CRS data used in other domains than taxation

[anubis92]

Been wondering :

Living in a CRS country like UAE. Your freezone company has a IBKR account, personal euro account in Portugal, personal Binance account.
In all 3 places the CRS reporting is done to UAE because you informed them of your residency.

Question : Now could for example Germany or Sweden (ex : child support court case, want to access your financials, other investigation....)
access the CRS data that UAE has collected via a centralized database? Or is it solely sent to UAE and unaccessible to anyone else

Regards,

 

[Sols]

No, in your example, Germany and Sweden would not be able to access data from UAE under CRS procedures. A request for information under TIEA or similar agreement would also be denied, since UAE would (should) consider you tax resident in UAE and therefore have no obligation to share information about you.

The data would only be available to them subject to MLAT (Mutual Legal Assistance Treaty) or similar, and you usually need to be a very high profile target for those to be invoked.

 

[zzzzzz]

Been wondering :

Living in a CRS country like UAE. Your freezone company has a IBKR account, personal euro account in Portugal, personal Binance account.
In all 3 places the CRS reporting is done to UAE because you informed them of your residency.

Question : Now could for example Germany or Sweden (ex : child support court case, want to access your financials, other investigation....)
access the CRS data that UAE has collected via a centralized database? Or is it solely sent to UAE and unaccessible to anyone else

Regards,

There is no centralized CRS database. Broker in CRS country sends data to local taxman and they forward XML file to taxman in your CRS country of residence.
If you have account with IBKR USA, there is no CRS, only FATCA. If I remember correctly IRS only share personal account data and no corporate, to your country of residence.

@Sols what about if you change tax residence in february, is CRS data for that tax year sent to new country of residence only (6+ months tax rule) or also to old tax residence country?

 

[Konstanz]

No, in your example, Germany and Sweden would not be able to access data from UAE under CRS procedures. A request for information under TIEA or similar agreement would also be denied, since UAE would (should) consider you tax resident in UAE and therefore have no obligation to share information about you.

The data would only be available to them subject to MLAT (Mutual Legal Assistance Treaty) or similar, and you usually need to be a very high profile target for those to be invoked

UAE has double tax treaties with Germany and Sweden.
Just read double tax treaty. They can exchange information according to double tax treaty.
They will write request to UAE and will get all information.

 

[Sols]

UAE has double tax treaties with Germany and Sweden.
Just read double tax treaty. They can exchange information according to double tax treaty.
They will write request to UAE and will get all information.

Exchange of information usually has a condition that the requesting party must prove that they have a valid reason for requesting the data. This was a big problem with exchange of information under TIEA/DTAAs, and one reason OECD came up with CRS instead. Under the older system, a lot of requests would be denied because insufficient cause was presented by the requesting party. I remember speaking with some people from some European authorities which complained that the vast majority of requests were denied and the ones that weren't took weeks or months and often came back incomplete.

If in this example, the party for whom data is being requested is tax resident in UAE, the UAE would likely reject the request as being unsubstantiated. The examples given would not be valid reasons under a tax treaty, since it doesn't sound like a tax matter.

 

[Konstanz]

Exchange of information usually has a condition that the requesting party must prove that they have a valid reason for requesting the data. This was a big problem with exchange of information under TIEA/DTAAs, and one reason OECD came up with CRS instead. Under the older system, a lot of requests would be denied because insufficient cause was presented by the requesting party. I remember speaking with some people from some European authorities which complained that the vast majority of requests were denied and the ones that weren't took weeks or months and often came back incomplete.

If in this example, the party for whom data is being requested is tax resident in UAE, the UAE would likely reject the request as being unsubstantiated. The examples given would not be valid reasons under a tax treaty, since it doesn't sound like a tax matter.

The reason will be request from home country for example. Your passport country or country you were resident recently
There is no need of some serious reason if there is double tax treaty.
I think this topic is about tax. So, will request information regarding tax.
In my experience I have example were EU authorities got information from Seychelles about persons IBC

 

[Sols]

The reason will be request from home country for example. Your passport country or country you were resident recently
There is no need of some serious reason.

And when that request cannot be substantiated, what happens then?

The example here is Germany or Sweden requesting data under a DTAA (whose exchange of information is modelled on TIEA) from UAE, for a person resident in UAE. While I don't know specifically about UAE, based on every comparable example I've seen or head of, the request would be denied. Requests on far weaker grounds have been denied.

 

[Konstanz]

And when that request cannot be substantiated, what happens then?

