Cook Islands reporting and U.S. trust forms

Cook Islands CRS reporting

The Cook Islands implements the Common Reporting Standard (CRS) for automatic exchange of financial account information through domestic legislation and regulations. The legislation implements tax information exchange arrangements, and regulations govern reporting under the CRS.^[2]

The Ministry identifies the Income Tax (Automatic Exchange of Financial Account Information and Other Matters) Amendment Act as the law that introduced CRS into domestic legislation. Further provisions appear in the Income Tax Amendment Act. Regulations provide consistency with section 96C (2).^[2]

Financial institutions can use the Revenue Management Division portal to register and submit CRS reports. The Ministry says those reports contain financial information required to be exchanged with tax authorities outside the Cook Islands through the OECD AEOI Global Forum program.^[2]

The Ministry also lists Cook Islands AEOI guidelines and participating jurisdictions. It lists reportable jurisdictions as well. Whether a particular account holder or trust arrangement meets the detailed CRS reporting definitions depends on the facts.^[2]

The Ministry describes the Cook Islands as a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Cook Islands has also entered into tax information exchange agreements and other international tax agreements.^[2]

FATCA and trustee company rules

The Treasury table lists no FATCA intergovernmental agreement (IGA) model or status for the Cook Islands. FATCA calls for foreign financial institutions to report account information to the IRS for U.S. taxpayers and certain foreign entities with substantial U.S. ownership interests.^[3]

Treasury says foreign financial institutions may register directly with the IRS or comply with an IGA treated as in effect in their jurisdiction.^[3]

The Cook Islands Financial Supervisory Commission says trustee company business is subject to the Trustee Companies Act. Applications for a trustee company licence are lodged with the Commission using prescribed forms. The Commission identifies licensed trustee companies.^[1]

IRS reporting for U.S. trust owners and beneficiaries

For a U.S. citizen, the IRS identifies Form 3520 and Form 3520-A as trust information returns, while Form 8938 and FBAR may apply under separate foreign asset or account reporting rules. The IRS defines a U.S. person to include a U.S. citizen, and says the forms can relate to transactions with a foreign trust, ownership under grantor trust rules, or distributions.^[5]

Form 3520 covers specified transactions and ownership involving foreign trusts. IRS instructions identify transfers of money or property to a foreign trust, a U.S. person's ownership of trust assets under sections 671 through 679, and receipt of distributions as filing circumstances. A separate Form 3520 applies to transactions with each foreign trust.^[6]

A U.S. beneficiary of a foreign nongrantor trust reports distributions on Form 3520 and includes the taxable portion in income. The type of beneficiary statement depends on whether the trust is treated as a grantor or nongrantor trust, and the Form 3520 instructions cover reporting when no statement is received.^[5]

Form 3520-A is the annual information return for a foreign trust with a U.S. owner. The IRS says U.S. persons treated as owners must ensure the trust files a complete return and provides annual statements to U.S. owners and beneficiaries. If the trust does not file a complete return, the owner attaches a substitute Form 3520-A to a timely Form 3520.^[5]

Form 3520 is generally due by the fifteenth day of the fourth month after the taxpayer's year ends. Qualifying U.S. citizens and residents living and working abroad have until the fifteenth day of the sixth month after the tax year ends and attach a statement to the form. Form 3520-A is generally due the fifteenth day of the third month after the foreign trust's year ends. When that day falls on a weekend or legal holiday, the due date moves to the next business day.

Form 8938 is used to report specified foreign financial assets when their total value exceeds applicable reporting thresholds. A financial interest in or signature authority over a foreign financial account, including a trust account, may require annual FBAR reporting on FinCEN Form 114.^[5]

Form 8938 and FBAR reporting obligations can apply in addition to the foreign trust forms.^[5]

Questions and answers

Related resources

Related glossary terms

• Section 6048: Section 6048 sets information reporting rules for certain foreign trusts. Its parts cover notice of events, U.S. owner duties and beneficiary distributions.
• U.S. owner of a foreign trust: The Form 3520 instructions define a U.S. owner as a person treated as owning trust assets under grantor trust rules. Ownership can apply to part of a trust.
• Grantor: Form 3520 describes a grantor as a person who creates a trust, transfers property to it without full value, or is treated as an owner under specified rules.

Related articles and guides

• Cook Islands Trust Legislation: Cook Islands requirements for international trusts and the supervision of trustee companies under the Trustee Companies Act 2014, for U.S. citizen readers.
• Switzerland reporting and foreign trust rules: Switzerland exchanges account information under AEOI and FATCA arrangements, with Swiss trustee rules and IRS reporting for foreign trusts set out alongside.
• Liechtenstein reporting and U.S. trust forms: Liechtenstein's FATCA information and trustee supervision, with the IRS reporting rules that apply to U.S. citizens who own a foreign trust in Liechtenstein.

Tools and official documents

Related pages

• Cook Islands: overview: Start page for this jurisdiction.
• Trustee regulation and licensing
• Taxation of trusts
• U.S. treaty and agreements
• Courts and legal system