FAQs Archive - Page 5 of 6

Has the BVI allowed RFIs to align the scope of the beneficiaries of a trust treated as Controlling Persons of a trust with the scope of the beneficiaries of a trust treated as a Reportable Person of a trust? If so, is there any process to elect/use this approach?

Section 32A (10) of Mutual Legal Assistance (Tax Matters) Act, Revise Edition 2020 allows Reporting Financial Institutions to align the scope of Beneficiaries as controlling Person with the scope of beneficiaries treated as a reportable persons. If the reporting FI elects this approach, Section 32A (11) and (12) of the MLA indicates that the Reporting

admin2024-03-08T08:38:12-04:00February 28th, 2016|INVESTMENT ENTITIES|

How about where the FI cannot tell when the Trustor/Settlor passes away. Is it best practice to document each discretionary beneficiary, as it’s very uncommon for an account holder to divulge such information that would require additional documentation?

The FI will have to continue to name the Trustor/Settlor as the account holder until they have information to demonstrate that the Trustor/Settlor has died. The discretionary beneficiaries cannot be listed until they become account holders (i.e. until they have received the distribution). The RFI must use reasonable efforts to ensure that the information they

admin2024-03-08T08:40:12-04:00February 28th, 2016|Design Process|

For an investment entity, is it required to include in the reporting the interest and dividends? Isnt this applicable only to Custodian Institution?

An investment entity only has to report on a Financial Account and according to the standard an Investment Entity’s Financial Account is any equity or debt interest in the Financial Institution. Interest and Dividends are to be reported in case of a Custodial Account and interest paid is to be reported in the case of

admin2024-03-08T08:41:37-04:00February 28th, 2016|INVESTMENT ENTITIES|

BVI Law does not require that you know the value of the Trust property? What if you do not have the value of the Trust property? If a trust invests, we would know the amount being invested. How is this treated?

The standard does not base the calculation or value of a Financial Account (Trust Property) on the local laws of the BVI. The Standard at Section 1. Subparagraph A(4) – Account balance or value states that “in the case of an equity or debt interest in a Financial Institution, the balance or value of an

admin2024-03-08T08:42:24-04:00February 28th, 2016|INVESTMENT ENTITIES|

The OECD Implementation Handbook states that if the account holder of a trust is itself an entity the account holder must be “looked through” to identify the Controlling Person(s) of that entity. But Controlling Persons can only be reported in relation to a Passive NFE, and I have never seen a Self-Certification form requesting Active NFEs and Financial Institutions to declare its Controlling Person(s). If a Trust is required to report Controlling Person(s) of an Active NFE or a Financial Institution that is a charitable entity for example, there will most likely not be a Controlling Person through ownership and they would therefore have to report a Controlling Person through other means or a Senior Managing Official. Such a person is not entitles to any assets of the trust and is not an equity interest holder in any way and did not receive benefit from the trust, yet on the report it will look like this person received benefit and is entitled to the total value of the trust property (because they cannot be reported as Controlling Persons as this is only available for Passive NFEs on the AEOI reporting portal). The “Controlling Person” would have to be reported as the account holder themselves not being linked to the entity actually receiving the distribution. This seems to contradict the intention of the regulator and could potentially cause problems for the “Controlling Person” when filing their tax with the relevant tax authority as the CRS report filed by the trust to the tax authority will indicate that the “Controlling Person” is actually an account holder of the trust and did received benefit from a trust but they did not.

In Section V and Section VI of the CRS Commentary the following must be noted: Section V. C. Entity Accounts with respect to which reporting is required. With respect to Preexisting Entity Accounts described in paragraph B, only accounts that are held by one or more Entities that are Reportable Persons, or by Passive NFEs

admin2024-03-08T10:09:10-04:00February 28th, 2016|INVESTMENT ENTITIES|

Is it possible that a BVI investment entity, which only has a Trust as its shareholders, agrees for all due diligence and reporting to be done by the Trustees?

The BVI Investment Entity can make that decision. What should be noted is under BVI law the RFI remains responsible for any failure identified if any with the due diligence and reporting done by the Trustee.

admin2024-03-08T08:51:11-04:00February 28th, 2016|INVESTMENT ENTITIES|

In a trust structure are Appointers, Enforcers and successors in a reportable jurisdiction be classified and reported?

If these persons exercise ultimate effective control over the trust, they must always be treated as controlling persons of a trust or an account holder and as such must be reported. If they do not, then they are not account holders or controlling persons.

admin2024-03-08T08:52:18-04:00February 28th, 2016|INVESTMENT ENTITIES|

If we have a discretionary irrevocable trust on which no beneficiary had a distribution. The settlor that was previously reported passed away. There were still no distribution to beneficiaries. Who should be reported?

The account will not be reported since it has no account holder. As stated in our presentation the only account holder (settlor) has passed away, therefore, for the moment the RFI will treat the account as an excluded account. When circumstances change (i.e. the distributions have been made to the beneficiaries), then the account will

admin2024-03-08T08:53:11-04:00February 28th, 2016|INVESTMENT ENTITIES|

Investment entity: the company has a discretionary account with private bank but this account is closed and fund in account is withdrawn. How to report this after the account is closed ? Still classify as investment entity or no longer meet as FI and out of scope passive NFE.

The Closure of any financial account that is held by a reportable person must be reported. If the closure of the account and withdrawal of the fund means that the entity no longer meets the definition of an investment then, then the RFI must also make an application for deregistration to the BVI with the

admin2024-03-08T08:54:52-04:00February 28th, 2016|INVESTMENT ENTITIES|

With regards to the Relationship manager, In the event of an Investment Entity Type 2 whereby the financial account is the equity interest, Who will be considered as the Relationship manager? The Director of the company?

The relationship manager only becomes relevant where the account is a high value account. A relationship manager is an officer or other employee of an FFI who is assigned responsibility for specific account holders on an on-going basis (including as an officer or employee that is a member of an FFI’s private banking department), advises

admin2024-03-08T08:56:07-04:00February 28th, 2016|INVESTMENT ENTITIES|

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