Financial Services Ireland

Mandatory Disclosure Rules – A focus on Wealth & Asset Management

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As you may be aware, the new EU Mandatory Disclosure Rules for cross-border arrangements came into force on 25 June 2018 (through the Council Directive (EU) 2018/22 (the Directive) published on 25 May 2018. The objective of the Directive is to assist competent authorities with collecting information to allow for tax planning as the integration of national economies and markets heightens.

As a result, the Wealth and Asset Management Industry in Ireland will need to consider how these rules are impacting its operations, to identify any reporting obligations, share awareness with affected businesses internally, and potentially speak to Irish Revenue.

  • The rules apply to transactions or arrangements entered into after 25 June 2018, albeit that reporting will not be required until 2020. Therefore action may be required now to identify in-scope transactions. A new specific governance process may be required.
  • Wealth and asset managers, administrators and management companies could be considered “intermediaries” with reporting obligations in relation to client transactions. The definition of “intermediary” is drafted broadly and appears to go beyond the natural meaning of the word, and beyond a design or promotion role, encompassing cases where assistance is provided in implementation.
  • It is not clear at this stage whether the EU Commission and Member States are expecting and aiming for a modest volume of disclosures (such as that under the UK’s Disclosure of Tax Avoidance Schemes (DOTAS) regime) or (given that the rules amend the existing EU directive enabling AEOI) a high volume more consistent with CRS reporting.
  • Some of the criteria triggering disclosure do not have a tax “main benefit” test.
  • For the avoidance of doubt, the OECD have published their own version of the Model Mandatory Disclosure Rules (‘MMDR’) for CRS Avoidance Arrangements and Opaque Offshore Structures which were approved by the Committee of Fiscal Affairs on 8 March 2018. The MMDR relates to CRS Avoidance only and will be incorporated in the final Irish legislation related to EU MDR.

The weight the rules will place on setting up investment structures going forward as well as reviewing previously established investment structures is very significant.

Please reach out to us if you would like to discuss.

For additional reading, EY globally have invested in sharing insights on MDR which are also enclosed for your reference:

Global Tax Alerts:

Thought Leaders

Amanda Murphy

FS Partner, Business Tax Advisory

Sinéad Colreavy

FS Partner, Tax