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Ne ma (europe) 2015

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These slides are based on the presentation I gave on essential tax guide for custodians at network management conference (NeMa) in Greece to 460+ delegates.

I will be posting a followup blog regarding my time there and highlights from the discussions that where addressed.

Keep an eye on the blog posts to follow on the link below.
http://withholding-tax.info/blog/

Enjoy.

Published in: Economy & Finance
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Ne ma (europe) 2015

  1. 1. Essential Tax Guide for Custodians NeMa (Europe) June 2015 @Ross KMcGill Tax Relief, Recovery & Reporting Worldwide
  2. 2.  Relief & Recovery Update  The tax landscape – tectonic changes  Reporting Update  QI  FATCA & GATCA
  3. 3. 5,700 Permutations of tax treaties with increasing disclosure and claim info requirements. <10% Claims actually made. Low industry response 30% Statutory Withholding Tax Rates trending upwards while treaty rates are stagnant 505 Tax reporting becoming more commonly associated with claims processing (IGAs + AEOI) Partnering ‘Financial institutions cannot meet these challenges alone’ WFC2015 5.8m >100% Rise in tax relief and standard reclaims at GlobeTax in last twelve months $1.2Tn Tax entitlements extant at any one time 04 0506 07 0302 01 7 Things to Know about withholding tax
  4. 4. Issuers Limited interest in automation Holder disclosure & reporting increasing Increasing need to finance growth Depositaries & Depositories Investment in new technologies (T2S) Looking for value added services Custodians & Brokers Legacy systems, regulatory overload, Bundled fees, omnibus and nominee accts, complex network management, manual tax processing, variable scale and scope of offeringAsset Managers, CIVs & Private Banks Increasing pressure for performance Increased compliance spend for no benefit Investors Transparency fuelling pressure for claims. Low yields fuelling pressure for claims Fiduciary duties becoming relevant The Pyramid of Tax Intermediation Why network management needs more engagement
  5. 5. Not even aware Refusal to disclose ownership Omnibus or nominee accounts Custodian offers limited tax services Prime Brokers do not offer tax services Standard refund conditions not met Relief at Source or QR not available or conditions not met Total number of investors entitled to tax relief 100% All entitled Process limitations Proving criteria Business model Resources Chain of intermediation Perception Awareness Performance Why is it so low?
  6. 6. 811 USERS 4,606 14.9 m 41Bn EVENTS CLAIMS SHARES 69% NO DOCS 19 MARKETS Electronic Submission Portal Source: ESP Reports 2008-2015
  7. 7. Reporting Update
  8. 8. QI vs NQI
  9. 9. W-8 VALIDATION AND RELIEF AT SOURCE – Y OR N? OMNI, RATE POOL OR CLIENT SEGREGATED ACCOUNTS? PRIMARY BACKUP WITHHOLDING (28%) ON UNDOCUMENTED US ACCOUNTS? CONNECTION TO FATCA WITHHOLDING? application withholding FATCA OR QI REPORTING OF US ACOUNTS? POOLED FOR DIRECTS BUT NOT FOR INDIRECTS? ADOPTION OF REPORTING FOR DISCLOSED CUSTOMERS OF FI CLIENTS? RESPONSIBLE OFFICER & PERSONAL LIABILITY? PERIODIC REVIEWS AND CERTIFICATIONS OF ADEQUATE CONTROLS? NEW: ADEQUATE RESOURCES AND ADEQUATE TRAINING? PRIMARY WITHHOLDING QI OR NON-WITHHOLDING QI? PRIMARY BACKUP WITHHOLDING (28%) ON US? MAP OF US EXPOSURE AND KYC? THINGS oversightreporting 28% W-8 4TO TELL YOUR CUSTOMERS ABOUT QI
  10. 10. Actual GIINs 0 50000 100000 150000 200000
  11. 11. GIINs vs eligible population 0 200000 400000 600000 800000 1000000 1200000
  12. 12. Luxembourg 7,766 (5%) Switzerland 4,877 (3%) France 4,473 (3%) Germany 3,967 (2%) Brazil 5,265 (3%) Cayman 29,630 (18%) UK 23,019 (14%) IRS GIINs issued May 2015 (includes branches) 56% of all GIINs in just 10 markets Netherlands 3,336 (2%) Guernsey 4,930 (3%)Jersey 4,421 (3%)
  13. 13. No IGAM2 In Substance M1 In Substance M2 SignedM1 Signed IGAs 755 34 (30/6/2014) 9 (30/11/2014) 6 (30/6/2014) 1 (30/11/2014) 139 As at 02/06/2015
  14. 14. IGA Growth 0 20 40 60 80 100 120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 20132012 2014 2015
  15. 15. The Global FATCA Model  AEoI  Bilateral agreements under Art.26 of the OECD Model Tax Convention  Multilateral Convention on Mutual Assistance in Tax Matters (2011)  Requires changes in domestic law  Competent Authority Agreements (CAA) provide the link between CRS and legal basis of exchange  CRS  Definitions of account types  Rules for due diligence:  Pre-existing individual and new individual account types  Pre-existing entity and new entity account types  Scope of account holders subject to reporting  Scope of financial institutions required to report  Non Compliance enforced under domestic laws  Data transfer via domestic regulator  Transfer in xml format
  16. 16. Competent Authority Agreements DocumentationReporting Agreement P-FFI Documentation [W-8, W-9, US Indicia] FATCA Withholding [30% Penalty] Reporting [US account holders, Recalcitrants & NP-FFIs] Control & Oversight [ROs, Periodic Review, Certification] GATCA AEoI + CRS FATCA FFIs & NFFEs Reporting US ‘Foreign’ Assets
  17. 17. NoneCommittedSigned AEoI 4652 153
  18. 18. Contact

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