Fiduchi is required to hold appropriate and up to date Customer Due Diligence (“CDD”) documentation throughout the duration of the business relationship with you. Part of this CDD requirement means that Fiduchi requires information regarding your tax circumstances and if you are a controlling person.

For more information on Client Due Diligence please see our CDD section or click here.

This guide provides supportive guidance notes which are to be used by clients when completing Fiduchi’s CDD application forms. Please note that there are two types of guidance notes below which are to be used in conjunction with the following forms:

• Fiduchi CDD Form A1 – Individual CDD (Full) – please refer below to Guidance Note A – Individual Fiduchi CDD Forms A3, A5 & A7.

• Entity CDD – please refer below to Guidance Note B – Entity.

This page also contains a Frequently Asked Questions section at the end.

Guidance Note A – Individual

Important Information:

Each jurisdiction has its own rules for defining tax residence, and jurisdictions have provided information on how to determine if you are resident in the jurisdiction. In general, you will find that tax residence is the country in which you live. Special circumstances may cause you to be resident elsewhere or resident in more than one country at the same time (dual residency).

If you are a U.S. citizen or tax resident under U.S. law, you should indicate that you are a U.S. tax resident on this form and you may also need to fill in an IRS W-9 form.

If your tax residence (or the Controlling Person, if you are completing the form on their behalf) is located outside the country where the Financial Institution is maintaining the account is located, Fiduchi may be legally obliged to pass on the information in this form and other financial information with respect to your financial accounts to the tax authorities in the country where the Financial Institution is located and they may exchange this information with tax authorities of another jurisdiction or jurisdictions pursuant to intergovernmental agreements to exchange financial account information.

The questions in Section F – FATCA & Self Certification on form A1 – Individual Client Due Diligence – are intended to request information consistent with local law requirements.

Where you need to self-certify on behalf of an entity account holder, do not use this form. Instead, you will need to request from your account director the form D2 – Entity Tax Residency Self Certification Form.

As a financial institution, Fiduchi is not able to give tax advice. If you have any questions then please contact your tax adviser or domestic tax authority.

Guidance Note B – Entity

Important Information:

If you are an individual account holder or sole trader or sole proprietor, please refer to Guidance note A – Individual. For joint or multiple account holders please complete a separate form D1 – Individual Tax Residency Self Certification Form for each account holder.

If the Account Holder is a U.S. tax resident under U.S. law, you should indicate that you are a U.S. tax resident on this form and you may also need to fill in an IRS W-9 form. For more information on tax residence, please consult your tax adviser or local tax authority.

Please provide information on the natural person(s) who exercise control over the Account Holder (individuals referred to as “Controlling Person(s)”) by completing a separate form D1 – Individual Tax Residency Self Certification Form for each Controlling Person.

This information should be provided by all Investment Entities located in a Non-Participating Jurisdiction and managed by another Financial Institution.

If you are completing the form on the Account Holder’s behalf, then you should indicate the capacity in which you have signed the form in the Declaration section of each form. For example, you may be the custodian or nominee of an account on behalf of the account holder, or you may be completing the form under a signatory authority or power of attorney.

As a financial institution, Fiduchi is not able to give tax advice. If you have any questions then please contact your tax adviser or domestic tax authority.

Frequently Asked Questions and Terminology

The continued drive for international tax transparency and increased cooperation between tax administrations has led to numerous ideas and initiatives over the last several years. One initiative is the OECD’s “Standard for Automatic Exchange of Financial Account Information” – more commonly referred to as the “Common Reporting Standard”.

It is clear that CRS has significantly enhanced the fight against illegal tax evasion, but it is also clear that individuals that have set up well-planned and properly managed wealth preservation vehicles have nothing to fear.

Exchange of Information is a complex matter and it has far-reaching implications so to deal with some of the questions that clients might have, Fiduchi has prepared this guide and FAQ summary.

What is the Common Reporting Standard (“CRS”)?

CRS is a global standard for the automatic exchange of financial information between financial institutions and tax authorities.

CRS was developed by the Organisation for Economic Co-operation and Development (“OECD”) and provides an international legal framework for the prevention of illegal tax evasion. More information can be obtained from the OECD’s website www.oecd.org

What is the purpose of CRS?

