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CRS in Business account

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asiamanner

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Dec 28, 2021
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#1
Hi everybody. I have company in Hong Kong, business account in Singapore and I am citizen to EU member state. Does Singapore's bank report me to CRS or not? Does anybody know? If so, it would be better to have business account somewhere outside CRS reporting country right?

Can anybody help where to settle prepaid cards for HK company without CRS? Thanks for your help :)
 
#6
#8
#10
It's all complex matter to read. But on all pages I read an escape route is to mark your company as an NFE(read: active companies producing selling goods)
How I read it, it's a full escape to the amerikan FATCA system and partially an escape to the CRS system.
Because the bank reports only the name of the company to the country where the company is located. The UBO's/board of the company are NOT reported in it's country of residence. THAT DOES MATTER A LOT TO MUCH OF US!

So like me, if you run a Panama offshore company, and have IBAN CRS bank account in Lithuania, the Bank will report to Panama. And not to the country of residence where the UBO lives.

So my conlusion is that your reply is a bit rude, and not correct. There are tons of topics even on the OECD page describing active NFA/NFFA's being a hole in the system.

For all readers on this forum: this one explains the best:

1. Active NFEs are engaged in an active trade or business (production, industry, non-financial
services, consultancy, marketing, sales, tourism, restaurants, services, etc.) where less than 50% of
their gross income for the preceding calendar year is passive income (see what is passive income
below).
Example: A bakery produces bread and more than 50% of its incomes comes from its commercial
activity.
Reporatble person in this case is the Entity only, i.e. the bakery. If the Bakery is a company in
Bulgaria, Satabank will have to report the account of this company to the Maltese tax authorities and
they will have to transfer the information to the Bulgarian tax authories.

2. Passive NFEs have more than 50% of their income that derives from passive income (a. o.
dividends, interests, rents, royalties, annuities).
Example: A company, which keeps cash and does not have active income or any commercial activity,
different from passive incomes. Or, in the example above - the same bakery, but it has a large
investment portfolio (has invested in shares or bonds or real estate) and has more than 50% of its
income from these investments than from its business activity.
Reporatble person in this case is the Entity and the Controlling Persons in the Entity. If the Bakery is a
company in Bulgaria, Satabank will have to report the account of this company to the Maltese tax
authorities and they will have to transfer the information to the Bulgarian tax authories. If the
Controlling persons (the person who owns more than 25% of the shares) are two – one individual,
who is a Bulgarian Tax Resident, and a second individual, who is a Greek Tax Resident, Satabank will
have to report also the Controlling Persons to the Maltese Tax authorities, and they will have to
transfer the information for the Controlling persons to the respective tax authorties in Bulagaria for
the first, and in Greece – for the second Controlling person.
 
#11
romalo said:
Do you have a proper source? There is a lot of bulls**t about CRS on the web.
Click to expand...

Yes read the official CRS guidance below and the faq page might be useful under reportable accounts section.


CRS OECD Manual:

https://www.oecd.org/publications/s...x-matters-second-edition-9789264267992-en.htm

CRS OECD Faq:

https://www.oecd.org/tax/exchange-of-tax-information/CRS-related-FAQs.pdf
Some Definition given on last pages:

“Controlling Person” This is a natural person who exercises control over an entity. Where an entity Account Holder is treated as a Passive Non-Financial Entity (“NFE”) then a Financial Institution must determine whether such Controlling Persons are Reportable Persons. This definition corresponds to the term “beneficial owner” as described in Recommendation 10 and the Interpretative Note on Recommendation 10 of the Financial Action Task Force Recommendations (as adopted in February 2012). If the account is maintained for an entity of which the individual is a Controlling Person, then the “Controlling Person tax residency self-certification” form should be completed instead of this form.

“Reportable Person” A Reportable Person is defined as an individual who is tax resident in a Reportable Jurisdiction under the tax laws of that jurisdiction. Dual resident individuals may rely on the tiebreaker rules contained in tax conventions (if applicable) to solve cases of double residence for purposes of determining their residence for tax purposes.

romalo said:
There are tons of topics even on the OECD page describing active NFA/NFFA's being a hole in the system.
Click to expand...

New or old loopholes? Some of these have been closed years ago around NFE's...lol. Are you referring to the below perhaps?

http://www.the-best-of-both-worlds.com/support-files/issue01.pdf
You need to look at substance criteria for company to be considered tax resident and that might be where effective management and control is exercised sadly. Hence data will be exchanged with company officers country. Some may even have the following for example:

The following points qualify for an “active NFE” (no reporting obligation):

  • Effective office locations must be available to the company.
  • Employees must be employed and work at the place of domicile.
  • Local standard monthly salaries with periodic social security contributions are mandatory.
  • The operational establishment character must be proved to the bank.
  • The business should have a local connection with local customers.
  • The most important decisions of the management should also be made at the domicile of the company (written minutes of the meetings with place and date are significant evidence).
 
