2015 heralds the start of US FATCA report submissions, requiring global reporting of financial accounts to the US. Following on from FATCA, the Organisation for Economic Co-operation and Development (OECD) are introducing agreements for a Common Reporting Standard (CRS). The CRS is designed to extend ‘FATCA-style’ reporting across other jurisdictions with an expectation that over 40 countries will adopt this. Join this informative discussion to better understand what FATCA and CRS means, learn about the related time frames and reporting obligations, and more importantly, find out what the impact of these regulations is to both employee share plans and share ownership. Come with questions, leave with answers on this tricky topic.

1. The Impact of FATCA and CRS on
Employee Share Plans and Share
Ownership
Panayiota Burquier, Gibson Dunn & Crutcher LLP
June Davenport, Solium
John D. Heaton, Equiniti
Jeffrey M. Trinklein, Gibson Dunn & Crutcher LLP

2. Topics
• Origins of the Problem
• US Response
• UK Response
• International Response
• Effects on Participants, Issuers, Service Providers and Advisors
• Hope for the future?

3. Origins of the Problem
• Extraterritorial reach of the “Taxman”
– Many jurisdictions tax long-term residents on worldwide income
– The United States even taxes nonresident citizens on worldwide income
– No longer “One for you, Nineteen for me” but rates are still high enough
• Perception of widespread tax evasion
– Sales of confidential bank information to tax authorities in Europe
– Stories of private bankers shuttling money and even diamonds in toothpaste
tubes between Switzerland and the United States
• Conflict between the old and new way of doing things
– Bank secrecy was sacrosanct in Switzerland and elsewhere
– In a digital age, diminished expectations of privacy and massive information
transfers

4. US Response
• Foreign Account Tax Compliance Act
– Law enacted in 2010
– Either “foreign financial institutions” collect information for the IRS on US
accountholders, or else FFIs must suffer 30% withholding tax on dividends,
interest and capital gains generated by US stocks and bonds
• Mechanics of FATCA
– Under the law, FFIs must register with the IRS
– “Inter-Governmental Agreements” are based on one of two models
• Model I: FFIs do not need to report to the IRS, but rather report to the tax authorities in their own
jurisdictions
• Model II: FFIs report to the IRS but with certain modifications
– The key to compliance: understanding who is and is not an FFI

5. US Response
• For US employers with US employee benefit arrangements
benefiting only US employees, FATCA is not an issue and the only
compliance burden relates to collecting Forms W-9 and
withholding the right amount of tax
• Are non-US retirement plans FFIs? Look for exemption:
– broad participation retirement fund
– narrow participation retirement fund
– treaty-qualified retirement fund
– fund similar to a U.S. qualified plan
– investment vehicle for these funds
• Does the IGA change the result?

6. Sample of IGA Provisions: Canada
• FATCA – Canada
– IGA exempts ‘tax deferred’ arrangements from reporting – RRSPs, pension
programs, Tax Free Savings Plans
– General share purchase plans /corporate nominee ‘like’ accounts subject to
reporting
– Canadian banks lobbying to get share plans removed from reporting obligations
– Privacy is of significant concern (cannot ask for nationality to identify US
persons)
– FBAR/FATCA reporting confusing for individuals – many cross border employees
impacted by reporting

7. Sample of IGA Provisions: Australia
• FATCA – Australia
– IGA much broader for reporting exemptions
– Any account which qualifies as an employee share scheme or an employee
share trust is not reportable
– Corporate nominee arrangements/Vested Share Accounts – still reportable if
not covered as part of the share scheme

8. Sample of IGA Provisions: UK
FATCA – UK
• Excluded products
– Pension schemes
– Investment trusts
– Share registers
– CSNs
– Dissenter registers
– Depositary Instruments
• In scope
– Investment Account
– Global nominee (nominees not falling into CSN category)

9. Sample of IGA Provisions: UK
FATCA – UK
• Excluded products
– Share Incentive Plans (Schedule 2 SIP)
– Save As You Earn (Schedule 3 SAYE Option Scheme)
– Company Share Option Plan (Schedule 4 CSOP)
– Profit Sharing Schemes (Approved by HMRC under the Income and Corporation Taxes Act
1988)
• EBTs
– In scope - non-tax advantaged SIPs and other trusts (where trust identifies beneficiary)
– Not in scope - if EBT holds unallocated shares, an unallocated right does not constitute a
Financial Account - when shares become allocated and the trustee is directed as soon as
reasonably possible to transfer the assets, the Trust will not be treated as maintaining a
Financial Account for the duration of time it takes to complete the transfer

