EMI no CRS

[kkein]

I personally see no reason for an EMI to claim not reporting if they are in fact reporting. This can only backfire on them, once the first of their customers will get into troubles and advertise the thing.
This, plus the fact that by european laws EMIs are, as of now, not yet obliged to report.

 

[Igemon]

And even BlackCatCard, while asking for a TIN, didn't ask for any official document confirming that was actually a TIN.
So I just entered some random numbers, good luck with that report

 

[kkein]

And even BlackCatCard, while asking for a TIN, didn't ask for any official document confirming that was actually a TIN.
So I just entered some random numbers, good luck with that report

Well if they do report as they say, you may get into troubles, at some point. The report will get to Malta, then sent over to your country of tax residence. It might happen that this will in fact get you flagged or something

 

[myshufflemix]

Adv cash is based in Gibraltar and has russian owners.
They said to my email that they don't report anything unless they get a court order , then they have to disclose any info they have..

I believe that is the truth. From all the EMI's around I trust AdvCash the most.

 

[Igemon]

Well if they do report as they say, you may get into troubles, at some point. The report will get to Malta, then sent over to your country of tax residence. It might happen that this will in fact get you flagged or something

There was only a minor amount in BCC because I knew from the very beginning they will report. Nevertheless, I don't think they will report it correctly.

 

[CounselRep]

There is a discussion in the following link about whether EMIs are legally obliged to report an EMI account under CRS:

https://www.offshorecorptalk.com/threads/payeer-crs-reporting.30052/post-144428
The short answer seems to be that those EMIs with UK-issued or Maltese-issued EMI licenses are not obliged to report under CRS (because EMI accounts are not considered "depository" accounts under the rules of CRS).

(read this in particular: IEIM400750 - International Exchange of Information Manual - HMRC internal manual - GOV.UK).

I haven't checked the situation for Lithuania or every other EMI licence-issuing country in Europe (not being able to read every European language makes that difficult), but the underlying EU Directive for EMIs, and the EU Directive for CRS, are the same for all EU countries. So - in theory - the (pre-Brexit) UK situation should be the same for all EU EMIs, i.e. no EU-licensed EMI's should be obliged to report their EMI accounts under CRS.

And while some EMIs might have dodgy reputations, even the bigger EMIs like TransferWise say on their website that they don't report under CRS. Transferwise stands to lose A LOT by lying about that - including loads of regulatory licences around the world - regardless of how suspicious you are of them.

Some corporate groups might have an EMI licence AND a banking licence (e.g. Revolut), so it might be that if you are using a Revolut bank account, that gets reported under CRS but if it's a Revolut EMI accounts that won't.

The banks who hold the funds on behalf of EMIs might have to report under CRS (if they are in a CRS-reporting country and all the rest of the CRS criteria are met), but the question is whether those banks:

a) open just one account, in the name of the EMI, and with the funds of every EMI customer in that one account (so that, in effect, they are only reporting the EMI under CRS, not the EMI customers), or

b) if the bank opens up accounts in the name of every one of those EMI customers.

I don't know the answer to that question - maybe someone else here does? But I think it is VERY UNLIKELY the bank opens individual accounts in the name of each individual EMI customers, especially without the bank KYC'ing those customers again. And that wouldn't make sense or seem a very cost effective to do.

Also, how can an EMI actually report under CRS? Do any of them have the CRS-specific reporting software and linked that up to the global CRS automatic exchange network?

On the thin margins that EMIs already operate under, can they afford to buy that software, pay for the installation and systems integration, meet the financial and time cost of staff training, afford the ongoing maintenance, and meet all those CRS compliance costs?

Has anyone who has opened an EMI business account been asked or actually given answers to any of the typical CRS questions that banks ask? e.g.

- Has anyone given an EMI details on the active or passive status of their business?

- Have they been specifically asked questions about the company UBO (not the legal shareholders - the actual beneficial owner)?

- Has anyone given details about the UBO (not the shareholders - the actual UBO)?

No, my guess is that if an EMI is telling you it is reporting under CRS, it's probably operating under a banking licence and not an EMI licence. Sometimes the term "EMI" is used loosely around here to include neobanks and other fintechs with banking licences and accounts, as opposed to institutions with an Electronic Money Institution licence who issue you Electronic Money Institution accounts.