The example here is Germany or Sweden requesting data under a DTAA (whose exchange of information is modelled on TIEA) from UAE, for a person resident in UAE. While I don't know specifically about UAE, based on every comparable example I've seen or head of, the request would be denied. Requests on far weaker grounds have been denied.

Maybe. But I would not rely on denied requests these days. When you have greylistings
It's always better to construct everything to not be afraid information be released

 

[zzzzzz]

Exchange of information usually has a condition that the requesting party must prove that they have a valid reason for requesting the data. This was a big problem with exchange of information under TIEA/DTAAs, and one reason OECD came up with CRS instead. Under the older system, a lot of requests would be denied because insufficient cause was presented by the requesting party. I remember speaking with some people from some European authorities which complained that the vast majority of requests were denied and the ones that weren't took weeks or months and often came back incomplete.

If in this example, the party for whom data is being requested is tax resident in UAE, the UAE would likely reject the request as being unsubstantiated. The examples given would not be valid reasons under a tax treaty, since it doesn't sound like a tax matter.

In my countries (EU) DTA with UAE they always mention "UAE national" and not "UAE resident". I was later told from a person who relocated to UAE from my country, that he cannot get tax residence certificate in UAE to prove that he was tax resident for the past year (he didn't deregister immediately at home and taxman at home wanted to see TRC). Only UAE nationals can get it - this information was confirmed by UAE taxman and taxman in his home country.
Even such matters cannot be solved, and expecting miracles from some tax exchange request is nonsense.

 

[Sols]

Maybe. But I would not rely on denied requests these days. When you have greylistings
It's always better to construct everything to not be afraid information be released

Looking closer at this particular example, the tax treaty between Germany and UAE expired last year. Probably in favor of CRS.

There is a TIEA between Sweden and UAE and it's a standard TIEA. It does not allow for exchange of information for anything other than tax matters and only for persons over which the requesting party has jurisdiction. This doesn't sound like a tax matter and Sweden would struggle to demonstrate jurisdiction over the person resident in UAE. Geopolitical pressure aside, under ordinary circumstances, UAE would not comply with a request from Sweden.

But you're right that it's better to set everything up so you have zero risk.

In my countries (EU) DTA with UAE they always mention "UAE national" and not "UAE resident". I was later told from a person who relocated to UAE from my country, that he cannot get tax residence certificate in UAE to prove that he was tax resident for the past year (he didn't deregister immediately at home and taxman at home wanted to see TRC). Only UAE nationals can get it - this information was confirmed by UAE taxman and taxman in his home country.
Even such matters cannot be solved, and expecting miracles from some tax exchange request is nonsense.

That is correct for DTA (they often only cover UAE nationals, not UAE residenets), but the scope is different for TIEA.

 

[zzzzzz]

@Sols if you change tax residence in the first few months of the year (Jan. Feb. Mar.) is CRS data for that tax year sent to the new country of tax residence only (+183 days rule) or also to the previous country of tax residence?

@Sols if you change tax residence in the first few months of the year (Jan. Feb. Mar.) is CRS data for that tax year sent to the new country of tax residence only (+183 days rule) or also to the previous country of tax residence?

p.s. I'm talking about already opened foreign account at bank/brokerage and changing tax residence.

 

[anubis92]

The reason will be request from home country for example. Your passport country or country you were resident recently
There is no need of some serious reason if there is double tax treaty.
I think this topic is about tax. So, will request information regarding tax.
In my experience I have example were EU authorities got information from Seychelles about persons IBC

My initial topic is not about tax, it's about court cases (ex: alimony / child support).

@Sols
My thinking was that on company side I would need another person as manager of my company / on the CRS data of the company brokerage and accounts to be "hidden" but apparently this is not needed as all data flows to UAE and stays there.

So declaring if I understand : on personal side, services that lie outside of the UAE ex: IBKR / Wirex / Binance / German bank etc... as long as they know I'm UAE resident will not be "visible" to French/Swedish court right? I thought there was a way for France to "search" for firstname and lastname dob and get a listing of broker accounts, EU accounts etc....

So I can hold company + all accounts in UAE on my name and keep using old providers worldwide including in Europe and not worry that they would show up to a EU court over child support / alimony for instance.

Cheers,

 

[Sols]

CRS does not create a central database that can be searched freely. Jurisdictions collect information from its reporting entities (such as banks) and send that data to the relevant counterparties. This is most of the time done entirely based on the account holder's stated (and sometimes proven through documented evidence) tax residence.

However, if there is a criminal investigation against you, methods other than CRS can be used to obtain data from financial institutions.