Form to identify if I am a reportable person for purposes of CRS

Yaneek

Building Trust
Entrepreneur
Hello.
My bank from Cyprus sent me two forms today:
  1. Form to identify if I am a reportable person for purposes of CRS
  2. Form for tax residency declaration
This seems like a serious thing and I do not want to make mistakes. Can anybody tell me how I have to complete this form? What I should declare and what not?

My country is part of CRS.
My offshore company was closed last year, but the bank still needs these forms now because I still used my bank account last year.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
1. Is your home tax office aware of the offshore company?

2. How did they send you the form by post to home address or by email?

Being your account will be reported to all addresses they have on record for you anyway, "Self Certification" of tax residence does very little to prevent information being exchanged with addresses they have on record for beneficial owners, directors, shareholders, signatories etc.

The only question now is whether you have any tax owed from activities of offshore company. To determine this you need to know what CFC laws exist, what income was made etc.

P.S Yes it is serious as lying now on those forms adds an offense of fraud to any tax evasion offense if your home country ever finds out.
 

Yaneek

Building Trust
Entrepreneur
1. Is your home tax office aware of the offshore company?

2. How did they send you the form by post to home address or by email?

Being your account will be reported to all addresses they have on record for you anyway, "Self Certification" of tax residence does very little to prevent information being exchanged with addresses they have on record for beneficial owners, directors, shareholders, signatories etc.

The only question now is whether you have any tax owed from activities of offshore company. To determine this you need to know what CFC laws exist, what income was made etc.

P.S Yes it is serious as lying now on those forms adds an offense of fraud to any tax evasion offense if your home country ever finds out.
First of all thank you Martin for taking the time to reply.

1. No it is not.

2. They sent the form to my home address by post.

What is the best thing I can do in this situation? Should I worry?
 

Yaneek

Building Trust
Entrepreneur
I could still declare the money this month (it's the deadline this month). Do you think it's a good idea to declare it as income (not dividends) and pay income tax for the amount? Sounds silly I know, but income tax has been lowered over the years in my country and I would be 100% ok, paying this. I would only declare the amounts I actually received. As far as I understand I don't have to declare the amounts that I reinvested in the company and didn't withdraw. Would my approach be 100% legal?
 

fshore

Trusted Member
Business Angel
1. If that was an active company then you should not be reportable, only the company should be reported. If it was active then you should fill out the form claiming that this was an active trading company and not a passive company (owners of passive companies will be reported directly).
 

Yaneek

Building Trust
Entrepreneur
1. If that was an active company then you should not be reportable, only the company should be reported. If it was active then you should fill out the form claiming that this was an active trading company and not a passive company (owners of passive companies will be reported directly).
Any active company is one that make at least one transaction per year right?
Only companies with a balance of more the €250.000 are reported right?
 

Yaneek

Building Trust
Entrepreneur
So if my company was active, with balance way below 250k, do I even have to worry?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
I could still declare the money this month (it's the deadline this month).
If you have earned money above and beyond any tax free threshold in home country then do so immediately.

Do you think it's a good idea to declare it as income (not dividends) and pay income tax for the amount?
How much are we talking about here i.e 1,500 bucks or 150,000 bucks?

As far as I understand I don't have to declare the amounts that I reinvested in the company and didn't withdraw. Would my approach be 100% legal?
I don't know which country you are talking about here to understand the tax system and implication of non-compliance.

Bottom line is if the tax is low in home country then declare everything pay whats owed and sleep at night. Your company is going to be CRS reported. As they sent you mail at your home address then that is the address they have on record and the country which will receive your account details - CRS Self Declaration or no CRS Self Declaration completed. Discussions on active or passive activity is irrelevant.
 

