New CRS trust legislation to help combat overseas tax evasion
The OECD (Organisation for Economic Cooperation and Development) have established that new rules apply concerning trusts in order to comply with the Common Reporting Standard’s regime of automatic information exchange of information between member jurisdictions.
The new rule confirms that going forward, the Protector of any trust which is operating as a financial institution must always have the role of Accountholder as well, and therefore bound by the CRS.
The rule applies regardless of whether the Protector has operational control over the trust, says the OECD in an in depth Q & A document which covered all the technical aspects of the new system.
This goes even further than the corresponding trust provisions of the European Union Fourth Money Laundering Directive, which only subject trust protectors to disclosure if they 'exercise effective control over the trust'.
From next year, the CRS will be commonly used by government officials to exchange information other financial institutions and any bank accounts opened within their jurisdiction, for the detection and punishment for overseas tax evasion.
The Q & A document also talks about how to regulate the status of Beneficiaries of discretionary trusts. It states that a beneficiary who receives a discretionary distribution from the trust in any given fiscal year must be treated as an accountholder of the trust in all following years, except the individual is perpetually omitted from being in receipt of future distributions from the trust.
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