The OECD developed CRS in response to calls from the G20 to create a global system allowing participating jurisdictions to obtain information from their financial institutions and automatically exchange that information with other participating jurisdictions on an annual basis.

The aim of CRS is to reduce the ability of taxpayers of one jurisdiction to conceal their assets and income in another jurisdiction. CRS should not unduly affect the management and effectiveness of properly advised structures.

Which jurisdictions have committed to CRS?

Over 120 jurisdictions have committed to CRS. A full list of participating jurisdictions can be found on the OECD website www.oecd.org Significant jurisdictions are the UK, all other EU states, China, India, Japan, Russia, Switzerland, Jersey and the other Crown Dependencies, Cayman and BVI.

The reality is that CRS will probably affect every jurisdiction in the World, although a notable exception to the list of signatories is the USA, which has decided that it can rely upon the existing framework created by its Foreign Account Tax Compliance Act.

Putting aside the difficulties caused by the USA’s non-commitment to CRS, it is increasingly likely that financial institutions in jurisdictions that do not sign up to CRS will face reputational risks and restrictions in the transactions they can undertake. While withholding taxes specifically tied to CRS compliance have not yet been introduced, heightened scrutiny and reputational concerns are growing for non-compliant jurisdictions. In the short term, blacklists or equivalent measures remain more likely than withholding taxes, particularly as international pressure builds for greater transparency. Financial institutions operating in non-CRS jurisdictions may face challenges accessing certain markets or dealing with CRS-compliant counterparts due to the lack of reciprocal information sharing.

What’s the difference between CRS and FATCA?

The Foreign Account Tax Compliance Act, commonly referred to as FATCA, is a framework developed by the U.S. to combat tax evasion by U.S. taxpayers, imposing reporting obligations on financial institutions along with withholding taxes for non-compliance. Over 120 jurisdictions have adopted FATCA through an intergovernmental agreement with the U.S.

CRS, on the other hand, is a global initiative aimed at combating tax evasion by taxpayers of any jurisdiction that has signed up (over 120 jurisdictions). The U.S. has not joined CRS.

One key difference between FATCA and CRS is that under FATCA, there is a de minimis rule where individual accounts under $50,000 and entity accounts below $250,000 are generally not reportable. Under CRS, there is no universal de minimis exception for reportable accounts, although individual jurisdictions may apply certain thresholds.

When did CRS begin?

Full information can be found on the OCED’s website www.oecd.org, but CRS was brought into practice in three stages:

• Stage 1 – 56 countries, the so-called ‘Early Adopters’, including Jersey and the EU, the UK and India began CRS on 1 January 2016, with the first reporting by May 2017.

• Stage 2 – A further 40 countries, including China, Israel, Japan, Russia, Switzerland and Singapore began on 1 January 2017, with the first reporting by May 2018. Jurisdictions continued to sign up to reach the current number of over 120.

• Stage 3 – Dates are still to be set for those jurisdictions that have not yet formally adopted CRS.

What will financial institutions such as Fiduchi be reporting?

All institutions within CRS-participating jurisdictions must obtain and report the same information, including:

• name and residential address of Reportable Account holder;

• date of birth of Reportable Account holder;

• jurisdiction of tax residency of Reportable Account Holder together with relevant tax reference number;

• reportable Account name and identifying number where applicable (i.e. in respect of a trust, the trust’s name; in respect of a company, the company’s name);

• reportable Account balance at year end or closure; and

• amount paid to Account Holder during the year.

Where the Reportable Account is held by a Passive Non-Financial Entity, the Financial Institution will be required to provide certain information on ‘Controlling Persons’ of that Reportable Account.

Financial Institutions will report to the relevant authority in their own jurisdictions, who will in turn share that information with the authority of the taxpayer.

How are trust accounts affected by CRS?

Trusts are complex structures, and the wording of CRS is not always clear when considering how trusts should be treated within the framework. However, trusts are explicitly covered by the CRS rules, and it is clear that Reportable Accounts include those held by trusts. Financial Institutions (which may include the trust itself) are required to look through passive entities to report on the natural persons who ultimately control or benefit from trusts.

In most cases involving family or private wealth planning, a trust is likely to be classified under CRS as either a Reporting Financial Institution (“FI”) or a Passive Non-Financial Entity (“Passive NFE”).