Yaneek

Building Trust
Entrepreneur
How much are we talking about here i.e 1,500 bucks or 150,000 bucks?
Bottom line is if the tax is low in home country then declare everything
In the meantime I talkedto the banker. They said my company was not reported in the past years because the balance was always under 250k. However for 2018 they have to declare all companies that are considered passive. They said my company is categorized as passive in their records. I have the option to declare it as active till tomorrow. However I don't know what the conditions are and which companies are considered active or passive.

All I did in 2018 was to spend money and withdraw. I am not sure if that qualifies as active.

What should I do?
 

Admin

Forum Moderator
Staff member
Hello.
My bank from Cyprus sent me two forms today:
  1. Form to identify if I am a reportable person for purposes of CRS
  2. Form for tax residency declaration
This seems like a serious thing and I do not want to make mistakes. Can anybody tell me how I have to complete this form? What I should declare and what not?

My country is part of CRS.
My offshore company was closed last year, but the bank still needs these forms now because I still used my bank account last year.
BoC asked me about the exact same thing, I refused to complete the forms and they closed the account. So far I have not heard anything from the local tax office but I'm sure I will :D I only had a very small amount on this account for years never used it so I can't care less about it.
 

challenge

Thrustswiththe Member
Entrepreneur
I would fill the form as active NFE asap. Possibly call/talk/write/persuade them that it was a mistake by their system and that your company was always a trading company, so it has to be active NFE for CRS matters.
(unless it was a holding, in that case they were right and you can't do anything...)

--> When you fill that form as active nfe you don't have to put your personal info there. When it says tax ID number it's the one of the company, when it says residency is the company's tax residency not yours as individual. You don't have to fill controlling person info for active NFEs.

Google about the crs form and you'll find plenty of manuals to fill them correctly for each entity type if instruction are not clear. e.g. the HSBC one is pretty clear, or if you're really dedicated you could go read the CRS handbook... hundreds of pages.
 

Yaneek

Building Trust
Entrepreneur
Good info challenge. Thanks a lot man.

Guys I only have till tomorrow to fill out the form. Please do reply now if you have any info for me.

What do I tick for these:
  • A corporation the stock of which is regularly traded on one or more established securities markets? Yes/No
  • A corporation that is related entity of a corporation that is publicly traded? Yes/No
  • Non for profit organization? Yes/No
  • Income tax exempt (government entity, central bank or international organization) Yes/No
My guess is that I have to tick no for all except the last one?

What bothers me is that the form says that the controlling person has to fill out the form with the personal info except when the company is a 'corporation the stock of which is regularly traded on one or more established securities markets'
 

challenge

Thrustswiththe Member
Entrepreneur
Well you should tick No to everyone. Last one is for gov. entities/banks and special "public" companies that are tax exempt by law.
But usually those questions are in the sections/forms that aren't for active nfes.

-- Can you attach the pdfs they sent you? maybe they sent you only the forms for the non reportable or passive nfe instead of those of active nfe?
-- which bank is? BoC or Hellenic or ?

Really if you can't answer those easy questions correctly... you could make way bigger mistakes in that form both with Cyprus and with your home country. Don't you have an accountant?
 

Yaneek

Building Trust
Entrepreneur
Ok then I will tick no to all. Here is the form from hellenic.
I would appreciate all help I can get (maybe I did more mistakes in the form?). I also don't know what to tick on page 2, #8. I haven't completed anything beyond page 4.
Today is the last day for this.

I do have an accountant for my onshore business, however I haven't told her about the offshore. I don't think she can help me with this.
 

Attachments

challenge

Thrustswiththe Member
Entrepreneur
@Yaneek I am quite busy, but gave it a quick check, disclaimer: i'm not an accountant, but filed quite a bit of these the last two years...