Happy to be proven wrong with actual evidence to the contrary on the above though (preferably from some who actually works in a bank or an EMI compliance department who knows what they are talking about from experience). That would certainly clear up the never-ending debate about this topic on this forum, instead of going around in circles on it all the time...

NB. Because AdvCash is registered in Belize / does not have an EU EMI licence, I don't think the above applies to AdvCash, but I'm guessing AdvCash accounts aren't considered "depository" accounts under CRS either for the same reason. Same goes for Neat I suppose?

 

[Risehigh]

There is a discussion in the following link about whether EMIs are legally obliged to report an EMI account under CRS:

https://www.offshorecorptalk.com/threads/payeer-crs-reporting.30052/post-144428
The short answer seems to be that those EMIs with UK-issued or Maltese-issued EMI licenses are not obliged to report under CRS (because EMI accounts are not considered "depository" accounts under the rules of CRS).

(read this in particular: IEIM400750 - International Exchange of Information Manual - HMRC internal manual - GOV.UK).

I haven't checked the situation for Lithuania or every other EMI licence-issuing country in Europe (not being able to read every European language makes that difficult), but the underlying EU Directive for EMIs, and the EU Directive for CRS, are the same for all EU countries. So - in theory - the (pre-Brexit) UK situation should be the same for all EU EMIs, i.e. no EU-licensed EMI's should be obliged to report their EMI accounts under CRS.

And while some EMIs might have dodgy reputations, even the bigger EMIs like TransferWise say on their website that they don't report under CRS. Transferwise stands to lose A LOT by lying about that - including loads of regulatory licences around the world - regardless of how suspicious you are of them.

Some corporate groups might have an EMI licence AND a banking licence (e.g. Revolut), so it might be that if you are using a Revolut bank account, that gets reported under CRS but if it's a Revolut EMI accounts that won't.

The banks who hold the funds on behalf of EMIs might have to report under CRS (if they are in a CRS-reporting country and all the rest of the CRS criteria are met), but the question is whether those banks:

a) open just one account, in the name of the EMI, and with the funds of every EMI customer in that one account (so that, in effect, they are only reporting the EMI under CRS, not the EMI customers), or

b) if the bank opens up accounts in the name of every one of those EMI customers.

I don't know the answer to that question - maybe someone else here does? But I think it is VERY UNLIKELY the bank opens individual accounts in the name of each individual EMI customers, especially without the bank KYC'ing those customers again. And that wouldn't make sense or seem a very cost effective to do.

Also, how can an EMI actually report under CRS? Do any of them have the CRS-specific reporting software and linked that up to the global CRS automatic exchange network?

On the thin margins that EMIs already operate under, can they afford to buy that software, pay for the installation and systems integration, meet the financial and time cost of staff training, afford the ongoing maintenance, and meet all those CRS compliance costs?

Has anyone who has opened an EMI business account been asked or actually given answers to any of the typical CRS questions that banks ask? e.g.

- Has anyone given an EMI details on the active or passive status of their business?

- Have they been specifically asked questions about the company UBO (not the legal shareholders - the actual beneficial owner)?

- Has anyone given details about the UBO (not the shareholders - the actual UBO)?

No, my guess is that if an EMI is telling you it is reporting under CRS, it's probably operating under a banking licence and not an EMI licence. Sometimes the term "EMI" is used loosely around here to include neobanks and other fintechs with banking licences and accounts, as opposed to institutions with an Electronic Money Institution licence who issue you Electronic Money Institution accounts.

Happy to be proven wrong with actual evidence to the contrary on the above though (preferably from some who actually works in a bank or an EMI compliance department who knows what they are talking about from experience). That would certainly clear up the never-ending debate about this topic on this forum, instead of going around in circles on it all the time...

NB. Because AdvCash is registered in Belize / does not have an EU EMI licence, I don't think the above applies to AdvCash, but I'm guessing AdvCash accounts aren't considered "depository" accounts under CRS either for the same reason. Same goes for Neat I suppose?

