Operational Tax in Private Markets: Key Changes This Quarter

Our Q4 tax update covers the latest operational tax developments across FATCA, CRS, and related compliance areas. Key changes include new IRS forms and encryption standards, revised UK penalty regimes, expanded HMRC registration requirements, and emerging global CRS v2.0 guidance ahead of its 2026 implementation. 

Together, these updates reinforce the need for a robust, well-governed operational tax compliance framework—one that is data-driven, resilient, and ready to respond swiftly to evolving obligations. 

Sonata One’s Tax Services team tracks these developments closely and provides end-to-end support to help you stay fully compliant and confident. 

For further details on any of these updates, or to discuss how we can help, contact Robin Silverthorne, Ben Crofts or Zabine Ellahee in our tax team.  

United States  

• Draft Form W-9 (January 2026) introduces new features, including digital asset exemption codes. Sole proprietors and disregarded entities must now provide the owner’s SSN, which may require re-solicitation.  

• The IRS has released Publication 1187 (Rev. 9-2025) to provide the specifications for electronic filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, with the Internal Revenue Service (IRS).  It supports 1042-S production, including some amendments in respect of OBBA, new FATCA reporting categories, and some enhanced encryption requirements.  

• The IRS released a new public key for FATCA submissions to IDES, effective as of 17 October 2025. 

United Kingdom 

• A revised penalty regime – The International Tax Compliance (Amendment) Regulations 2025 has been introduced for non-compliance under FATCA/CRS. For more information see our full update, issued in September.  

• HMRC has provided additional guidance in relation to CRS v2.0 (IEIM400580), identifying reporting deltas and other changes consequential to CARF.  

• From 1 January 2027, HMRC will align with other FATCA/CRS jurisdictions and require UK financial institutions to report via separate FATCA and CRS xml submissions – moving away from the combined xml, as outlined in IEIM404500 – Reporting Format.  

• Mandatory Registration for UK AEOI Reporting (IEIM404510) – The International Tax Compliance (Amendment) Regulations 2025 introduce a new requirement for all Reporting Financial Institutions and Trustee-Documented Trusts to register with HMRC’s AEOI service, marking a shift to mandatory registration for all in-scope entities, tightening HMRC’s oversight of AEOI compliance. Entities must register by the later of: 31 December 2025, or 31 January following the calendar year in which they first become a Reporting Financial Institution or Trustee-Documented Trust for CRS or FATCA purposes.  

Luxembourg  

• Reporting Financial Institutions must notify the Withholding Tax Office (SRI) of any change to their CRS classification. 

• Self-certification procedures have been clarified, particularly where certifications are not collected and validated on Day 1. 

• Further guidance has been provided on the Register of Actions, reinforcing expectations around maintaining a clear governance and audit trail for CRS compliance. 

• The authority has also outlined the expanded scope of in-depth audits, which are expected to increase significantly in volume.  

• Full details for all these updates can be found in the bulletin faq-crs.pdf. 

Germany 

• Germany has released updated guidance in its latest FATCA Newsletter- 02/25  on using the new BZSt online portal for FATCA compliance – 

General 

• CRS v2.0 – Over the past few months, numerous CRS jurisdictions have issued new guidance and updates ahead of the changes coming into effect on 1 January 2026.  

• CRS Financial Institution Due Diligence: Reliance on a GIIN – Several tax authorities have reiterated, and in some cases newly clarified, that a GIIN alone is no longer sufficient to confirm an account holder’s status as a Financial Institution for CRS due diligence purposes. Updated guidance consistently emphasises the need for additional documentation or validation beyond the GIIN to properly establish Financial Institution status.  

How we can help 

Sonata One’s tax team helps fund managers stay ahead of an increasingly operational tax compliance landscape. 

We provide a comprehensive operational tax service — including FATCA/CRS, W-forms and Withholding Tax — fully integrated with our broader fund subscription and KYC solutions. All delivered through a single platform, with expert human support at every stage. 

If you’d like to strengthen your global tax compliance, ease the burden on your internal teams, and deliver a smoother experience for investors across the fund lifecycle, get in touch with us to learn how we can help.