FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) are two international regimes which facilitate the exchange of information to ensure tax transparency on a global level.
Both regimes, FATCA and CRS, are based on international agreements. Germany is a signatory to these international agreements, and consequently financial institutions resident there are obliged to collect certain prescribed account information and further on to transmit the mandated data to the partner countries.
FATCA stands for “Foreign Account Tax Compliance Act” and is a US-tax law aimed at encouraging tax compliance by US taxable persons outside the United States of America.
The United States and Germany signed an agreement to improve international tax compliance (IGA). The rules laid down therein have been implemented into German law by the FATCA-USA-Umsetzungsverordnung – abbreviation: FATCAUSA-UmsV.
FATCA requires foreign financial institutions to collect tax relevant information regarding US persons and report this information to the US tax authority. The legal requirements have to be met for pre-existing clients as well as for new clients. They have to be screened to detect a potential US reporting relevance. The bank uses a so called “Self-Certification FATCA and CRS” form, on which the client is asked to declare his tax residencies.
The client is obliged to inform the bank within 30 days in relation to any subsequent change of tax residence. Should the bank identify new or changed “US indicia” (see graphic “Indicia according to FATCA” on page 2) the bank will contact the client to ask him to submit a new self-certification form.
Indicia according to FATCA:
Where the bank’s records indicate indicia which may lead ultimately to a reporting obligation to the USA, the bank is obliged to report certain prescribed account information to the Federal Central Tax Office (“Bundeszentralamt für Steuern” – BZSt).
This report may also include beneficial owner’s information and in certain cases controlling person’s information. The BZSt is obliged to forward this information to the US federal tax authority IRS (Internal Revenue Service).
CRS – the Common Reporting Standard – is a common and comprehensive approach of the OECD for an automated exchange of information to ensure tax transparency on a global level. The purpose is the implementation of a common model for an international exchange of tax information.
The “Common Reporting Standard” was aligned internationally by the OECD, the group of G20 countries and the European Union. Germany implemented the reporting standard into local law – called “Finanzkonten Informationsaustausch Gesetz” (abbreviation FKAustG).
Financial institutions are obliged to ascertain the tax residency for all new and existing clients. This is accomplished by using an internally produced document known as the “Self-Certification FATCA and CRS” form which requires the client to document their residency for tax purposes. In cases where the identified tax residency is within a CRS member state – the client becomes reportable for the respective country.
The client is obliged to inform the bank within 30 days in relation to any subsequent change of tax residence. Should the bank identify so-called ”indicia” (see graphic “Indicia according to CRS” on page 2) which may indicate another relevant tax residency the bank will contact the client to submit a new self-certification.
Indicia according to CRS:
The identification of relevant indicia may ultimately lead to a reporting obligation outside of Germany or the respective branch location. The bank is obliged to report certain prescribed account information to the to the Federal Central Tax Office (“Bundeszentralamt für Steuern” – BZSt).
This report may also include beneficial owner’s information and in certain cases, also controlling person’s information. The BZSt is obliged to forward this information to the respective tax authorities of countries participating in these automatic exchange of information regime.
Pursuant to the tax reporting regimes FATCA and CRS the following information will be submitted: name, address, account number(s) and balance(s) of so called financial account(s). In addition interest payments, dividends and gross proceeds from sale or redemption of equities will be submitted – if there are any.
The report is based on a calendar year with a cut-off date of December 31st of the previous year – the reporting year. The data transmission to the competent German tax authority takes place on a secured electronic channel.
We kindly advise you, that the FATCA and CRS reporting does not relieve you from your tax obligations towards the respective tax authority. Due to different regulatory requirements, it may occur that data reported under the FATCA or CRS regime may not be identical to other tax statements provided by UniCredit Bank GmbH.