#12
Exactly there is the maze.

I literally did a kyc procedure with 25+ banks (see other topic, all list with banks is there)
Non of the banks askes for this list.
Some ask "are you active NFE".
In a rare occasion they ask for and POA of the company. Which our Panama Lawyer provided.
Off-topic:
Modern e-commerce/platform companies don't furfill this bulls**t list. You only have to say: yes the final decisions are taken in Panama, in the "office". 1 time per year, in a 1 hour meeting.
That is a 100% fact. See arrest in Belgium for OECD. All meetings can be prepared at home, by a management team non living in the country of the company.
And now with Covid, the judges will have more headache.
Example: The management is working from home in multiple countries, the UBO doesn't activaly work. Impossible to Judge where the HQ are.

Result: Banks dont care about the list, the reponsability if for the account owner to ba an active NFA and sign for it.
They just CRS report to Panama and ready. Panama doesn't do anything with the data.

For peeps who are scared of double taxation this can be valuable.
Like me in Colombia. I have te report all income from all companies worldwide and pay 35% CIT.
a dutch BV is not acknowledged as a in spanish called SAS. They simply don't know what a BV is.
And because I'm sole shareholder, it's recognized similar to sole proprietorship / freelancer.
So I have to pay double CIT 25.8 in NL, and 35% in COL.
Of course foreigners don't pay it , but they off. should.

So to avoid discussion, My NL company now is not making profit anymore. All going to Panama.
So it's better to to this in silent mode, CRS to Panama-> no problem.
CRS report to UBO Colombia or NL = potential questions and problems. So to my opinion an Active NFE is a good solution to some and pretty easy to achieve.

prevention is better than cure :)
 
#13
romalo said:
I literally did a kyc procedure with 25+ banks (see other topic, all list with banks is there)
Non of the banks askes for this list.
Click to expand...

If they are already planning to report you to country of controlling person they do not need to ask for this information. It also saves them time having to comply with economic substance laws....lol.

“Reportable Jurisdiction Person” — an Entity that is resident in a Reportable Jurisdiction(s) under the local tax laws of such country. Generally, an entity will be resident for tax purposes in a jurisdiction, if under the tax laws of that jurisdiction (including tax conventions), it pays or should be paying tax therein by reason of its domicile, residence, place of management or incorporation or any other criterion of a similar nature, and not only from sources in that jurisdiction. An Entity such as a partnership, limited liability partnership or similar legal arrangement that has no residence for tax purposes shall be treated as resident in the jurisdiction in which its place of effective management is situated. If another type of Entity certifies that it has no residence for tax purposes it should complete the CRS Self-certification stating the address of its principal office. Dual resident Entities may rely on the tiebreaker rules contained in tax conventions (if applicable) to determine their residence for tax purposes.

romalo said:
Modern e-commerce/platform companies don't furfill this bulls**t list. You only have to say: yes the final decisions are taken in Panama, in the "office". 1 time per year, in a 1 hour meeting.
That is a 100% fact. See arrest in Belgium for OECD. All meetings can be prepared at home, by a management team non living in the country of the company.
And now with Covid, the judges will have more headache.
Example: The management is working from home in multiple countries, the UBO doesn't activaly work. Impossible to Judge where the HQ are.
Click to expand...

This does not fulfill the substance requirements however. Most countries have substance requirements - even the offshore ones as part of OECD rules I discussed in another thread. They were all forced to do enact Economic Substance laws a few years ago as part of BEPS Action 5 if I can remember. It has flown under a few people radars this change in law. Panama is no exception to this and has Economic Substance laws. You need to check if your company falls under Panamas Economic Substance laws.

https://www.iflr.com/article/b1lmx4...tance-requirements-for-offshore-jurisdictions
What the link I posted highlighted was Active NFE loophole was closed by virtue of substance test to determine tax residency and hence CRS reporting. This is what banks should be using. But as the article mentioned banks did not at the time understand this. Some banks may not care but the below from OECD is what they should be checking. It's the same way they check here OECD guidance on which tax ID to accept for each country they onboard a client from.

http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/
 
#14
It also saves them time having to comply with economic substance laws....lol.
it is a annoying reaction, do not like your personality.

Because I confirm and sign we are an active NFE they will NOT report to my country. That is a FACT from OECD & That is what the readers of the topic want to know.
Please don't continue telling CSI nonsense stories to people to draw attention and respect.
Just stop okay?

Or are you such a person who always wants to have the last word?
 
#15
Your ignorance is bewildering unfortunately. You really have not comprehended what I have told you about substance etc. My motive is always to help but for some like yourself ignorance is bliss once you decide facts don't matter and your shell company is tax resident in Panama then thats fine. If your not happy hit he ignore button. I don't lose sleep over any of this at all and thats why I laugh at you....lol.
 
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