For active nfe there's lots of stuff you don't have to fill there, so it's pretty easy, but:
  • page 1 everything mandatory is marked with * ; place of management cyprus, same for registered address.
  • page 2 fill everything mandatory, if you already sent the docs in the list when you opened the bank account you may omit them. usually all this info is for account openings, they should already have it
  • page 3: only legal name and PART B; 6,7,8,9 all NO; 10a yes resident of cyprus and its tax id number, 10b not USA, 11 Active NFE
  • page 4: sign
  • page 5: your data, same as you supplied when you opened it. IGNORE the "Tax Residency". As you can see on page6 note 4: "In any case, no Tax Residency information needs to be provided if the Entity is Active.", so don't fill your personal Tax info as this is active NFE.
that's it and since you didn't give them your tax id number you should be pretty safe. Your personal data should be only for internal KYC/AML on opening, not for CRS reasons. They should already have all of that. In case of problems they'll ask you later, but being active NFE don't think they'll care too much, unless there are other specific treaties between your passport country and cyprus...

Send it to them filed that way and ask if they need copy of "yours" and company documents, even if they should already asked you at the opening due diligence phase.
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send me a coffee if you want, I don't do drugs, but you can choose coffee or hookers...
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Yaneek

Building Trust
Entrepreneur
Thanks for the help. I PMed you.
I sent them the form. Lets see what happens.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
update: they accepted the form. my company is categorized as active now.
The simplest explanation is below (See point 3). There still seems to be a lot of misunderstanding on how CRS actually works sadly. Nothing you have done will prevent reporting. I doubt very much your cyprus banker knows anything about CRS and how the bank has implemented it other than a basic client faq sheet they are given and talking points. Criminal prosecution is no joke.

See point 3:
Active NFE as a solution for CRS

P.S I replied to your PM. Sorry was late to party but keep in mind what I mentioned in it.
 

challenge

Thrustswiththe Member
Entrepreneur
it would be too long to write everything, but don't scare him. He will not be reported. As now, banks are not economic police units... if they really have doubts about active/passive self certification they'll check the NACE business code in the registry and that's already way more than enough.

this is cyprus guidance to crs, as soon it's active-NFE it's not reported, full stop. And usually the self certification, as long as the other data is coherent, is enough.
https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/crs-by-jurisdiction/guidance/Cyprus-Guidance.pdf

Forget all that "Although no information is reported about Controlling Persons in this report, this will likely trigger an exchange on demand about Controlling Persons" from your link. I know who that author is. He's doing wishful thinking there, an exchange on demand in the majority of countries would happen only if there is a crime big enough to justify it... I mean millions.

why do you think Greens are crying like little kids in the EU parliament about active NFEs not being reported? :)
http://extranet.greens-efa-service.eu/public/media/file/1/5729

things are already changing though, it'll not be like this for long...
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
it would be too long to write everything, but don't scare him. He will not be reported.
The guidance is not how it works.

Banks implement CRS software modules into their core banking platform to perform the CRS reporting. They are not manually going through 100,000's of accountants checking balances and CRS criteria manually.....lol. In large banks it is an automated software process. Indicia software modules of CRS software will "automatically" flag your account for reporting to UK if you have i.e a UK telephone number against an account but claim to be resident in Germany. There is no if's and but's about it. Search the Cyprus guidance for "indicia" rules perhaps. However if it makes people sleep better at night that they think a "Self Certification" form determines which country they get reported too and if they get reported then good luck I guess, but having an address and phone number for country X an then filling form to say you live in Country Y does not mean you will not get reported to country X...lol. He is beneficial owner of company and resident in CRS country and hence will be reported. That is common sense and people need to stop searching for hope.

The sums he is talking about (he PM'd me value) will mean criminal prosecution and jail if the taxman opens a case after receiving any information. To think the banks CRS software relies alone on "Self Certification" data you provide on the form - data they cannot verify is like saying the bank relies on you telling them what your home address is without you providing proof of address. So to do nothing and cross fingers and hope maybe not a good idea. We are not talking evading income of 800 euros here but much more.

However you can pray that this particular Cyprus bank does not understand CRS reporting and developed their own CRS reporting methodology based on guidance but if they picked an off the shelf software solution it is a different story.
 

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