DAC 2 - Automatic Exchange of Financial Account Information through CRS and FATCA

Legal Overview:

Automatic exchange of financial account information is one of the legislative tools implemented in pursuance of international commitments to combat cross-border tax fraud and tax evasion. This automatic exchange of financial account information was pioneered through the enactment of the FATCA in 2010 by the United States of America via a legislation which required foreign financial institutions to pass information on their U.S. customers to the U.S. tax authorities.  

DAC 2 / CRS came into force through the Council Directive 2011/16/EU (‘Directive on Administrative Cooperation’) via an amendment of the Council Directive 2014/107/EU (‘DAC2’) as regards to mandatory automatic exchange of information in the field of taxation and uniformly incorporating the Common Reporting Standard (commonly known as ‘CRS’) as developed by the OECD.  Under this standard, CRS data is exchanged with OCED member jurisdictions with which Malta has activated relations.

DAC 2 and CRS, were then implemented into Maltese legislation on 4^th December 2015, by virtue of LN 384 of 2015, which amended S.L. 123.127, entitled the Cooperation with Other Jurisdictions on Tax Matters (Amendment) Regulations, 2015, with effect from 1^st January 2016.

The EU has also signed agreements similar to DAC2 with five non-EU countries (Andorra, Liechtenstein, Monaco, San Marino and Switzerland). These agreements ensure a level playing field between financial institutions in these countries and financial institutions in the EU which are required to implement DAC 2. 

On 26^th June 2014, Malta signed a bi-lateral agreement with the US implementing FATCA via an Agreement between the Government of the United States of America and the Government of the Republic of Malta to Improve International Tax Compliance and to Implement FATCA.  Through this agreement, FATCA Model 1A IGA entered into force and was given the force of law in Malta through L.N. 78 of 2014 entitled the ‘Exchange of Information (United States of America) (FATCA) Order.’ This was subsequently amended through L.N. 30 of 2015 which brings into force further concessions from the U.S. Government through letters dated 1 July 2014 and 3 October 2014 in terms of Article 7(2) of the IGA.

Guidelines for Classification and Registration of Reportable Financial Institutions:

Under these standards Financial Institutions (FIs) can be classified either as custodial institutions, or depository institutions, or investment entities or specified insurance companies. The financial information to be reported depends on the type of financial account maintained, hence entity classification is the first core requirement to determine the obligations of entities in Malta in terms of these instruments.

To assist FIs to their Classification process, MTCA is providing this Entity Classification Self Review Toolkit, which enables entities to self-classify themselves.

MTCA will provide the FI with its login information and details to eventually be able to conduct its CRS / FATCA Submissions.

If an FI requires to conduct modifications to its already submitted self-classification registration, such changes can be affected by accessing and compiling the necessary details through the Modification Form.

Self-Compliance Questionnaire:

An annual Self-Compliance Questionnaire (SCQ) aimed at ensuring the effective implementation of, and compliance with, the applicable reporting and due diligence procedure is to be completed annually by all Financial Institutions in Malta falling within the scope of FATCA and CRS.

The first SCQ will relate to the 2025 reporting period. Submission of the SCQ will be carried out through the designated link and must be authenticated using the e-ID of the Financial Institution’s Director, Legal Representative, or Tax Practitioner.

The accompanying guidance note is intended to assist users in the completion of the SCQ. Access to the SCQ for completion can be found further down below, under the section CRS & FATCA Submissions. 

CRS & FATCA Submissions:

• CRS / FATCA Reports are to be submitted by the Registered Fls in accordance to the DAC 2 XML Schema or Excel Format, which can be conducted through approved access to the AEOI Reporting Portal.
• Trustee Declaration Return
• Self-Compliance Questionnaire

Reporting Deadlines:

• Trustee Declaration is to be submitted on an annual basis, by 31^st January of each year.
• Self-Compliance Questionnaire for reporting period 2025 is to be submitted by 13^th March 2026. 
• Nil Returns are to be submitted on an annual basis, by 30^th March of each year.
• CRS/FACTA Reports in Excel Format are to be submitted on an annual basis, by 30^th March of each year.
• CRS/FACTA Reports in XML Format are to be submitted on an annual basis, by 30^th April of each year.

Guidelines:

For further guidance on the above, kindly refer to the Implementing Guidelines on Automatic Exchange of Financial Account Information. (S.L. 123.127 and S.L 123.156) Issued in terms of Article 96(2) of the Income Tax Act (Version 4.8).

Contact Details:

For clarifications on the AEOI email [email protected]