What is the common reporting standard (CRS)?
The Common Reporting Standard and due diligence in the automatic exchange of financial account information was drawn up by the OECD, incorporated in Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards the mandatory automatic exchange of information in the field of taxation and transposed by the law of 18 December 2015 on the Common Reporting Standard (CRS), published in the Mémorial A – No 244 of 24 December 2015.
By 30 June each year, Luxembourg financial institutions are required to report to the Luxembourg tax authorities (Administration des Contributions Directes) personal and financial information for the previous year relating to the accounts of the persons concerned.
Before 30 September each year, the Luxembourg tax authorities will transfer this information to the tax authorities of the customer’s country of residence and to those of the countries in which indicia have been detected without being invalidated by a self-certification (provided the countries identified are countries participating in the exchange).
Today, more than 100 countries are in scope for reporting.
How does it impact the bank?
As a Luxembourg financial institution, Quintet Private Bank is responsible for determining the tax residence of its customers:
- For customers who are natural persons, tax residence is determined on the basis of the information held as a financial institution and (if necessary) by a self-certification provided by the customer.
- For customers who are legal persons, a self-certification shall be requested mentioning the entity’s CRS classification and the natural person(s) controlling the structure (where appropriate).
Based on this identification process, each year Quintet Private Bank communicates reportable customers and reportable accounts to the Luxembourg tax authorities.
How does it impact you?
Quintet Private Bank contacts all its customers in order to collect the appropriate self-certification.
For the purposes of the CRS regulations, the forms are only to be updated if there is a change in circumstances (change of country of tax residence, change of activity, name, beneficial owner, etc.). The update must be received within a maximum period of 30 days or risk being considered as notifiable in several countries.
A customer who is a natural person is deemed reportable if he is resident in a reportable jurisdiction or has at least one CRS indicia in a reportable jurisdiction other than his country of tax residence:
- Address (post, residence, post-office or care-of) in a CRS jurisdiction;
- Telephone number from a CRS jurisdiction (if that is the only number);
- Standing order to an account maintained in a CRS jurisdiction;
- Power of attorney on an account granted to a person with an address in a CRS jurisdiction (post, residence, post-office or care-of).
Consequently, if the person holding the account does not submit a self-certification, Quintet Private Bank shall report this person on the basis of the information in its possession (a customer may be reportable in several countries).
A customer who is a legal person is reportable if required by its status (i.e. Passive or an Investment entity in a non-reporting jurisdiction) and if it is incorporated or fiscally resident in a reportable jurisdiction or if it is controlled by a natural person resident in a reportable jurisdiction.
What exactly is reported to the tax authorities?
The information reported to the tax authorities will be:
- of a non-financial nature: name, address, country(ies) of residence, tax identification number, date and place of birth for individual and
- of a financial nature: account number, account balance as at 31 December, accounts closed as well as the total gross amount of interests, dividends and other income, the total gross proceeds of sales and repayments of financial assets credited to the account(s) during the calendar year.
The above-mentioned amounts are financial information; they do not automatically correspond to taxable income under the tax legislation of the country of residence of the account holder.
Which forms should be completed?
All legal persons who are account holders :
- Entity tax residency self-certification (CRS-E) : French - German -English - Netherlands
All natural persons who are account or joint account holders :
- Individual tax residency self-certification (CRS-I) : French -German- English - Netherlands
For legal reasons, Quintet Private Bank is not authorized to advise you on your tax situation or your CRS status. In order to avoid the most common errors, we invite you to contact a professional tax advisor.