Nice looking for an answer aswell. Makes sense why wire card had an UK license for all partnersships lol. But sounds great with transferwise tbh - looking for the feedback on advcash since it's praised so much here

 

[goodvibes]

I have found another interesting document regarding this topic The Common Reporting Standards (“CRS”) and US Foreign Account Tax Compliance Act (“FATCA”) in Lithuania

The UK has taken the approach outlined in this letter and implemented it into HM Revenue and Custom’s (“HMRC’s”) Final Guidance for the International Exchange of Information Manual, published in April 2016. In Guidance Note IEIM400750, HMRC confirms that EMIs and PIs are not Depository Institutions for the purposes of reporting under the CRS or FATCA. In Guidance Note IEIM401540, HMRC confirms that e-money accounts and unregulated payment products issued by CIs are not Depository Accounts for the purpose of reporting under the CRS or FATCA.

The Luxembourg tax authority (Impots Directes) has also taken a similar approach and their FAQs state that EMIs issuing e-money and PIs providing payment services do not fall under the definition of a Depository Institution under CRS and FATCA, and need not report data under either regime. EMIs carrying on regulated financial activities in addition to issuing e-money are required to assess whether those activities must be reported under CRS and FATCA. Finally, Impots Directes has indicated that CIs are outside of the scope of CRS and FATCA for their emoney issuing activities, but should review their other regulated financial activities and determine whether reporting is required.

But I still have an issue with UK EMI Wirex, they said they don't do any automatic tax reporting (and as seen above by UK Law they're not obliged) but my Wirex EUR bank account is in Tallinn, Estonia...

 

[nomad999]

Looks pretty clear to me with all these information here, EMIs dont report CRS info unless if they have a banking license.

For instance, transferwise never asked me about tax id like banks and financial institutions do.

 

[CounselRep]

I have found another interesting document regarding this topic The Common Reporting Standards (“CRS”) and US Foreign Account Tax Compliance Act (“FATCA”) in Lithuania

The UK has taken the approach outlined in this letter and implemented it into HM Revenue and Custom’s (“HMRC’s”) Final Guidance for the International Exchange of Information Manual, published in April 2016. In Guidance Note IEIM400750, HMRC confirms that EMIs and PIs are not Depository Institutions for the purposes of reporting under the CRS or FATCA. In Guidance Note IEIM401540, HMRC confirms that e-money accounts and unregulated payment products issued by CIs are not Depository Accounts for the purpose of reporting under the CRS or FATCA.

The Luxembourg tax authority (Impots Directes) has also taken a similar approach and their FAQs state that EMIs issuing e-money and PIs providing payment services do not fall under the definition of a Depository Institution under CRS and FATCA, and need not report data under either regime. EMIs carrying on regulated financial activities in addition to issuing e-money are required to assess whether those activities must be reported under CRS and FATCA. Finally, Impots Directes has indicated that CIs are outside of the scope of CRS and FATCA for their emoney issuing activities, but should review their other regulated financial activities and determine whether reporting is required.

But I still have an issue with UK EMI Wirex, they said they don't do any automatic tax reporting (and as seen above by UK Law they're not obliged) but my Wirex EUR bank account is in Tallinn, Estonia...

That's interesting to know about Luxembourg and seems consistent in the approach to EM accounts not being "depository" accounts under CRS.

my Wirex EUR bank account is in Tallinn, Estonia...

Do you know if your Wirex account a bank account or an EM account?
Remember, even TransferWise keeps its funds in real banks like Barclays, JP Chase Manhattan, etc. but that doesn't mean an EM account with an EMI transforms into a "depository" account under CRS.

 

[goodvibes]

Guy from support said it's a bank account but on the first page on Wirex it says Wirex isn’t a bank.

This is an answer from Wirex:

Whilst Wirex does not have a recurring legal obligation to report to any tax authority regarding individual users, where Wirex receives a request from any foreign regulator, we request that they make a formal enquiry through their equivalent UK counterpart. Where that takes place and Wirex receives the request through the appropriate UK regulator, we are legally obligated, depending on the information requested, to cooperate with that enquiry. As such, if a request is made by your home tax authority to the UK’s HMRC, which then requests information regarding your account and any potentially taxable assets held in that account (e.g. cryptocurrency), Wirex may be legally obligated to provide that information to HMRC, which would in turn forward it to your home taxation regulator, who would assess any applicable taxation, depending on how your country treats those assets.

