A person is considered to have a tax residence in a country if he/she is liable under the laws of that country to tax due to domicile, residence, place of management and control or any other similar criterion.
Where an accountholder or controlling person is a reportable person with respect to multiple participating countries, the entire account balance or value, as well as the entire amount of income or gross proceeds, shall be reported to each participating country.
As is the case with US FATCA, collecting a Tax Identification Number if issued by the relevant country, and holding the date of birth for pre-existing accounts, is vitally important to enable correct reporting.
As such, you may find your clients start receiving requests for information from financial institutions in the coming months.
A reporting financial institution is allowed to do this by mail, email, fax, telephone or self-certification.
Once an account is identified as reportable, it remains so for all subsequent years, even if the account has no balance or value, or received no reportable payments, unless the accountholder ceases to be a reportable person due to a change in circumstances, or if the account is closed.
The exchange of information, whether in relation to personal accounts, trust accounts or accounts of other structures, is expected to lead to a significant increase in the amount of information available to tax authorities in participating jurisdictions.
It is also worth pointing out that one of the key differences between the FATCA agreements and the CRS is that the CRS has no monetary threshold – where an account is reportable its value is immaterial.