10. UK Response
• UK Intergovernmental Agreements (“Son of FATCA”)
– 2012 UK Autumn Statement announced that UK would enter into
intergovernmental agreements (IGA) with Crown Dependencies and Overseas
Territories
– Each of the Crown Dependencies IGAs are reciprocal. Only one of the Overseas
Territories IGA is reciprocal - that with Gibraltar
– All of the UK IGAs except one follow the US Model 1. Bermuda IGA follows the
US Model 2
– General framework similar to US FATCA
– Key difference is that UK IGAs do not form part of a withholding tax regime –
UK’s political power over overseas possessions enough to encourage them to
sign up to the IGAs

11. International Response
• In April 2013, the G20 Finance Ministers endorsed the idea of
automatic exchange of information. From that moment, the
Common reporting standard (or “CRS”) was born
• The proposed OECD CRS is based on the Model 1 IGA
– Many similarities to FATCA
– Also many “false cognates”
• 52 jurisdictions have agreed to begin exchanging information in
either September 2017 or September 2018, depending on the
country. Absent from the list: the United States

12. International Response
• Why is the US reluctant to participate?
– The US has unique views on tax residency, taxing all citizens and US
corporations
– The OECD CRS model looks to tax residency or place of effective management
in the relevant jurisdiction, which is more or less the standard in the rest of the
world
– As a result, unlikely that the US will ever commit to the CRS
• Unlike FATCA, CRS has no de minimis threshold, which means
that all accounts are currently eligible for CRS reporting
regardless of the account balance
• A common reporting schema is being developed. However,
authorities in individual countries are likely to amend CRS to
accommodate their local needs

13. OECD CRS in the UK
• New UK legislation came into effect yesterday
– The International Tax Compliance Regulations 2015 and the International Tax
Compliance (Crown Dependencies and Gibraltar) (Amendment) Regulations
2015 were made on 24 March and came into force on 15 April
– Apart from a few minor changes, they are in line with what was expected and
replicate the FATCA exemptions for Employee Share Plans
– The UK government has introduced an additional dormant account exemption,
but that is unlikely to be relevant to this audience
– HMRC Guidance Notes about what the Regulations mean in practice will not be
published until after the General Election, possibly as late as June which is of
concern
– Urgent clarification is needed as to the status of Corporate Sponsored
Nominees, which are exempt under FATCA. No one has yet suggested that
their status changed under CRS, but if the Guidance Notes reflect a change in
their treatment, there is insufficient time to make the necessary changes

14. International Response
FATCA* OECD CRS
Financial
Institutions
Custodial Institution
Depository Institution
Investment Entity
Specified Insurance Company
Custodial Institution
Depository Institution
Investment Entity
Specified Insurance Company
Investment Trust Companies
Exempt/Non-
Reporting Financial
Institutions
Government Entities
International Organizations
Central Banks
Certain Pension and Retirement Funds
Qualified Credit Card Issuers
Certain Collective Investment Vehicles
Government Entities
International Organizations
Central Banks
Certain Pension and Retirement Funds
Qualified Credit Card Issuers
Certain Collective Investment Vehicles
Low-Risk Non-Reporting Financial Institutions
FATCA vs OECD CRS:
Entities Required to Report
* Based on Model 1 IGA provisions

15. International Response
FATCA* OECD CRS
Information Exchange
Model
Bilateral (reporting required with respect to US
persons)
Multilateral (reporting required with respect to all partner
jurisdiction persons)
Persons Subject to
Reporting
Specified US Persons and Non-US Entities with
one or more Controlling Persons that is a
Specified US Person
Reportable Jurisdiction Person and Passive NFEs with one
or more Controlling Persons that is a Reportable
Jurisdiction Person
Basis for Specified US
Person/Reportable
Jurisdiction Person
Status**
US citizen or resident individual Partnership or
corporation organized in the United States or
under the laws of the United States or any
State thereof
A trust if (i) a court within the United States
would have authority under applicable law to
render order or judgments concerning
substantially all issues regarding administration
of the trust and (ii) one or more US persons
have authority to control all substantial
decisions of the trust
An estate of a decedent that is a citizen or
resident of the United States
An individual or Entity that is resident in a Reportable
Jurisdiction under the laws of such jurisdiction, or an
estate of a decedent that was a resident of a
Reportable Jurisdiction. For this purpose, an Entity
such as a partnership or similar legal arrangement
that has no residence for tax purposes shall be treated
as resident in the jurisdiction in which its place of
effect management is situated
FATCA vs OECD CRS:
Persons Subject to Reporting
* Based on Model 1 IGA provisions
** Persons described in this row may be exempt from reporting under one of the exemptions to Specified US Person status under
FATCA IGAs or Reportable Person status under the OECD CRS

