CRS Updates – December 2017

OECD Seeking Public Comments Regarding Mandatory Disclosure Model

On 11 December 2017, the Organisation for Economic Co-operation and Development (“OECD”) published a press release containing a mandatory disclosure consultation document which is open for comments from interested parties and stakeholders until 15 January 2018. Through the consultation document, the OECD is seeking input for a model requiring mandatory disclosure rules, and which ultimately intends to target promoters and service providers with a material involvement in the design, marketing or implementation of Common Reporting Standard (“CRS”) avoidance arrangements and offshore structures.

While tax transparency has significantly improved over the past decade, issues remain in regards to the widespread use of offshore structures to circumvent CRS reporting requirements, as highlighted by the release of both the “Panama” and “Paradise” papers. With the OECD’s proposed model, the rules would require intermediaries to disclose information on potential schemes to their local tax authority. Said information would then be made available to other tax authorities in accordance with the applicable information exchange agreement.

The OECD is now seeking public input from interested parties and stakeholders via the consultation document. The deadline for comments is 15 January 2018.

Please refer to the link for access to the OECD’s press release and consultation document.

Swiss CRS Update: Additional Agreements Approved by Chambers of Parliament

On 6 December 2017, the Swiss Parliament announced their approval of 41 additional partner jurisdictions starting on 1 January 2018 for the Automatic Exchange of Information (“AEOI”) under the CRS. After an initial rejection from one chamber of parliament, Saudi Arabia and New Zealand were also approved and are part of the 41 new partner jurisdictions. In addition to this announcement, the Swiss Parliament outlined strict and detailed requirement criteria for existing and potential Swiss partner jurisdictions. As part of this, the Swiss Federal Council will evaluate whether Swiss partner jurisdictions are compliant with the OECD CRS before Switzerland will exchange any information or data with them. The results of said testing will be communicated to the chambers of parliament.

Please refer to the link for additional details regarding the Swiss Parliament and Federal Council’s AEOI-related decisions.

Additionally, please refer to the link for a list of Switzerland’s current AEOI partner jurisdictions.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

871(m) Updates – Fall 2017

Draft 1120-F Instructions include QDD Tax Liability Information

For 2017, Form 1120-F is the form to be used by Qualified Derivatives Dealers (“QDD”) for purposes of reporting their QDD Tax Liability.  According to the draft instructions for the Form 1120-F published by the IRS on 10 October 2017, the QDD tax liability will be reported by attaching a statement to the Form 1120-F.

This statement is required to contain a table with columns for the gross amount, the rate of tax and the tax liability and must contain the following rows:

  • total section 871(m) amount;
  • total dividends received in the QDD’s equity derivatives dealer capacity;
  • total QDD tax liability pursuant to section 3.09(A) of the Qualified Intermediary (“QI”) Agreement (Revenue Procedure 2017-15);
  • total QDD tax liability pursuant to section 3.09(B) of the QI agreement; and
  • total QDD tax liability pursuant to section 3.09(C) of the QI agreement.

Second Report to the President on Executive Order 13789

On 2 October 2017, Secretary of the Treasury, Steven T. Mnuchin, published his second report to the President on identifying and reducing tax regulatory burdens.  The content of the report is focused on providing recommended actions to eliminate or mitigate the burdens imposed on taxpayers by eight regulations that the Department of the Treasury identified for review under Executive Order 13789.

Although the regulations under Section 871(m) have not been previously identified for review, the Secretary notes within this report that the Treasury is continuing to analyze all recently issued significant regulations and is considering possible reforms of several recent regulations not identified in the first report.  Specifically, the Secretary mentions that the regulations published under Section 871(m) as well as the regulations published under the Foreign Account Tax Compliance Act are included within this review.

We will continue to keep you updated as we learn more on these topics.