Where a Jersey trust is an FI, the trust itself is obliged to report to the Jersey tax authority regarding the trust’s Reportable Accounts. In practice, this means disclosing details of the trust and, in respect of individuals residing in a participating jurisdiction, the settlor, the beneficiaries, the protector, and any person with a loan account. However, it is worth noting that for discretionary beneficiaries, there is no reporting obligation until that beneficiary actually receives a benefit.

Where the trust is a Passive NFE, the trustee may be required to disclose information on the same individuals to any Financial Institution with which the trust deals (e.g., a bank or investment manager). This is so the FI can then file its own report under CRS.

Terminology

“Account Holder” refers to the person listed or identified as the holder of a Financial Account by the Financial Institution maintaining the account. For an individual, the individual listed as the holder or owner of the Financial Account is considered the Account Holder. If a trust or estate is listed as the holder or owner of a Financial Account, the trust or estate is considered the Account Holder, not the trustee, owners, or beneficiaries of the trust.

Similarly, if a partnership is listed as the holder or owner of a Financial Account, the partnership is the Account Holder, not the individual partners. However, a person (other than a Financial Institution) holding a Financial Account on behalf of or for the benefit of another person in the capacity of agent, custodian, nominee, signatory, investment advisor, or intermediary is not treated as the Account Holder. In such cases, the person on whose behalf or for whose benefit the account is held is considered the Account Holder.

“Active NFE” (under CRS) or an “Active NFFE” (Non-Financial Foreign Entity, under FATCA) is an entity that meets specific criteria, with definitions broadly aligned but some distinctions between the regimes.

Under both CRS and FATCA, an entity qualifies if less than 50% of its gross income is passive and less than 50% of its assets produce passive income. Publicly traded entities, or those that are related entities of such companies, are also considered active under both regimes. Governmental Entities, International Organisations, Central Banks, and entities wholly owned by them meet the definition under both CRS and FATCA, though FATCA also includes U.S. Territory Entities.

Entities that primarily hold stock or provide financing and services to non-financial group subsidiaries qualify as Active NFEs/NFFEs, except for those functioning as investment funds or similar vehicles. While this definition is consistent under both CRS and FATCA, FATCA provides more flexibility for certain U.S.-connected entities.

Start-up entities qualify if they are less than 24 months old and are investing in a business other than a Financial Institution, a rule that is consistent across both regimes. Similarly, entities in liquidation or those undergoing reorganisation with the intent to operate a non-financial business meet the definition under both CRS and FATCA.

Treasury centres are included if they primarily provide financing or hedging to related non-financial group entities and not to unrelated parties, which is similarly defined under CRS and FATCA. Non-profit entities are eligible if they operate exclusively for religious, charitable, scientific, cultural, or educational purposes, are tax-exempt, and prohibit profit distribution to private individuals. FATCA allows additional flexibility for U.S. Territory NFFEs and specific classifications.

It is important to note that certain entities, such as U.S. Territory NFFEs, may qualify as Active NFFEs under FATCA but not as Active NFEs under CRS. Entities must assess their classification under both regimes to ensure compliance.

“Control” refers to the ability to exercise control over an Entity, generally determined by the natural person(s) who ultimately hold a controlling ownership interest. This is typically based on a specified percentage (e.g., 25%) of ownership in the Entity.

“Controlling Person(s)” refers to the natural person(s) who exercise control over an entity. For Passive NFEs under CRS or Passive NFFEs under FATCA, Financial Institutions must identify whether the Controlling Persons are Reportable Persons. This aligns with the definition of “beneficial owner” in Recommendation 10 of the FATF Recommendations (2012).

For legal arrangements other than trusts, Controlling Persons are individuals in equivalent or similar positions with ultimate control. For trusts, the Controlling Persons include the settlor(s), trustee(s), protector(s) (if any), beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising effective control, including through ownership chains. Under CRS, settlor(s), trustee(s), protector(s) (if any), and beneficiary(ies) are always considered Controlling Persons, even if they do not exercise control. If the settlor is an entity, Financial Institutions must also identify and report the Controlling Persons of that entity as Controlling Persons of the trust.

