AEOI - beneficial owner reporting?

[dotbloup]

I have carefully read the Common Reporting Standard (CRS) from the Automated Data Echange (AEOI) from the OECD.
For new entity account (business bank account), i can clearly see that every bank account information will be reported to the country of incorporation where the company is a tax resident.

It makes sense. But for us, it is not a problem. If Belize government receives bank account information from Cyprus including the Ultimate beneficial owner information, that will not change anything for any of us. By the way, it makes sense that the country of incorporation is aware of all the bank account for a company.

On the other hand, that would be another story if the country of the Ultimate beneficial owner would receive information from Cyprus. However, in the Common reporting standard. i don't see anything which could confirm that the beneficial owner of a business bank account is reported to its country of residence.

Reporting:
Offshore bank account of individual => Reported to country of individual fiscal residency.
Offshore bank account of company => Reported to country of company fiscal residency

I wonder if i am right... So find the links below where you can find the reporting rules.
Common Reporting Standard (CRS) - Organisation for Economic Co-operation and Development

 

[JohnLocke]

As usually thank you very much for your informative posts. This is really interesting news for most of us here. Since there is a common believing that everything get reported regardless if you open a corporate account or a personal account.

The fact that they will report to the Seychelles (in this example) and not to the ultimate beneficial owner is important to pin point here.

 

[negon]

Thanks for the share. So as Admin already said, very informative as always

 

[dotbloup]

I have found this link:
http://www.oecd.org/ctp/exchange-of...e-of-financial-information-in-tax-matters.pdf

at page 43, it says that if the Account holder is not a passive non financial entity it should not be reported in relation to the controlling person. I translate it like: if the account holder is a simple company it should be reported in relation to the company information not the controlling person (aka beneficial owner) information. It means it should be reported according to the tax residency address of the company.

I encourage people to look into it to confirm by reading from page 43.... My understanding would be that they only pass the information of the beneficial owner when it is a Passive non financial entity.

 

[JohnLocke]

at page 43, it says that if the Account holder is not a passive non financial entity it should not be reported in relation to the controlling person. I translate it like: if the account holder is a simple company it should be reported in relation to the company information not the controlling person (aka beneficial owner) information. It means it should be reported according to the tax residency address of the company.

Have read it and it seems you are right. I will have a lawyer to check it this week just to be sure we read it correct.

 

[dotbloup]

As usually thank you very much for your informative posts. This is really interesting news for most of us here. Since there is a common believing that everything get reported regardless if you open a corporate account or a personal account.

The fact that they will report to the Seychelles (in this example) and not to the ultimate beneficial owner is important to pin point here.

great

 

[aurlux]

was this confirmed?

 

[negon]

You may read the information provide on the OECD link and from reading there it seems it is confirmed.

 

[dotbloup]

There is another solution to confirm it, ask a bank in a country where the CRS will come into force next year. here is the list:

CRS by jurisdiction - Organisation for Economic Co-operation and Development

 

[dotbloup]

In fact, the question that should be asked to the bank, would be to know if they will automatically report the details of the beneficial owner of a business bank account to be transmitted to the country of his fiscal residency.

The answer "maybe" can't be satisfying. Either they will report all of them or none of them. It is important to find the right person that will be able to answer this.

On the other hand, i know the beneficial owners of offshore personal bank accounts will be reported for sure. I have received some day ago a notification from my bank to confirm my fiscal residency.

 

[aurlux]

Cheers guys. Is there any chance the country where the company is registered will report to country of fiscal residence?

 

[dotbloup]

Cheers guys. Is there any chance the country where the company is registered will report to country of fiscal residence?

This only happens if there is an agreement between the two countries. You can find it yourself. Those agreement are called double treaty agreements, they all have the same templates all over the world. In those agreements, there is always a clause for exchange of information.

DTA agreement functioning:
1. The request has always to come from the country of fiscal residence
2. The country of company has to first study the request and it can be rejected.
3. The country of company may send the information about the owner of a company
4. The country of fiscal residence has to pay the country of company for that.

For your information, in the last 10 years, all the big headlines about tax evasion in the newspapers were never originated from a government.

Panama papers whistleblower: Insider (likely trainee) at Monsecka office in Panama
Swissleak whistleblower: IT consultant who worked for swiss banks.
Luxembourg whistleblower: Employees of banks...

