FATCA & CRS – Reporting Obligations and Key Considerations

In line with global tax transparency initiatives and the Automatic Exchange of Information (AEOI) regime, financial institutions are required to comply with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). These international frameworks mandate the identification, documentation, and reporting of financial account information to local tax authorities. In the Cayman Islands, the annual reporting deadline is 31 July, although deadlines may vary in other jurisdictions depending on the applicable intergovernmental agreements (IGAs).

What is FATCA?

The US Foreign Account Tax Compliance Act (FATCA) is a federal law enacted to combat offshore tax evasion by US persons. It requires:

• Foreign Financial Institutions (FFIs) to identify and report accounts held by US taxpayers or foreign entities with substantial US ownership to the US Internal Revenue Service (IRS).
• Account Reporting content includes account balances, interest, dividends, and gross proceeds.
• Non-compliance may result in a 30% withholding tax on certain US-sourced payments to the FFI.

Jurisdictions that have entered into IGAs with the US are classified as either Model 1 or Model 2 jurisdictions, which determines the reporting pathway.

What is CRS?

The Common Reporting Standard (CRS), developed by the Organisation for Economic Co-operation and Development (OECD), facilitates the automatic exchange of financial account information between participating jurisdictions. Under CRS:

• Financial institutions must identify and report accounts held by non-resident individuals and entities.
• Reportable information includes account balances, interest, dividends, and other income.
• Data is exchanged annually between tax authorities of participating jurisdictions.

Reporting Entities

Entities obligated to report under FATCA and CRS include:

• Financial Institutions such as banks, custodians, investment entities, and certain insurance companies.
• Investment Funds managing assets on behalf of clients.
• Non-Financial Entities, in some cases, where they hold reportable accounts or have controlling persons who are tax residents in participating jurisdictions.

Documentation Requirements

To meet due diligence and reporting obligations, financial institutions must collect:

• Self-certification forms to determine the tax residency of account holders.
• Supporting documentation to verify identity and residency status.

Reporting Deadlines in the Cayman Islands

For the 2024 reporting year:

• FATCA and CRS returns (including nil returns) must be submitted by 31 July 2025.
• CRS Compliance Forms must be submitted by 15 September 2025.

The relevant authority in the Cayman Islands the is the Department of International Tax Cooperation (DITC), a department of the Tax Information Authority (TIA). All filings must be made via the DITC Portal.

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Marbury’s Regulatory Advisory Services team supports clients in navigating FATCA and CRS compliance, including entity classification, GIIN application, notification, Point of Contact (POC) appointment, CRS manual provision and reporting. If you are not currently a client and require assistance, please contact us at info@marburys.com or reach out to your usual Marbury relationship manager.

For more information, visit our Overview of FATCA & CRS.