In this regard, all Maltese Financial Institutions are required to register with the Commissioner for Revenue and to conduct all the required due diligence about their clients.
What is CRS?
CRS stands for “Common Reporting Standard”. On 6 December 2012, the EU Commission highlighted the need to promote the automatic exchange of information. Council of the European Union adopted EU Council Directive 2014/107/EU that extended the cooperation between EU tax authorities to automatic exchange of financial account information. This extension effectively incorporated the Common Reporting Standard within EU Council Directive 2011/16/EU as regards administrative cooperation in the field of taxation.
The main aim behind CRS is to combat cross-border tax fraud and tax evasion posed by undeclared and untaxed income which has led to a considerable reduction in national tax revenues. The need for an increase in the efficiency and effectiveness of tax collection was felt. The automatic exchange of information constitutes an important tool in this regard.
How is this being implemented?
Malta as an early adopter of the CRS requires all Maltese financial institutions to register with the Inland Revenue, report information consistent with the scope of reporting and to follow due diligence procedures.
Who should register?
In terms of the Maltese Guidelines, Financial Institutions include:
- Custodial Institutions, thus any Entity that holds, as a substantial portion of its business, Financial Assets for the account of others such as brokers and custodial banks;
- Depository Institutions, any entity that accepts deposits in the ordinary course of a banking or similar business including entities regulated in Malta as a savings or commercial bank;
- Investment Entities mainly funds, portfolio managers, investment trusts including entities engaged in trading in money market instruments, foreign exchange; interest rate and index instruments; transferable securities or commodity futures trading; individual and collective portfolio management; otherwise investing, administering or managing funds or money on behalf of other persons as well as any entity which has its gross income primarily attributable to investing, reinvesting, or trading in financial assets, if the Entity is managed by another Financial Institutions;
- Specified Insurance Companies –an insurance company is to be considered to be a Specified Insurance Company when the products written are classified as Cash Value Insurance or Annuity Contracts or if payments are made with respect to such contracts.
What if an Entity is not a Financial Institution?
At the moment Financial Institutions are in the process of registering with the Commissioner for Revenue and conducting their due diligence procedures by providing their client with self-certification forms.
Mazars Malta can help you establish your status for CRS purposes and assist you in completing the said forms provided by the Financial Institutions which service you.
Initial Registration with the Commissioner for Revenue for Financial Institutions should be done by not later than 30 June 2016. If your Company is a financial Institution already registered for FATCA purposes, there is no need to re-register for CRS purposes; however a notification form should be sent to the Commissioner for Revenue accordingly.
How can Mazars Help?
Mazars Malta can be of assistance in establishing your Financial Institution’s status for CRS purposes. We can help you register in this respect.