If a natural person cannot be identified as the Controlling Person, Financial Institutions must report the senior managing official of the entity, as they are deemed to be the Controlling Person in the absence of another identified individual.

Under FATCA, Controlling Persons are less explicitly defined, focusing instead on substantial U.S. owners (those with more than 10% ownership in a Passive NFFE) who must be reported where required.

“Custodial Institution” means any Entity that holds, as a substantial portion of its business, Financial Assets for the account of others. This is where the Entity’s gross income attributable to the holding of Financial Assets and related financial services equals or exceeds 20% of the Entity’s gross income during the shorter of: (i) the three-year period that ends on 31 December (or the final day of a non-calendar year accounting period) prior to the year in which the determination is being made; or (ii) the period during which the Entity has been in existence.

“Depository Institution” means any Entity that accepts deposits in the ordinary course of a banking or similar business.

“Entity” means a legal person or a legal arrangement, such as a corporation, organisation, partnership, trust or foundation. This term covers any person other than an individual (i.e. a natural person).

“Financial account” refers to any account maintained by a Financial Institution, including deposit accounts, custodial accounts, and certain insurance and investment accounts. These are the accounts that are subject to reporting requirements if they are held by Reportable Persons or entities. The definition includes both individual and entity accounts.

“Financial Institution” means a “Custodial Institution”, a “Depository Institution”, an “Investment Entity”, or a “Specified Insurance Company”. Please see the relevant domestic guidance and the CRS for further classification definitions that apply to Financial Institutions.

“Investment Entity” includes two types of entities. The first type is an entity that primarily conducts, as a business, one or more of the following activities or operations for or on behalf of a customer: trading in money market instruments (such as cheques, bills, certificates of deposit, derivatives, etc.), foreign exchange, exchange, interest rate and index instruments, transferable securities, or commodity futures trading; individual and collective portfolio management; or otherwise investing, administering, or managing financial assets or money on behalf of others. However, rendering non-binding investment advice to a customer is not considered part of these activities.

The second type of “Investment Entity” is an entity whose gross income is primarily attributable to investing, reinvesting, or trading in financial assets, where the entity is managed by another entity that is a Depository Institution, a Custodial Institution, a Specified Insurance Company, or the first type of Investment Entity. This structure is commonly referred to as a “Managed Investment Entity.”

“Investment Entity located in a Non-Participating Jurisdiction and managed by another Financial Institution” is any entity that (i) is managed by a Financial Institution and (ii) is located in a jurisdiction that is not a Participating Jurisdiction. Such entities are typically classified as Passive Non-Financial Entities (NFEs) under CRS and Passive NFFEs under FATCA. Their controlling persons may need to be reported depending on the jurisdiction and the specific reporting requirements under both FATCA and CRS.

“Investment Entity managed by another Financial Institution” refers to an entity whose management is provided by another entity that performs, either directly or through a service provider, any of the activities or operations listed in the definition of “Investment Entity.” An entity is considered to be managed by another entity if the managing entity has discretionary authority over the assets of the managed entity, either in whole or in part. If the management of the entity involves a mix of Financial Institutions, NFEs, or individuals, the entity is considered managed by a Financial Institution (such as a Depository Institution, Custodial Institution, Specified Insurance Company, or another type of Investment Entity) if any of the managing entities is one of these Financial Institutions. Under FATCA, such entities are often classified as Passive NFFEs, and their controlling persons may need to be reported.

“Non-Participating jurisdiction” under FATCA is a jurisdiction that has not agreed to comply with FATCA reporting requirements or enter into an intergovernmental agreement with the U.S. As a result, financial institutions in these jurisdictions may face withholding taxes on U.S. source payments.

Under CRS, a Non-Participating Jurisdiction is one that has not signed the Multilateral Competent Authority Agreement or failed to implement the Common Reporting Standard. Financial institutions in such jurisdictions are not required to exchange financial account information with other participating jurisdictions.

“Passive NFE” under CRS means any NFE that is not an Active NFE and includes an Investment Entity located in a Non-Participating Jurisdiction and managed by another Financial Institution.

“Passive NFFE” under FATCA refers to any NFFE that does not qualify as an Active NFFE. This includes entities where less than 50% of their gross income is active income and they are primarily engaged in holding passive assets or activities unrelated to active business operations.

