THE COMMON REPORTING STANDARD ("CRS") - SECOND UPDATE (JUNE 2016) FOR OCORIAN CLIENTS

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1 JERSEY BRIEFING June 2016 THE COMMON REPORTING STANDARD ("CRS") - SECOND UPDATE (JUNE 2016) FOR OCORIAN CLIENTS Ocorian previously issued a briefing in October 2015 ("first update") to all its clients and intermediaries regarding the status of CRS for such clients and structures usually administered by Ocorian in Jersey. That briefing included reference to other jurisdictions in which Ocorian operated at that time (e.g. Guernsey, Mauritius, Singapore, UK and Ireland) and since then Ocorian now administers client structures which may be affected by CRS in Cayman and Luxembourg. This second update mainly covers developments in relation to the implementation of CRS affecting clients of Ocorian in Jersey but updates to the implementation of CRS in other jurisdictions will also be given. Relatively few of the countries have yet issued full guidance notes on how they expect CRS reporting to be implemented in WHAT IS CRS? As previously stated, CRS is the result of the drive by G20 nations to develop a global standard for the automatic exchange of financial account information following the approach taken to implement US FATCA. A Financial Institution to be applied in participating jurisdictions (see list in first update) will be required to report certain financial information on relevant clients to its local tax authority also which may in turn exchange that information with any jurisdictions whether a client or the connected parties known to be tax resident. WHICH COUNTRIES ARE NOW SIGNED AND COMMITTED? In our first update on CRS we identified those countries which were then anticipated as signing and being committed to adopt CRS with effect from 1 January 2016 for reporting in Of the 48 countries on that list which were signed and committed with effect from 1 January 2016, for reporting in 2017, Mauritius, Chile and Uruguay now put back their commitment date for reporting to In addition, Cook Islands, Panama and Guyana have now committed to sign but there is no commitment as to their reporting date as yet. At this stage, however, the implementation of CRS reporting is still very much a work in progress with relatively few countries outside Europe and the British Dependent Territories signed and committed for reporting in A full list of countries in each of the categories referred to above is contained in our first update. WHAT IS THE STATUS FOR THOSE COUNTRIES WHICH ARE NOW SIGNED AND COMMITTED FOR REPORTING IN 2017? Relatively few of the countries have yet issued full guidance notes on how they expect CRS reporting to be implemented in However, Jersey, Guernsey and UK (being three of the jurisdictions from which Ocorian operates) have issued guidance notes and this update concentrates mainly on those guidance notes for clients of Ocorian in Jersey. We will be issuing separate updates as soon as there are appropriate guidance notes for the other jurisdictions in which Ocorian operates and which are signed and committed

2 JERSEY BRIEFING 2 The reporting methodology will be exactly the same as for FATCA reporting. for reporting in THE JERSEY GUIDANCE NOTES The Jersey Authorities have issued second edition CRS guidance notes in February 2016 ("The Jersey Guidance Notes") which provide guidance on implementation of CRS as it affects Ocorian clients having structures administered from Jersey. (This includes structures governed by laws other than those of Jersey or companies incorporated in jurisdictions other than Jersey but which are administered from Jersey). These Jersey Guidance Notes have not provided any additional in depth commentary and the Jersey Authorities have thus far taken the approach of aligning their guidance on CRS reporting with the FATCA guidance notes previously issued. This approach means that the work for implementation of CRS reporting in 2017 is expected to be broadly the same as for FATCA reporting, but there is still some uncertainty and we will need to monitor any further guidance which is released in Jersey. Thus there will be a need to review each structure to ensure that there are no variations as to classification under the final Jersey Guidance Notes which will be applicable. This review of the classification of Jersey administered structures is currently ongoing and the outcome of this review will be communicated to clients in respect of their structures during the course of Further verification or self-certification of tax residence and tax payer identification numbers will be sought from affected clients e.g. beneficial owners of companies and settlors or beneficiaries of trusts during the course of It is worth, however, restating the principles under which Ocorian has reviewed and will be implementing CRS guidance under the following three headings: Classification Verification Reporting Reference is made to the first update issued by Ocorian under these three headings. What can now be said at this stage under each heading is as follows: Classification It is anticipated that an exercise to classify structures and entities for CRS reporting will need to be undertaken, similar to the classification for FATCA reporting. There are likely to be changes in respect of sponsored/ sponsoring entity arrangements which do not apply under CRS and thus will affect funds and trusts in particular. Verification As indicated above, we will need to obtain tax payer identification numbers for clients (beneficial owners of companies and settlors and beneficiary of trusts in all countries in respect of which CRS reporting will take place in 2017). We will be in touch with the relevant clients during the course of 2016 to obtain the necessary tax payer identification numbers and for self-certification forms. Reporting As previously indicated, CRS reporting in respect of countries which are signed and committed for 2017 will take place by May/June The reporting methodology will be exactly the same as for FATCA reporting (i.e. the reports will be made via the Jersey Comptroller of Income Tax using a unique CRS ID obtained from them, and so far as we are aware at this stage, the reporting will be made electronically directly between the Jersey Comptroller of Income Tax database as populated by Ocorian and the electronic database maintained by the relevant taxation authorities in the "recipient reporting countries". UK FATCA REPORTING TO BE TRANSITIONED TO CRS REPORTING - KEY DIFFERENCES It should first be noted that the USA has not committed to CRS reporting and thus there will be no transition from FATCA reporting to CRS reporting as regards US tax payers. Accordingly, reporting under the FATCA guidelines will continue in 2016, 2017 and beyond in the same manner as in 2015 for US tax payers who are identified as beneficial owner of companies and settlors or beneficiaries in receipt of distributions from trusts administered in any jurisdiction which is signed up to US FATCA (in practice all jurisdictions from which Ocorian operates). As regards UK FATCA, it is not yet clear how the reporting which is due to take place in June 2016 as regards UK tax payers who are beneficial owners of companies or settlors or beneficiaries of trusts will be transitioned to CRS reporting in We anticipate sending

