The Common Reporting Standard (CRS), commonly called the Global FATCA, is designed to prevent tax evasion, and ultimately, initiate a global automatic exchange of information between CRS-participating jurisdictions.¹
The CRS has been implemented at European Union level through the Directive on Administrative Cooperation (Directive 2014/107/UE), known as “DAC 2”.
Under the CRS, financial institutions must report financial accounts held directly, or indirectly, by account holders that are tax residents in a CRS jurisdiction.
Who is within scope of the CRS?
All financial institutions situated in a CRS jurisdiction are subject to the CRS regulation.
In order to identify CRS-jurisdiction residents, financial institutions must acquire self-certifications from their accounts holders. These must include the country(ies) of tax residence and the tax identification number(s) (the “TIN”).
Your TIN is a unique combination of letters and/or numbers assigned to you/your entity by a tax authority or government. Some countries/territories do not issue a TIN, but instead rely on other issued numbers such as social security/national insurance numbers for individuals or company registration/employer identification numbers for entities. OECD has published a list of acceptable TIN formats and their alternatives which can be found at the following link:
For information on tax residence, please refer to your tax adviser or see the following link:
http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/
Is CRS applicable in Luxembourg?
Yes. As a member of the European Union Member State, the ‘DAC 2’ must be implemented in all of Luxembourg’s national legislation. As such, Financial Institutions based in Luxembourg need to report collected information to the local tax authority (Administration des Contributions Directes) that will then forward the information to the tax authorities of the account holder’s countries of tax residence(s).
What does CRS mean for Banking Circle clients?
For new customers, Banking Circle must acquire its customers tax residence(s) and their TIN. Without this information, Banking Circle is not authorized to open the account.
For Pre-existing customers, Banking Circle will contact all customers subject to CRS review to obtain a self-certification form in which they must determine their residence for tax purposes and provide their TIN. Without the required documentation, Banking Circle is legally obliged to consider the account holder as a reportable person. Consequently, undocumented account holder information will be reported to the relevant tax authorities.
¹ CRS participating jurisdiction (or “CRS jurisdiction”, is a country that agreed to implement the CRS).