 

[CounselRep]

Guy from support said it's a bank account but on the first page on Wirex it says Wirex isn’t a bank.

This is an answer from Wirex:

Whilst Wirex does not have a recurring legal obligation to report to any tax authority regarding individual users, where Wirex receives a request from any foreign regulator, we request that they make a formal enquiry through their equivalent UK counterpart. Where that takes place and Wirex receives the request through the appropriate UK regulator, we are legally obligated, depending on the information requested, to cooperate with that enquiry. As such, if a request is made by your home tax authority to the UK’s HMRC, which then requests information regarding your account and any potentially taxable assets held in that account (e.g. cryptocurrency), Wirex may be legally obligated to provide that information to HMRC, which would in turn forward it to your home taxation regulator, who would assess any applicable taxation, depending on how your country treats those assets.

Interesting.

That sounds less like reporting automatically under CRS, and more like reporting "on request" under a Tax Information Exchange Agreement (Tax Information Exchange Agreements (TIEAs) - OECD).

That's a key thing to keep in mind with bank reporting: whether or not your bank is in a CRS reporting country, they might still be legally obliged to report information to their own government who then reports that information to the authorities of another country under a TIEA or simply because they want to co-operate with another government and local laws don't stop them from doing so.

For this to happen though, the other government ** generally ** has to be investigating you specifically and show good grounds why they are doing so before your bank information is handed over, although I'm sure many countries just roll over with their legs in the air regardless of evidence if governments like the U.S. come knocking...

 

[Btraveler]

Interesting.

That sounds less like reporting automatically under CRS, and more like reporting "on request" under a Tax Information Exchange Agreement (Tax Information Exchange Agreements (TIEAs) - OECD).

That's a key thing to keep in mind with bank reporting: whether or not your bank is in a CRS reporting country, they might still be legally obliged to report information to their own government who then reports that information to the authorities of another country under a TIEA or simply because they want to co-operate with another government and local laws don't stop them from doing so.

For this to happen though, the other government ** generally ** has to be investigating you specifically and show good grounds why they are doing so before your bank information is handed over, although I'm sure many countries just roll over with their legs in the air regardless of evidence if governments like the U.S. come knocking...

Yes, at this moment sounds more like that. Anyway, I think you should still be safe on countries like Georgia, British Virgin Islands, Armenia, etc...

 

[cyprusbanker]

Does transferwise has a banking license or a financial license only, if the latter they are a simple EMI true?

 

[Leviafan27]

Information about Paysera is wrong!

Today I wrote them a letter and they answered the following:

Dear Customer, Thank you for contacting us.

Please be informed that Paysera provides information about the opened account automatically in the same way as other banks.

Like all financial institutions, we are obliged to transfer information to the relevant institutions that such a client has opened an account in our system.

Thank you for using Paysera services.

 

[Educate]

Does anyone know if US stock brokers report ETFs held by EU clients to their governments?

Logically, it doesn't seem that US would gain anything by doing so. They seem to like being holders of offshore wealth.

 

[LoveMyLife]

Does anyone know if US stock brokers report ETFs held by EU clients to their governments?

Logically, it doesn't seem that US would gain anything by doing so. They seem to like being holders of offshore wealth.

Answer is not as easy... If ETFs are in non EUR currency, they do not. If ETF currency is EUR, they do. Or to be correct, they has to provide all data to ETF custodian. ETF custodian which currency is EUR, has to be a bank or insurance company in the EU. And they report..

 

[Educate]

Answer is not as easy... If ETFs are in non EUR currency, they do not. If ETF currency is EUR, they do. Or to be correct, they has to provide all data to ETF custodian. ETF custodian which currency is EUR, has to be a bank or insurance company in the EU. And they report..

So if a EU person wants to hold ETFs and not get reported, solution is to hold those ETFs in USD currency?

 

[goodvibes]

So is there any EMI with IBAN that doesn't report to CRS lol

 

[LoveMyLife]

So if a EU person wants to hold ETFs and not get reported, solution is to hold those ETFs in USD currency?

Yes. Or any other. Just no EUR. If you want a small or almost non volatility with EUR currency, the great one in which to hold ETFs is CHF.