Should you have any further questions, please contact one of the following persons:

Christoph Schaerer
+41 58 792 4282

Melanie Taosuwan
+41 58 792 4249

Thomas Plank
+41 58 792 4584

Swiss Banking Association Publishes Circular Regarding W-8 Form Translations, the FFI Agreement Extension, and FATCA Qualification Board Evaluations

On 5 October 2017, the Swiss Banking Association (“SBA”) published Circular 7939, which covers the translations of IRS Forms W-8BEN and W-8BEN-E, the extension of the FFI Agreement renewal, and several evaluations made by the FATCA Qualification Board.

With this Circular, the SBA has provided Swiss Financial Institutions (“FIs”) with German, French, and Italian translations of the current and updated IRS Forms W-8BEN and W-8BEN-E. FIs may use the translated IRS Forms effective immediately. Additionally, the Circular includes a reminder that the new IRS Form W-8IMY must be implemented and used by 1 January 2018, while all other new W-8 Forms must be implemented and used by 1 February 2018. Please refer to the link to find the German, French, and Italian translations of the IRS Forms W-8BEN and W-8BEN-E in PDF format under Circular 7939.

Circular 7939 also discusses the IRS-granted extension for FIs that have not renewed their FFI Agreement. On 1 August 2017, the IRS published a FAQ clarifying that FIs have been granted an extension until 24 October 2017 to renew their FFI Agreement. Please refer to the link for access to the FAQ published by the IRS (the FFI Agreement renewal topic is covered in question 12 under “Registrations Update”).

Lastly, Circular 7939 discusses various evaluations made by the FATCA Qualification Board, including evaluations made regarding FATCA self-certifications and plausibilization, deaths of US person(s) controlling a passive NFFE, and identifying entitled third party beneficiaries of cash value and annuity insurance contracts. Please refer to the following links for additional details to the evaluations made by the FATCA Qualification Board:


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

Swiss Banking Association Publishes New Circulars Regarding W-8 Forms and Section 871(m)

Swiss Banking Association Publishes Factsheet for Limitation on Benefits Provisions on the Updated IRS Form W-8BEN-E

On 22 September 2017, the Swiss Banking Association (“SBA”) published a factsheet for the limitation on benefits (“LOB”) provisions included on the updated IRS Form W-8BEN-E according to the revised Qualified Intermediary Agreement (in force as of 1 January 2017). The factsheet will provide Financial Institutions (“FIs”) with generic and simplified definitions of the various LOB categories listed on the W-8BEN-E and Treaty Statements. While the factsheet does not constitute tax advice, FIs may use it as a guidance for their entity clients when they complete the LOB section of the W-8BEN-E or Treaty Statement. Furthermore, the factsheet covers the additional categories of the Swiss-U.S. income tax treaty.

The factsheet is available in German, French, Italian, and English. It can be found on the SBA’s website published as Circular 7936. Please refer to the link for the factsheet in PDF format.

Swiss Banking Association Publishes Circular Regarding the Classification of Dividend-Equivalent Payments According to Section 871(m)

On 26 September 2017, the Swiss Banking Association (“SBA”) published Circular 7937 in order to provide clarification regarding the classification of dividend-equivalent payments relating to Section 871(m). Under the Qualified Intermediary Agreement, FIs must withhold tax on US-source income to non-US recipients (withholding rates vary depending on which Double Tax Treaty rate applies), and this includes certain dividend-equivalent payments under Section 871(m).

The SBA had several discussions with the State Secretariat for International Financial Matters and the Swiss Federal Tax Administration (“FTA”), which resulted with the FTA releasing a ruling describing the classification of payments within the scope of 871(m). Based on this, the Circular covers the classification of dividend-equivalent payments according to Section 871(m) as applicable under the Switzerland-US Double Tax Treaty. Additionally, the Circular discusses how withholding on US-source income applies to this classification of dividend-equivalent payments.

Please refer to the link for access to the SBA’s Circular 7937.