One key distinction between the two is that under FATCA, certain U.S. Territory NFFEs may qualify as Active NFFEs, but not as Active NFEs under the CRS. Additionally, FATCA allows for more flexibility in the classification of certain entities, especially those with U.S. connections, compared to the CRS, which applies more standardised criteria across all participating jurisdictions.

“Related Entity” An Entity is a “Related Entity” of another Entity if either Entity controls the other Entity, or the two Entities are under common control. For this purpose, control includes direct or indirect ownership of more than 50% of the vote and value in an Entity.

“Reportable Account” refers to an account held by one or more Reportable Persons, or if it is held by a Passive NFE or Passive NFFE with one or more Controlling Persons who are Reportable Persons. This means the account may be subject to reporting if the account holder is a Reportable Person, or if the Controlling Persons of a Passive NFE or Passive NFFE are Reportable Persons as defined under these regulations.

“Reportable Person” refers to an individual or entity that is tax resident in a reportable jurisdiction according to the jurisdiction’s tax laws. However, certain entities are excluded from this definition. These exclusions include publicly traded corporations, related entities of publicly traded corporations, governmental entities, international organizations, central banks, and financial institutions (except for certain investment entities under CRS that are treated as Passive NFEs, and certain Passive NFFEs under FATCA that are also treated as Passive NFE equivalents).

A Reportable Jurisdiction Person is often referenced and generally refers to the same concept as a Reportable Person but without the exclusions. It includes any individual or entity that is tax resident in a reportable jurisdiction, including those excluded from being a Reportable Person under the above criteria. Additionally, Passive NFEs under CRS or Passive NFFEs under FATCA are considered Reportable Persons if they have Controlling Persons who are tax resident in a reportable jurisdiction. In such cases, the Controlling Persons of these Passive NFEs or Passive NFFEs may also need to be reported, depending on the jurisdiction and the applicable reporting requirements.

“Reporting Financial Institution” refers to any financial institution that is required to report information about its financial accounts under FATCA or CRS regulations. These include entities such as Custodial Institutions, Depository Institutions, Investment Entities, and Specified Insurance Companies, which must identify and report on accounts held by reportable persons.

On the other hand, a Non-Reporting Financial Institution is any financial institution that is exempt from these reporting requirements. This category includes a Governmental Entity, International Organisation, or Central Bank, except when the payment derives from an obligation related to commercial financial activities conducted by Specified Insurance Companies, Custodial Institutions, or Depository Institutions. It also includes Broad Participation Retirement Funds, Narrow Participation Retirement Funds, Pension Funds of Governmental Entities, International Organisations, or Central Banks, and Qualified Credit Card Issuers. Additionally, it encompasses Exempt Collective Investment Vehicles and Trustee-Documented Trusts, where the trustee is a Reporting Financial Institution and reports all required information on reportable accounts. Lastly, any other entity classified as a Non-Reporting Financial Institution under a country’s domestic law also falls under this category.

“Specified Insurance Company” is an insurance company (or its holding company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract. Specifically, it is an entity engaged in the issuance or management of such financial products. These contracts involve life insurance policies that accumulate cash value or products that provide a series of payments over time.

“Tax resident” generally means when an entity or individual is liable to pay tax due to factors such as domicile, residence, place of management, or incorporation for entities, or similar criteria for individuals. This tax obligation must not be based solely on income from sources within the jurisdiction.

For individuals, tax residence is typically determined by factors such as where they reside for a significant portion of the year, where their primary home is located, or other personal connections to the jurisdiction. For entities like partnerships, limited liability partnerships, or similar arrangements with no fixed tax residence, the entity will be considered tax resident in the jurisdiction where its place of effective management is located.

In the case of dual-resident individuals or entities, the tiebreaker rules in applicable tax treaties can be used to resolve conflicts over tax residence.

“TIN” is referenced in the CDD forms and means Tax Identification refers to a unique combination of letters or numbers assigned by a jurisdiction to an individual or entity to identify them for tax administration purposes. Some jurisdictions do not issue a TIN but instead use other high-integrity identifiers, referred to as functional equivalents. These functional equivalents typically serve the same purpose in the tax system. For entities, examples of functional equivalents include a business or company registration number. Further details on acceptable TINs can be found on the OECD website.