Some more CRS questions

[xxxmb]

Hi everyone, I signed up here because I found a lot of good answers on this forum through Google.

However I'm still left with some questions. Yes I've read the implementation handbook, but it is quite complicated stuff . I was hoping I could get some answers here or at least get the discussion going.

- Am I reading it correctly that an active NFE is excluded from CRS? If so why is everyone so worried, this would only apply to personal accounts or shell companies that are de facto only there to hold cash?
- The $250.000 reporting threshold for companies is at the discretion of the bank correct? So not something we can rely on
- Will a $0 balance be reported?
- If you close your account during this year, the bank will report the closure date, but do they also report a balance of some sort?

Obviously I'm in somewhat of a grey area (not a tax resident anymore in the country that my bank has on file, but it seems impossible to change that) and I don't really want to wait and see what happens if they do report it .

 

[fshore]

Hi everyone, I signed up here because I found a lot of good answers on this forum through Google.

- Am I reading it correctly that an active NFE is excluded from CRS? If so why is everyone so worried, this would only apply to personal accounts or shell companies that are de facto only there to hold cash?

Active NFE will be reported as the account holder, the UBO is not mentioned. In this case the country that receives the report might ask for further information from the bank country, and can get UBO information that way.

Why do you worry if you get reported to a country where you are not tax resident?

 

[xxxmb]

Ok in my case that is a Seychelles company, so I doubt they will do anything with it since I'm not a tax resident there.

Why do you worry if you get reported to a country where you are not tax resident?

Because I used to be a tax residence there and it is my home country that I still visit often. Besides I would have to explain why my old personal address is on my business bank account. I'm pretty sure I can prove I don't owe them anything, but either way I'd rather let sleeping dogs lie .

 

[fshore]

Ok in my case that is a Seychelles company, so I doubt they will do anything with it since I'm not a tax resident there.

It will not be reported to Seychelles, but to the country that the bank determines the company is tax resident. This might be your personal address.

 

[xxxmb]

My bank send me a self certification form this year and I filled it in according to their instructions which ended up with the address of my Seychelles company, so I assumed that would be the country to which the details are sent?

I'm just going to assume that any of my accounts will be reported, just to be on the safe side. Nonetheless I'm still interested in the other questions I had .

 

[Martin Everson]

- Am I reading it correctly that an active NFE is excluded from CRS?

No

- The $250.000 reporting threshold for companies is at the discretion of the bank correct?

Yes

- Will a $0 balance be reported?

Yes

If you close your account during this year, the bank will report the closure date, but do they also report a balance of some sort?

Yes

Obviously I'm in somewhat of a grey area (not a tax resident anymore in the country that my bank has on file, but it seems impossible to change that)

Even with self certification of tax residency to the bank the bank should report to every country where they have indicia meaning a telephone number on record from that country, mailing or communication address to a country etc. Please note most banks are operate with CRS software, either in house or bought from thirdparty, that manages the complete rule book for CRS reporting. There is no human being going through client records manually checking 100,000+ accounts in some cases unless the bank is very small and poor. The CRS software module takes care of reporting everything even in event of address changes during the year etc. The software spews out the data report they send to their local tax office for future forwarding. It is not the banks responsibility if they report to the wrong country nor will they care as if you are not a resident there then the authority will ignore the data they are given. There will be many false alerts but that is expected.

 

[xxxmb]

Thanks for the reply Martin.

I guess we'll just see what they do eventually with the information. I guess it could be in the account holder's benefit as well if the wrong address is on file with the bank.

In my scenario it might cause some issues, but nothing major I think.

Just surprised they also report $0 balances, they have a ton of information about empty bank accounts coming their way

 

[KJK]

Obviously I'm in somewhat of a grey area (not a tax resident anymore in the country that my bank has on file, but it seems impossible to change that) and I don't really want to wait and see what happens if they do report it .

This is an interesting situation. Does anyone know what can happen in such case?

You are born in country A where in the past you opened a bank account.
Then you change your residency to country B, don't report it to the bank.
While having that residency (B) you send money to your old bank (A).

The bank then reports some transaction as suspicious (not necessarily under CRS but can be).
Tax office gets interested and asks you whether you reported it as taxable income.

Can you respond by proving your new residency and be off the hook?
Or will there by some consequences because you didn't report the change?
Can they somehow demand you to show proofs that you didn't stay in your home country?

 

[Martin Everson]

This is an interesting situation. Does anyone know what can happen in such case?

Just mentioned in my last post what happens

Can you respond by proving your new residency and be off the hook?

Yes.

A lot of pensioners who retired abroad and left their kids to the family home and didn't bother change their address will have this issue. You can give the bank your new residence and that is it. However if tax office gets involved like they did to my friend just prove you are living abroad and claim it was an oversight and case closed . Country B will then start getting CRS data moving forward.

 

[brownham]

A lot of pensioners who retired abroad and left their kids to the family home and didn't bother change their address will have this issue. You can give the bank your new residence and that is it. However if tax office gets involved like they did to my friend just prove you are living abroad and claim it was an oversight and case closed . Country B will then start getting CRS data moving forward

you are sure that simple?

 

[Martin Everson]

you are sure that simple?

Yes.

 

[mrmrmanhuman]

Yes.

Your responses are helpful!

In the management of confidentiality due to CRS, there are jurisdictions that do not participate in the CRS, and there are jurisdictions that participate but do not have a hard approach on the FIs. Anyone here know whether any Tax Authorities have begun auditing any banks or financial institution? The mentions will be worth avoiding!

 

[KJK]

Anyone here know whether any Tax Authorities have begun auditing any banks or financial institution? The mentions will be worth avoiding!

It is not the role of a tax office to "audit a bank", therefore your question is absurd and doesn't make sense.

 

[mrmrmanhuman]

It is not the role of a tax office to "audit a bank", therefore your question is absurd and doesn't make sense.

I think you need to get your facts right KJK.

Section IX of the CRS requires tax offices to ensure effective compliance to the CRS via rules, penalties, follow up procedures and audits. Based on the OECD CRS implementation handbook, it provides “guidance” on how to ensure “effective implementation”, with one of the measures being compliance reviews, i.e. audit.

I urge you to get your facts right before making such statements. Most of the patrons here are serious and are genuinely in to discover solutions. Your comments are absurd and you should perhaps reflect on where those absurd tendencies arise from. I sincerely pray that you do.

—
OECD Implementation handbook (2nd ed), para 47

47. Jurisdictions will also need to consider whether existing regulatory or tax audit programs can be adapted to monitor compliance with the Standard or whether a new review methodology should be employed. Since the CRS relies in many aspects on AML/KYC procedures, compliance with relevant AML/KYC obligations is a prerequisite for the proper functioning of the CRS and should therefore be an integral part of the compliance review procedure

 

[KJK]

Where exactly does the OECD CRS implementation handbook mention that "tax authorities are supposed to audit banks"? Do you even know what an audit is?

Your question is absurd and your understanding is wrong.