Bruno Hollenstein
Partner, Operational Tax
+41 58 792 43 72

IRS defers effective date for section 871(m) regulations

On 4 August 2017, the Internal Revenue Service (IRS) and the US Department of the Treasury published Notice 2017-42 which defers the effective date for portions of the regulations under Section 871(m) of the Internal Revenue Code for another year. The Notice extends the relief provisions currently in effect under Notice 2016-76, Rev. Proc. 2017-15, and the 2017 Section 871(m) regulations. The Notice provides:

  • that transactions in-scope based on their delta through the end of 2018 are limited to ‘delta one’ transactions; as a result, transactions with a delta less than 1 but greater that .8 (delta .80 transactions) will not be in scope until 1 January 2019,
  • that the simplified combination rule will continue to apply for withholding agents until 31 December 2018,
  • for the deferral of withholding on actual and deemed dividends paid to qualified derivatives dealers (QDDs) until 1 January 2019 and
  • for the extension of the good faith periods for the implementation of Section 871(m).

PwC Observation: The deferral provided by Notice 2017-42 has been anticipated by market participants who have been struggling to implement the guidance issued at the end of 2016 and the beginning of 2017. In particular, the changes to the Qualified Intermediary (QI) Agreement applicable to QDDs have raised significant questions for issuers of financial products linked to US equities in the international financial markets.

For more information, please refer to our

PwC Tax Insights Publication


Should you have any further questions, please contact one of the following persons:

Christoph Schaerer
+41 58 792 4282

Melanie Taosuwan
+41 58 792 4249

Thomas Plank
+41 58 792 4584

FFIs should renew their FATCA agreements by 31 July 2017

IRS reminds FFIs to renew their FATCA agreements on the FFI Registration System

On 7 June 2017, the U.S. Internal Revenue Service (“IRS”) reminded foreign financial institutions (“FFIs”) that the FATCA FFI Registration system has been updated to include the ability for FFIs to renew their agreement with the IRS.

FFIs that are required to renew their FFI Agreements should resubmit their registration applications by 31 July 2017, in order to be treated as having the FFI Agreements in effect as of 1 January 2017.

In addition, FIs around the world have been receiving messages from the IRS FATCA Registration System reminding them to update their agreements, if required. To make this process simpler, a “Renew FFI Agreement” now appears on the account home page after logging in.

For more information regarding which FFI’s are required to register, please see Table 17 on page 85 in Publication 5118.

IRS releases revised FATCA Online Registration User Guide

In June 2017, the U.S. Internal Revenue Service (“IRS”) released a revised Publication 5118 Foreign Account Tax Compliance Act Online Registration User Guide. Under the “What’s New” section, the IRS has provided the following information:

  • The FATCA Online Registration System now allows FIs to renew their foreign financial institution (FFI) agreement with the IRS. Certain financial institutions (FIs) must complete the renewal by July 31, 2017. All registered entities should use the system to determine whether they need to renew their agreement. (Table 17: Self Determination for Renewal of FFI Agreement can assist FIs with their determination.)
  • The FATCA Online Registration System adds account home page information regarding Renewal of FFI Agreement information including updates to account information such as the renewal due date and submitted date.
  • The IRS has discontinued the limited status for new or renewing FI applicants. Existing branches will no longer be marked as being in limited status.
  • Additional updates include:
    • A warning banner added to the login steps.
    • The number of attempts allowed to login to the registration system is reduced from five to three attempts.

CRS Updates May 2017

Second Edition of the OECD Standard for AEOI Released

On 27 March, 2017, the OECD published the second edition of the standard for Automatic Exchange of Financial Account Information in Tax Matters (“AEOI”). This newly released edition replaces the first edition of the standard for AEOI from July 2014.

The vast majority of the standard for AEOI remains unchanged relative to the first edition. In the second edition, Annex 3 “Common Reporting User Guide” is updated, as it now contains additional technical guidance on the handling of corrections and cancellations within the CRS XML Schema, including a revised set of correction samples.

