crs report for corporation

[nakamura]

Hi Guys,

I really appreciate the information which you guys share and It is really helpful to study.

I have a question about the CRS rule.

I am Asian but living in the EU and have been doing ecommerce business for a long time.

I plan to leave this country to Asia soon

Under the CRS regulations, what is exactly triggers that banks share the information of the company account with foreign authorities and report the information?

Let`s say there is a company in A (EUROPEAN UNION). and the director opens a company account in B country.

Then the bank in B will report and share the information with A tax authority right?

My question is,

Let`s say, there is a shareholder who has shares more than 25% of the company. The shareholder does not have a private account in A. but has a private account in B. and his tax residency is B as well.

In this case, B will report the information to A under the CRS rule as the shareholder has more than 25% of shares?

I think that B will not report anything because the shareholder does not have any account in A.

I am a little confused.

The reason why I am asking this is because I want to set up a new company in Asia. My EU company will make profit in the EU and a new company in Asia will make profit in Asia separately but I am wondering if the EU country regards it as CFC and try to charge the new company in Asia the TAX. My tax residency will be changed soon. How is it gonna be?


Please help to understand the rule.


Thank you

 

[fshore]

Banks report an active trading company based on the tax residency of the company, which can be where it's incorporated and where it managed and controlled from. If it's a passive company (receives mainly income from dividends etc) then they will report based on residency of owners.

 

[Martin Everson]

Let`s say, there is a shareholder who has shares more than 25% of the company. The shareholder does not have a private account in A. but has a private account in B. and his tax residency is B as well.

In this case, B will report the information to A under the CRS rule as the shareholder has more than 25% of shares?

I think that B will not report anything because the shareholder does not have any account in A.

Whatever account the shareholder has his name on will be reported to his resident country....end off.

The reason why I am asking this is because I want to set up a new company in Asia. My EU company will make profit in the EU and a new company in Asia will make profit in Asia separately but I am wondering if the EU country regards it as CFC and try to charge the new company in Asia the TAX. My tax residency will be changed soon. How is it gonna be?

CRS reporting is bank account based. Whether a company is considered a CFC is determined by the laws and thresholds of your specific EU country where you will be living at the time of ownership.

 

[Onassis]

Whatever account the shareholder has his name on will be reported to his resident country....end off.

Not if it's an active NFE. Correct?

 

[Martin Everson]

Not if it's an active NFE. Correct?

Not correct in pactice.

There are several checks to be made to determine whether an active NFE is reported or not. And one includes it's tax residency.

You can see it in practice by SG IRAS below under section 7.2

https://www.iras.gov.sg/media/docs/default-source/e-tax/iras-common-reporting-standard_e-tax-guide-2.pdf

You then need to fulfill the tests in 10.7

 

[nakamura]

Banks report an active trading company based on the tax residency of the company, which can be where it's incorporated and where it managed and controlled from. If it's a passive company (receives mainly income from dividends etc) then they will report based on residency of owners.

I really appreciate your help and kind explanation.

 

[nakamura]

Not correct in pactice.

There are several checks to be made to determine whether an active NFE is reported or not. And one includes it's tax residency.

You can see it in practice by SG IRAS below under section 7.2

https://www.iras.gov.sg/media/docs/default-source/e-tax/iras-common-reporting-standard_e-tax-guide-2.pdf

You then need to fulfill the tests in 10.7

Thank you Martin,

It is really helpful to study and research for my new company`s structure.