In October 2014, the OECD announced that over fifty jurisdictions had committed to the mutual exchange of information between tax authorities, termed the Common Reporting Standard ("CRS"). CRS involves the collection of information for tax purposes, commencing with high value accounts, by the tax authority of the jurisdiction where an account is held, and passing that information to the tax authority in the jurisdiction where the holder of the account is resident.

Many of the principles underlying CRS derive from the US FATCA regime. It is expected that the early participants in CRS will be reporting information about high value accounts for calendar year 2016, with reporting due to take place by end September 2017.

The legal basis for the exchange of information is set in existing double taxation agreements. It is expected that a large number of multilateral and bilateral agreements will be entered into by Ireland, as one of the jurisdictions among the early participators.

It is of interest for Irish families that jurisdictions which have traditionally been used for offshore planning are among those which have committed to CRS.

The exchange of information, whether in relation to personal accounts, trust accounts or accounts of other structures, is expected to lead to a significant increase in the amount of information available to tax authorities in participating jurisdictions.

For any individuals or families who have not regularised their tax affairs, they should take immediate advice in order to deal with any outstanding issues. As there is no statutory disclosure regime for offshore untaxed money in Ireland, it is important to take careful legal advice on the implications of approaching the Revenue Commissioners.

In the short-term, the impact of CRS is likely to be an increased flow of information across borders to revenue authorities. It is also likely to lead families and their advisors to question the benefit of complex structures.

In the medium term, it will be interesting to see whether the impact of information becoming available to revenue authorities may lead to further legislation, to mitigate any perceived benefit of these structures.

A number of important issues are relevant in this changing arena. First, it is necessary to consider the impact on confidentiality of data collected by the Revenue Commissioners under Irish law. Taxpayer information collected pursuant to Irish law is protected by confidentiality terms. It is reasonable to expect that Revenue would ensure that if and to whatever extent such data is provided to a revenue authority in another jurisdiction pursuant to CRS, it will be provided in terms which require that the standard of confidentiality required under Irish law, is both legislated for and replicated in practice in the jurisdiction to which it is provided.

The commencement of CRS will inevitably place an increased burden on financial institutions and service providers to investors. Financial institutions and service providers are already required to identify the beneficial ownership of accounts, including accounts held by complex structures, and to be in a position to identify the holder of such an account and their place of residence. Financial institutions and service provides to investors can expect to be required to provide information to the Revenue Commissioners which includes details of the jurisdiction(s) of residence of controlling persons ("CPs") in relation to an account (an "Entity").

In order to understand the implications of this obligation, it is necessary to consider the meaning of the term CP which includes the natural persons who exercise control over an Entity. In case of a trust, it includes the settlor, trustees, protector, beneficiaries or class of beneficiaries, and any other person exercising ultimate effective control over the trust.

For example, a person from a foreign jurisdiction who is placing trust funds with an Irish regulated fund for investment, is required to disclose the beneficial ownership of the Entity, by virtue of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. It would seem that the Irish financial institution with whom the funds are placed for investment, can expect to be required to report to the Revenue Commissioners in Ireland details of the settlor, trustees, protector, beneficiaries (including beneficiaries who are or may be entitled to a distribution on a fixed or discretionary basis). It would equally seem that when CRS has been established through relevant agreements, the Revenue Commissioners will be expected to report the interest or other form of financial return earned by the investment, to the tax authority in each jurisdiction where any of the persons identified above are resident. This will place an increased reporting obligation on financial institutions and service providers.

Can any conclusions be drawn from these developments?

It does seem to be the case that there is a greater focus on structures, particularly trusts, which are based in jurisdictions separate from the place of residence of their beneficiaries.

The impact of CRS will be to place much greater information about these structures under the spotlight of revenue authorities. Experienced commentators have predicted that there is likely to be a need for simplification of structures, enhanced obligations in terms of compliance and record keeping, and a greater need to question whether existing structures are fit for a purpose in the new regime.

It is inevitable that revenue authorities in different jurisdictions will be in receipt of multiple reports of information. While the information can be expected to be accurate of terms of CSR, the fact that persons feature in such information is not evidence of any breach of tax law, but it is likely that individuals and families will find their structures being queried and audited, with a focus on any breaches of tax law.

It is a matter of regret that the term CP is so broadly defined that information concerning interest and the financial return of an Entity, will be provided to jurisdictions in connection with the name of persons, many of whom have no economic entitlement in the Entity in question, or in the case of potential beneficiaries, may only occasionally, if ever, receive any economic benefit.

Families who have established, or benefit from international structures, should consider the implications of CRS for the structures.

Service providers should carefully consider the implications of CRS and seek advice concerning the implications for individuals resident in Ireland.

For beneficiaries, whether actual or potential, it is very important they should take advice concerning the scope of information which is likely to be made available to the tax authority in the jurisdiction where they reside. They should seek confirmation that all of their tax affairs are in order, and should active steps, in conjunction with their legal advisors, in case there are any issues to be resolved.

As stated earlier, it is important, given the risk of criminal prosecution and publication as a tax defaulter, that careful legal advice should be obtained before approaching the Revenue Commissioners, to resolve any issues.

It is likely that the impact of CRS will throw a good deal of transparency on structures which have previously not been subject to a material level of scrutiny. It is important for families and individuals using or benefitting from these structures to prepare for the scrutiny which is expected to arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.