activities limited to the investment, management or administration of the wealth of a limited number of shareholders or of related shareholders and is managed by a Reporting Financial Institution that is duly registered for CRS purposes shall by default be regarded as a Passive NFE. In this context, the term ‘related’ shall be taken to mean an individual and his or her spouse, descendants and ascendants in the direct line and their relative spouses, as well as the brother and sisters of such individual, but in all cases, shall not be more than seven individual shareholders.

In terms of the Revised Guidelines, trusts which qualify as Non-Reporting Financial Institutions where the trustee itself is a Reporting Malta Financial Institution and reports all information required to be reported with respect to all Reportable Accounts of the trust are not required to register with the IRD for CRS purposes.

The list of Non-EU Reportable Jurisdictions has been increased to include Colombia, Greenland, Liechtenstein, and Montserrat as having 2017 as their first CRS intended automatic exchange of information year and Australia, Mauritius, Saint Vincent and the Grenadines, Singapore and Switzerland having 2018 as the first intended automatic exchange of information year in relation to CRS.

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