Questions and Answers FATCA and CRS
Useful information about Garanti BBVA
Find out everything you need to know about FATCA and CRS
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Frequently asked questions
What is FATCA ?
FATCA (Foreign Account Tax Compliance Act) is a US regulation that requires all Financial Institutions to identify customers with US citizenship or US tax residence. Additionally, it requires Financial Institutions to send information, annually, about these customers to the IRS.
What is CRS ?
The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information. It was developed by the Organization for Economic Cooperation and Development (OECD) and its aim is similar to FATCA’s but taking into consideration customers from all partner jurisdictions.
What is the purpose of FATCA ?
The purpose of this Act is to prevent tax evasion by US citizens or residents. This legislation is focused on obtaining information from people with tax obligations in the US and does not imply any additional tax payment.
Why is CRS being introduced ?
Under CRS, tax authorities will require all Financial Institutions (such as Garanti BBVA) to collect and report certain information about non-residents.
Therefore, Financial Institutions will be requesting a self-certification to all new customers and also to existing customers that have a change in circumstances for a correct identification for CRS purposes.
What is the impact of CRS?
CRS has a far-reaching effect and can impact any customer, whether it is an individual or an entity. Most of the countries, including all EU members and major financial centers around the world have committed to CRS, with the important exception of the U.S.A. which is already committing with the exchange of information purpose under the IGAs signed for FATCA purposes.
What does Garanti BBVA have to do to comply with CRS?
- Obtain all tax residences and Tax Identification Numbers (TIN/NIF) of all new customers as of January 1st 2016 (early adopters);
- Collect and review information to identify the tax residence or the multiple tax residences (if any) of existing customers;
- Send information about financial accounts held directly or indirectly by foreign tax residents to the Local Tax Authority.
When was FATCA published? When did it come into force?
The regulation was published in February 2010 but did not come into force until July 1st, 2014. From that date on, all Financial Institutions must request additional documentation from customers upon account opening for a correct identification.
Who is affected by FATCA?
FATCA concerns US citizens or US tax residents and also customers who refuse to present the information requested by Financial Institutions (non-compliant customers).
How does CRS work?
With the entrance into force of CRS, Financial Institutions will be requiring additional information from customers and sharing it with the Local Tax Authorities. Additionally, Local Tax Authorities will be sharing such information with other partner jurisdictions. The commitment of CRS is ensured by local legislation (e.g. sanctions for a wrong identification or reporting of customers).
What is required of me as a customer?
Garanti BBVA requires your assistance in determining your tax residences. On this regard, you will be asked to provide a Self-certification form.
You may also provide this self-certification if Garanti BBVA has any reason to believe you might have tax obligations in a foreign country.
Additionally, you will be responsible for completing the Self-Certification form and promptly notifying Garanti BBVA of any change in your circumstances.
How is the tax residence determined?
The tax residence will be based on the definition under the local legislation. For further information please contact your Local Tax Authority and/or tax advisor.
I am not a citizen / fiscal resident of the US. In this case, does FATCA affect me?
No. Customers will be considered as falling under FATCA if they are identified as reportable (customers with tax obligations in the US or customers that do not conform to the reporting obligation). Information on non-US customers will not be reported. However, even these customers will be identified by the Financial Institutions.
I am a citizen / fiscal resident of the US. Does FATCA affect me?
Yes. If you are a US citizen or tax resident in the US, you will have to present your tax identification number (TIN) from the US in order to be correctly identified.
Once a year, your personal details, your account balance and payments made to these accounts will be reported to the IRS (US tax authority), either directly or through Local Tax Authority.
A person who is not born in the US, will be considered tax resident in the US?
It is possible. All holders of “Green Card” and people considered “tax resident” under US tax law, may be classified also as US persons by place of birth.
In this regard, all exemptions provided by US regulations will be taken into account.
I live and pay taxes in the same country. Why should I provide this information?
For CRS purposes, Garanti BBVA is obliged to request the tax residence from all customers even if the customers pay taxes in their country of residence. If the country where the customer opens the account is the only tax residence country for that customer, the customer’s information will not be passed on to partner jurisdictions.
Does FATCA/CRS require any additional action from customers?
No. The main obligation for customers will be providing the requested information anytime the entity asks for it.
What happens if the customer does not identify itself properly or refuses to provide its information?
Under FATCA, if the customer does not identify itself properly, it will be classified as “non-compliant” and any US payment received on his/hers account could be subject to withholding.
Under CRS, the local tax authority could establish sanctions for non-compliant customers.
What is TIN/NIF?
A Taxpayer Identification Number (TIN/NIF) is a unique combination of letters and/or numbers assigned to you. Some countries do not issue a TIN/NIF, but rely on another issued number such as social security/insurance numbers and so on.
What happens if I was born in the US, but I am not a US citizen / resident?
If you were born in the US, but you are not a US citizen, you must submit the certificate regarding loss of US citizenship or a reasonable explanation as to why you have not obtained this citizenship at birth or you have renounced the citizenship.
If this document is not presented, your personal details will be reported as being received from a person with US connection.
If I am a US citizen/ tax resident, is there any way not to apply FATCA regulations?
No. Information regarding all US customers which hold reportable financial accounts will be reported to the tax authorities.
What is Employer Identification Number (EIN)? (for FATCA)
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity which has employees. According to the IRS, your business must have an EIN if any of these criteria apply:
- You have employees;
- Your business operates as a corporation or a partnership;
- You file any of these tax returns: Employment, Excise or Alcohol, Tobacco and Firearms;
- You withhold taxes on income other than wages paid to a nonresident;
- You have a Keogh Plan (a tax deferred pension plan available to self-employed individuals or a business not incorporated for retirement purposes);
- You are involved with certain listed organizations, such as:
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns;
- Estates;
- Real estate mortgage investment conduits;
- Non-profit organizations;
- Farmers’ cooperatives;
- Plan administrators.
Does FATCA and CRS impact only on Garanti BBVA?
No. The legislation has an impact on all financial institutions (credit institutions, brokers, funds, and so on).
What is an Intergovernmental Agreement or IGA? (FATCA)
An Intergovernmental Agreement (IGA) is a bilateral agreement between a country’s tax authority and the U.S. government that facilitates compliance with FATCA. These agreements enable financial institutions from the designated jurisdictions to comply with FATCA, especially where local privacy laws keep them from complying.
What happens if I refuse to submit the statement (Self – certification form)?
You must fill in and submit the Self-certification form if you want to open an account at Garanti BBVA. If we have reasons to believe that you have a tax residence in a foreign country, we have a legal obligation to pass information to the tax authorities.
Did Romania sign an IGA with the US? (FATCA)
Yes, Romania signed an IGA with the US, in year 2015, based on which Romania will send information of a fiscal nature to the IRS regarding persons and entities who have US residence or present other US identification elements.
What information needs to be reported?
The information requested in the Self-certification form and details regarding your accounts and products that you hold, including:
- Account balance / value at the end of the year;
- Total interest for the year / amounts credited to the account.
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