Automatic Exchange of Information: guidance for charities
Find out whether your charity needs to report financial account information under the Automatic Exchange of Information requirements.
Which charities are affected
If your charity is an Investment Entity it will be a financial institution. It must report any relevant payments it makes to tax residents outside the UK to HM Revenue and Customs (HMRC). You’ll be asked to confirm the type of entity your charity is.
Your charity will also need to supply information on financial accounts under:
- the Crown Dependencies and Overseas Territories (CDOTs) agreements
- the Common Reporting Standard (CRS)
The CDOTs agreements came into effect from 1 January 2015, with first reporting due by 31 May 2016. The CRS came into effect from 1 January 2016, with first reporting due by 31 May 2017.
Between 1 January 2016 and 2017 CRS will gradually replace the CDOTs agreements. So your charity must collect data on financial accounts for the calendar year to 31 December 2016 and report it to HMRC by 31 May 2017.
When you don’t need to report
Your charity won’t need to provide its financial account information if its income is mostly from:
- gifts
- donations
- grants
- legacies
There’s also no need for your charity to report under the USA’s Foreign Account Tax Compliance Act (FATCA). This is due to the UK’s agreement with the USA excluding registered charities from FATCA’s requirements.
If your charity is not a financial institution, it will be an active Non-Financial Entity with no reporting requirements. You’ll need to tell your financial account provider about where you are tax resident and provide your Tax Identification Number if required.
Reporting your information
You must use the Automatic Exchange of Information Online Service.
What you must include
The information you need to report depends on the status of the person or entity your charity makes a payment to.
If your charitable trust, foundation, company or similar entity is a financial institution, any payments it makes to beneficiaries under its charitable objectives may need to be reported.
While this includes discretionary payments by the trustee, payments to suppliers for the provision of services are not included.
The CRS refers to these beneficiaries as account holders of an equity interest. This includes anyone who may receive a distribution, directly or indirectly. These account holders are reportable where they are tax resident outside the UK, in a reportable jurisdiction.
Find out more on completing your registration and report forms.
Due diligence checks
Due diligence checks require a financial institution to get a self-certification from an account holder. For your charity, this is the recipient of the distribution, grant or similar payment.
The self-certification must show where the recipient is resident for tax purposes, and if this is outside the UK, include the name, address and Tax Identification Number. If the recipient is an entity, it must also include the entity’s classification.
There is no set format for self-certification, and it can be included within existing record keeping and correspondence arrangements your charity has in place where new grants and similar payments are awarded.