FATCA and CRS apply to Financial Institutions, a term which is widely defined and generally captures persons who carry out investment management functions, as well as investment funds themselves.
Under these regimes, hedge funds, private equity funds and other structures like securitisation vehicles that constitute Financial Institutions are required to identify and report on relevant accounts held either by persons tax resident in a participating country, or in the US, or by non-financial entities that have controlling persons tax resident in a participating country or in the US.
Investment managers are generally also subject to these regimes. However, under FATCA, investment managers may, subject to certain conditions, apply the Certified Deemed Compliant exemption which, where applicable, exempts the entity from IRS registration and reporting. Under CRS, this carve-out is not available and generally these entities would be considered Financial Institutions with compliance and reporting obligations.
Maltese investment funds and investment managers are generally required to perform FATCA and CRS due diligence on all investors and account holders and, in certain circumstances, on the ultimate beneficial owners of investors. They are also required to report prescribed information on reportable accounts to the Maltese tax authorities.
As part of their due diligence obligations, Financial Institutions are required to obtain duly completed self-certification forms from investors. There are also a number of data protection and privacy considerations around the collection and processing of investor information.
Malta has implemented separate regimes for the reporting of financial information under FATCA and CRS. FATCA requires non-US Financial Institutions to report detailed information about their US account holders. CRS requires financial institutions in a CRS participating country to report detailed information about account holders who are tax resident in another CRS participating country.