16. International Response
FATCA* OECD CRS
Exemptions from
Specified US Persons/
Responsible Person
Status
Corporations the stock of which is regularly traded on
one or more established securities markets (“Publicly
Traded Corporations”)
Any corporation that is a member of the same
expanded affiliated group (as defined under US law)
as a Publicly Traded Corporation
The United States or any wholly owned agency or
instrumentality thereof
Any State of the United States, any US Territory, any
political subdivision of any of the foregoing, or any
wholly owned agency or instrumentality of any one
or more of the foregoing
Certain tax exempt organizations, retirement plans, and
trusts
Banks
REITs and Regulated Investment Companies
Certain trust funds
Registered dealers in securities, commodities or
derivative financial institutions
Brokers
Publicly Traded Corporation
Any corporation that is a Related Entity with respect to a
Publicly Traded Corporation
Governmental Entities
International Organizations
Financial Institutions
FATCA vs OECD CRS:
Persons Exempt from Reporting
* Based on Model 1 IGA provisions

17. International Response
• FATCA vs. OECD
• How different are the CRS definitions?
• Limits for reporting?
• Other differences?

18. Effects on the Participants
• Participants may see reduced value of equity plans
– Complexity of personal filing obligations
– Fines for non compliance at individual level can be severe (penalty could
exceed plan benefit)
• US participants who sign on foreign accounts also have FBAR
reporting
– Compliance is an individual burden and is mixed in with participant’s personal
assets
– Unlike FATCA, penalties for willful failure to comply can be enormous—50% of
the highest amount of the account balance each year
– Many companies just eliminate US citizens from signature authority

19. Effects on the Issuers
• Significant complexity for global share plans
– Where are the assets?
– Whose IGA or CRS scheme applies?

20. Choices for the Issuer
• Paternalistic approach or ‘do it yourself’
• What support should the issuer provide to plan participants, if
any?
– Issuer plans create reporting requirements
– Potential obligation to provide employees with information to assist with
personal tax filing requirements
– Who do you need support from?
• Liability
– Guidance versus advice
– Specificity – e.g. including a country missing another

21. Effects on Service Provider/Advisor
• Registration as FFI
• Database scanning
• Questionnaires
• How do you identify the individuals to report on
– Same employee may have reportable and non reportable plans
– Data privacy legislation considerations in certain jurisdictions
– Global plans & mobility can add complexity
– Asset value calculations broader than plan assets
• Non standardised filing formats under different IGAs
• Legislation evolving – unlikely to see more exemptions for
share plans under CRS

22. Sample Questions
• Name
• Address
• Date of birth
• Place of birth
• Country of birth
• Nationality
• Dual nationality
• Country of tax residency
– Taxpayer reference number
• Additional country of tax residency
– Taxpayer reference number
• Third country of tax residency
– Taxpayer reference number
• Do you hold US residency or citizenship or a Green Card

23. Is there Hope for the Future?
Early protoypes for a USB drive?

24. Is there Hope for the Future?
• Blame it on the computer
– If the data can be collected, it will
– It is too easy for digital information to get around state imposed confidentiality
restrictions
– Going back to the Stone Age is not generally seen as a desirable outcome
• What can we do?
– Make the systems work together as closely as possible
– Keep the government administrators in the loop
– Manage participant expectations

25. Thank You
Panayiota Burquier
Gibson Dunn & Crutcher LLP
PBurquier@gibsondunn.com
John D. Heaton
Equiniti
TWSLimited@johndheaton.co.uk
June Davenport
Solium
june@solium.com
Jeffrey M. Trinklein
Gibson Dunn & Crutcher LLP
JTrinklein@gibsondunn.com