Etc...etc...

 

[aurlux]

So the information would be exchanged only at the request of tax officials from the fiscal country?

The word double treaty agreement is new to me, would "tax information exchange agreement" be synonymous with it?

 

[dotbloup]

So the information would be exchanged only at the request of tax officials from the fiscal country?

The word double treaty agreement is new to me, would "tax information exchange agreement" be synonymous with it?

Here is the Double tax agreement between UK and Germany:
https://www.gov.uk/government/uploa...le/554740/2010_Germany_UK_as_amended_2014.pdf

Double tax agreement (DTA) is different from Automated Data Exchange.

DTA:
Imagine that a British resident has a business bank account in Germany, the UK tax authority needs to know that someone has a business bank account in Germany and has reason to ask the Germany authorities for information for it. But the HMRC will not ask all the countries in the world to know if British nationals have Business bank accounts because in the DTA agreement it is mentioned the request has to be precise, so it rarely happens. Plus, in some countries like in Cyprus, there is no withholding tax for the individual so there is no data for the person as individual in the tax authority database. The local tax authorities has only data from it's legal person (the company).

It sounds crazy but according to my observations, the most dangerous are not tax authorities or governments, but that's people in banks and companies or individuals who transmit the data. People can be really mean

 

[dotbloup]

Let me give you an example of privacy breach:

For instance, let's imagine you are French, you go to your personal bank let's say "credit agricole" to get a bank reference letter, and they don't want to write a generic bank reference letter (i have no idea if it is true but it is just for the example), they ask you for all the details about the person who asks for it.
You answer that it is for opening a bank account in BVI for a company in Panama...

Now, they know and the person can repeat it, since it is your personal bank they all have the information about you, and they can tell anyone about it. I think that's the real danger. This can be an intern, someone who does not like you, someone who wants to be famous in the newspapers....

 

[negon]

It sounds crazy but according to my observations, the most dangerous are not tax authorities or governments, but that's people in banks and companies or individuals who transmit the data. People can be really mean

I totally agree with this statement. It seems most people that own an offshore company and bank account tend to report it and let everyone else know!

 

[dotbloup]

Here is an example of a man who disclosed information about people bank account:

LuxLeaks whistleblower avoids jail after guilty verdict

 

[aurlux]

I have found this link:
http://www.oecd.org/ctp/exchange-of...e-of-financial-information-in-tax-matters.pdf

at page 43, it says that if the Account holder is not a passive non financial entity it should not be reported in relation to the controlling person. I translate it like: if the account holder is a simple company it should be reported in relation to the company information not the controlling person (aka beneficial owner) information. It means it should be reported according to the tax residency address of the company.

I didn't quite understand how the page 43 says information would be exchanged to the country of the company. Or is this only if the controlling persons are from country not participating in information exchange?
Test 2 on page 43:
"is the account holder a passive non-fictional entity with one or more controlling persons that is a reportable person?"

So if the owners of a company are from lets say Italy and the company is from tax haven, doesn't it mean "reported in relation to the controlling persons" that their info will be sent to Italy? What am I missing here? Any clearer description wether the info will go to country of company or fiscal residence? I'm new with law details so bear with me.

 

[dotbloup]

I didn't quite understand how the page 43 says information would be exchanged to the country of the company. Or is this only if the controlling persons are from country not participating in information exchange?
Test 2 on page 43:
"is the account holder a passive non-fictional entity with one or more controlling persons that is a reportable person?"

So if the owners of a company are from lets say Italy and the company is from tax haven, doesn't it mean "reported in relation to the controlling persons" that their info will be sent to Italy? What am I missing here? Any clearer description wether the info will go to country of company or fiscal residence? I'm new with law details so bear with me.

That would not make sense. I thought that the idea of CRS was to disclose money on accounts from businesses in order to get back the money.

For instance, if the business is in Italy and if the company has money on a bank account in BVI by the past, it was not possible for the Italian government to check what the company had on the bank account in BVI. For sure, the automated data exchange will allow the Italian government to know exactly what the company has on the bank account to check the profit and ask to pay the corporate tax.

Then, there is a second test for passive non financial entities. I thought that an individual was non a passive non financial entities.

 

[dotbloup]

I thought passive NFEs were investment entities.