IEIM8000360 - Branches
Branches are within scope of the CARF. Section I (B) of the CARF states a RCASP is subject to reporting and due diligence requirements with respect to transactions effectuated through a branch. Where there are multiple branches within a group which effectuate transactions, each branch will have a reporting and due diligence requirement, unless the transactions effectuated through the branch are reported by another branch.
If an RCASP is subject to reporting and due diligence requirements in a jurisdiction where it has a branch and the RCASP does not have a higher nexus in a jurisdiction that has implemented the CARF, the branch will report all the transactions effectuated by the entity, not just those of the branch. This position is reaffirmed by the OECD FAQ “Branch nexus”.
Example (1)
Crypto Bank is a RCASP that is tax resident in the UK and has two branches, one in Jurisdiction X, a CARF implementing jurisdictionon the UK’s list of partner jurisdictions and one in Jurisdiction Y, a non-CARF implementing jurisdiction. All branches effectuate relevant transactions.
Since the Jurisdiction Y branch is in a non-implementing jurisdiction, Crypto Bank is required to undertake due diligence and report any transactions effectuated in the Jurisdiction Y branch in the UK where appropriate to a partner jurisdiction
Crypto Bank is not required to undertake due and diligence and reporting for the Jurisdiction X branch as long as the branch undertakes due diligence and reports in Jurisdiction X.
Example (2)
Coin Crypto is an entity RCASP tax resident in Jurisdiction X, a non-implementing CARF jurisdiction, and has a branch in the UK. Jurisdiction X has not yet implemented the CARF. The UK branch is subject to reporting and due diligence requirements on all the transactions effectuated by Coin Crypto, not just those effectuated by the branch.