FACTA and CRS

In the current environment which demands transparency, and the increased focus on all Financial Institutions to know their clients, regular checks are required to ensure Financial Institutions adhere to the complex regulatory regulations.

The Foreign Account Tax Compliance Act (FATCA) was passed as part of the Hiring Incentives to Restore Employment (HIRE) Act. This introduced many regulatory requirements for all Financial Institutions to report financial accounts held by US account holders.

Furthermore, the OECD Common Reporting Standard (CRS) adds to these regulatory requirements. CRS came into operation in Ireland in 2016 whereby Irish Financial Institutions are required to report non-resident account holders to Revenue on an annual basis.

The FATCA and CRS rules impact all financial service providers in Ireland. Under AEoI a Reporting Financial Institution must review details of account holders and report any non-resident accounts to the tax authorities.

How BDO can help

• FATCA/CRS Classification
• FATCA Registration with the Internal Revenue Services (IRS)
• Review of FATCA/CRS sections of legal documentation – Prospectus, Trust Deeds, Self-certification forms
• Creation/Review of FATCA/CRS procedures
• FATCA/CRS annual filing
• Assistance with Revenue Profile Interview
• GAP Analysis - we can assist with a gap analysis and identify required changes to be implemented. This includes a remediation plan and clear actions for any gaps identified.

Qualified Intermediary (QI) Services

A Qualified Intermediary is a foreign financial institution such as a bank, broker or asset manager, which pays US source income to its customers and has signed a Qualified Intermediary Agreement (QIA) with the US tax authorities, the IRS.

QIs are subject to a set of responsibilities, including:

• Identification of customers
• Withholding
• Annual Reporting

The U.S. Qualified Intermediary (QI) regime was introduced by the IRS and became effective as from 1 January 2001. On 27 June 2014, the IRS released the Rev. Proc. 2014-39 with the revised QI withholding agreement to reflect the new FATCA Regime.

How BDO can help

• Drafting and review of the QI sections of legal documentation – Prospectus, Subscription forms
• Creation/Review of QI procedures
• Assistance with/review of QI Annual Report
• Review of documentation received from clients to ensure appropriate withholding tax rates are applied
• Performing QI health check of the business including processes and procedures
• GAP Analysis - we can assist with a gap analysis and identify required changes to be implemented. This includes a remediation plan and clear actions for any gaps identified.

It is important for companies seeking to grow by acquisition to make sure they look at the full range of issues in any contemplated transaction.

Potential tax liabilities can arise across a whole range of taxes from corporation tax, capital gains tax, stamp duty, VAT, withholding taxes and PAYE/PRSI.

Where a sole trade business goes into partnership, takes over another business or is being sold we will eansure that the shareholders / partners receive the necessary tax advice in particular in relation to maximising the potential returns available and limiting as far as possible the tax exposures arising from entering into such transactions.

With our cross functional team we can ensure that clients get access to expert advice. Our tax team works closely with our corporate finance and consulting teams, advising on merger and acquisition opportunities and conducting necessary due diligence.

The tax areas that we at BDO can assist in include the following: 

• Structuring the deal in a most tax efficient manner which may include possible restructuring before the sale.
• Acquisition and vendor due diligence reviews identifying material tax exposures and making recommendations.
• Assistance with the legal agreements in relation to tax matters.
• Advising on tax efficient remuneration for departing executives / employees of the target company to include incentive schemes for staff retention.

Ireland’s tax regime has many features which has made Ireland a key part of the overall group structure of many large multinational groups. Overseas companies continue to invest in Ireland as a European base in relation to various industries not least for its corporate tax rate of 12.5% but also in relation to Ireland’s access to an extensive treaty network, tax relief for R&D, capital allowances on intellectual property, together with participation exemption.

A key feature of the Irish corporate tax regime is the 12.5% corporation tax rate which applies to all trading income (with a small number of exceptions). This 12.5% rate applies to a wide range of activities including Intellectual Property (“IP”) development activities. Also, Ireland has become a location of choice for managing, developing and exploiting IP assets.

With the 12.5% corporate tax rate seen as a ‘global brand’ for Ireland we can advise companies that are investing into Ireland.

Trading in other jurisdictions outside of Ireland can be daunting not least dealing with the tax issues.

At BDO we can advise on an appropriate tax structure and will assist in order that local taxes payable are minimised.

With trading outside Ireland we can liaise with BDO tax specialists in overseas countries to identify planning opportunities which will minimise global tax together with tax and social security issues for international assignees, the repatriation of the profits and planning for double tax relief.

Our fully managed iXBRL service is designed to provide you with the confidence that your iXBRL tagged accounts will comply with Revenue’s online filing requirements.

Our iXBRL service will prepare iXBRL formatted financial statements from the original source document. Our specialist team will take your accounts in soft copy and then tag and rigorously quality check them ahead of Revenue submission.

Our iXBRL service will require minimal time commitments from your staff. The only requirement of your staff will be to discuss/approve potentially contentious iXBRL tagging decisions and give final sign off.

Our iXBRL specialist team will support your BDO engagement team with the expertise to resolve potentially contentious tagging decisions to ensure that accounts meet iXBRL specification guidelines.

When the iXBRL tagging and quality reviews are complete we will give you:

The completed iXBRL file in soft copy (html) format for submission with the Corporation Tax Return. 

If required, we will provide you with a schedule of the tags applied to each set of accounts, plus any judgements we have applied to ambiguous or contentious items within the accounts for ease of review.

Often the need for a reorganisation is as a result of change of ownership or part of a business is changed or due simply a need to ‘streamline’ or a tidy up a group structure.

Reconstructions are often implemented to facilitate the following:

• The introduction of new investors
• The sale of specific business carried on by the company or by the group
• The partition of the company/group between two or more shareholders
• The acquisition of another company or part of another company in exchange for shares
• Extracting value out of the company for shareholders.

With all transactions which involve the transferring of a business or shares there are a number of tax implications such as capital gains tax, stamp duty, corporation tax, VAT and income tax together with Company Law issues.

With tax planning such transactions may be carried out with a minimum of tax cost.

At BDO we can help to structure your company/group tax affairs in an efficient manner helping you to minimise the tax cost if you are contemplating any of the above.