Please refer to the following link for access to the second edition of the standard for AEOI:

Facility to Disclose CRS Avoidance Schemes Launched by OECD

On 5 May, 2017, the OECD launched a disclosure facility on the Automatic Exchange Portal allowing parties to share information on potential schemes, products, and/or structures that may be used to circumvent the Common Reporting Standard (“CRS”).

Parties are able to fill out a form through the Automatic Exchange Portal to describe any identified loopholes or schemes that may be used for avoiding the CRS. The form asks for a description of the scheme, information on how actively it is used, and a list of the countries or regions where the scheme is used . The OECD then systematically analyzes the received information on the reported schemes to assess the risk they present to the overall integrity and effectiveness of the CRS. If required, the OECD uses the acquired information to take appropriate courses of action. Parties may fill out the forms on an anonymous basis.


OECD Automatic Exchange Portal’s form


Christoph Schaerer
PwC Schweiz
+41 58 792 4282

QI renewal deadline is fast approaching (31 March) and IRS publishes new FAQs regarding QDD application

QI Renewal Deadline

Qualified Intermediaries (QIs) that wish to renew their QI Agreements with an effective date of 1 January 2017 are reminded that the application for their renewal is due by 31 March 2017.  Renewing by 31 March 2017 will ensure that there is a seamless transition from the old QI agreement to the new 2017 QI Agreement.

The application must be submitted online through the new IRS QI Portal.

For more information about the application process and the use of the portal, please see our PwC Tax Insights publication.

New FAQs regarding QDD application

On 17 March 2017, the IRS published new Frequently Asked Questions (“FAQs”) that provide additional details regarding the completion of the application questions for QIs that wish to apply to be Qualified Derivative Dealers (“QDDs”) for 2017.  These FAQs are published on the FATCA FAQ website under the Qualified Intermediary heading.  There are a total of eleven FAQs (beginning with #10) posted by the IRS that answer a variety of questions regarding the completion of the application for QDD status.

QI’s that wish to be QDDs with an effective date of 1 January 2017 must submit their applications on or before 31 March 2017 through the online QI Portal.

SuisseTax Online Portal Open for AEOI Registration

As of this week, ESTV SuisseTax, the Swiss Federal Tax Administration’s online portal, has opened its AEOI registration function for reporting Swiss Financial Institutions (“FIs”). Reporting Swiss FIs must register by the end of 2017 for an initial AEOI data exchange in 2018.

Please note that a registration for AEOI purposes is only possible via the online portal. Swiss FIs can enter the ESTV SuisseTax portal by referring to the following link:

The Swiss Federal Tax Administration is expecting to provide a data exchange test phase for reporting Swiss FIs in the summer of 2017.

Please refer to the link below for the official media release:

New QI Application Portal

The Internal Revenue Service (IRS) on December 30, 2016 released Rev. Proc. 2017-15, which sets forth the final 2017 qualified intermediary (QI) agreement (2017 QI Agreement). The 2017 QI Agreement provides procedures for QIs (including qualified derivatives dealers (QDDs)) and qualified securities lenders (QSLs)) to comply with their US information reporting and withholding obligations.

Historically, the process for applying for QI status has been a paper process that included the completion of Form 14345, Application for Qualified Intermediary, Withholding Foreign Partnership, or Withholding Foreign Trust, and IRS approval. The IRS currently is implementing an electronic QI application (QI Portal) process. In addition to the actual application, the QI portal has a link to a user guide and a frequently asked questions (FAQ) section as well as links to other resources for portal users.

Similar to systems used to manage foreign financial institution (FFI) agreements, the QI Portal provides users a secure system, a convenient method to upload certain supportive documents, the ability to receive electronic notifications regarding changes to status, renewal reminders, and other updates, and reduces the need to contact the IRS directly in many cases.

For more information about the application process and the use of the portal, please see our PwC Tax Insights publication.