3 JERSEY BRIEFING 3 Ocorian is required to obtain confirmation of tax residency from any client who has received a payment from a structure that Ocorian administers and who is reportable in further guidance on this to such UK clients as soon as it is available. What can be said at this stage, however, regarding this transition is as follows: Alternative reporting regime This is the regime available in 2016 for UK resident but non domiciled tax payers but this will not be available under CRS. Thus although those clients who are UK resident but non domiciled and who have elected to take the benefit of alternative reporting regime will not be reportable persons for the purpose of 2016 reporting, they will become reportable persons from 2017 onwards. Reporting thresholds UK FATCA guidance notes allow for reporting thresholds to be applied. For a pre-existing individual (reportable person) who receives less than US$50,000 during the prior reporting periods (2014/2015), they are not reportable but this threshold will not be available under CRS and reporting of all distributions to UK tax payers who are reportable persons will take place under CRS. UK tax payer, self-certification and tax payer identification numbers Ocorian is required to obtain confirmation of tax residency from any client who has received a payment from a structure that Ocorian administers and who is reportable in Ocorian is in the final stages of obtaining such tax payer identification numbers and/or self-certification forms from its clients whom we believe to be UK tax resident. As with US FATCA, discretionary beneficiaries of trusts administered from Jersey will only become reportable persons if they received an actual distribution during the relevant reporting period (2014 and 2015) for UK FATCA reporting in June However, settlors of trusts and beneficial owners of companies will be reportable persons in June 2016 in respect of the relevant account balances (net asset values) in the relevant structures as at 31 December 2015 COSTS Although significant costs may have been incurred in relation to individual structures for the purpose of US FATCA classification, verification and reporting, it is inevitable that additional costs will be incurred, on an ongoing basis, in respect of all structures administered by Ocorian in the various jurisdictions in which it operates in order to ensure compliance with CRS whenever that is implemented. It has now been possible to ascertain with a degree of certainty, the impact on all structures administered by Ocorian in Jersey where US FATCA reporting has already taken place (in 2015) and UK FATCA reporting will take place in June Ocorian in Jersey is also preparing for CRS reporting in Accordingly, Ocorian has introduced a standard scale of charges for all structures in order to ensure: Compliance and monitoring so as to meet FATCA/CRS reporting requirements (NB even where there is no current reporting, all such structures have to be classified and such classification verified and supplied to relevant banks and other financial institutions with which accounts are maintained). Where Ocorian provides a Responsible Officer for reporting purposes then a separate charge is being raised in respect of the provision of such Responsible Officer, but this only applies where there is actual reporting at the present time. Further details of the Ocorian standard charges may be ascertained upon enquiry and will be notified to clients on the next quarterly invoices which they receive in April CONTINUED ON FOLLOWING PAGE

4 JERSEY BRIEFING 4 KEY CONTACTS JERSEY BRADLEY VAUTIER Head of Tax Compliance and Reporting T +44 (0) E bradley.vautier@ PAUL LEARY Chief Operating Officer T +44 (0) E paul.leary@ MICHAEL RICHARDSON Partner T +44 (0) E michael.richardson@ DISCLAIMER AND REGULATORY The content of this document (including any opinion expressed) is intended for general information purposes only and it does not constitute and should not be interpreted as an offer, an invitation to contract or legal or any other form of professional advice and nor should it be used or relied upon as such. Unless expressly stated otherwise, information is not intended to be comprehensive and is only current at the time of initial publication or, if this document is dated, as at that date and Ocorian gives no warranty as to the adequacy, accuracy or completeness of any information. Should you require legal or other professional advice, it is recommended that you contact a suitablyqualified lawyer or other relevant professional. Neither Ocorian Limited nor any of its subsidiaries or affiliates from time to time accepts any liability or responsibility whatsoever for any loss that may arise from the use by any person of this document or its content. Ocorian Limited is regulated by the Jersey Financial Services Commission. Ocorian Fund Services (Jersey) Limited is regulated by the Jersey Financial Services Commission. Ocorian (Luxembourg) S.à r.l is authorised to conduct business by the Ministère des Classes moyennes. Ocorian (UK) Limited is authorised and regulated by the Financial Conduct Authority of the United Kingdom. Ocorian (Mauritius) Limited is regulated by the Financial Services Commission Mauritius. Singapore Trust Company Pte Ltd is regulated by the Monetary Authority of Singapore. Ocorian (Guernsey) Limited (registered Guernsey 45342) is licensed and registered by the Guernsey Financial Services Commission under the Regulation of Fiduciaries, Administration Business and Company Directors, etc. (Bailiwick of Guernsey) Law Ocorian (Ireland) Limited is an authorised trust or company service provider in accordance with Section 89(6) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 of Ireland NewCo.

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