Basic information about CRS (Common Reporting Standard)
Common Reporting Standard (CRS) is a standardized system for the automatic exchange of tax and financial information on a global level, which was developed by the Organization for Economic Co-operation and Development (OECD) in 2014 with the purpose to combat against the tax evasion and the tax frauds on international level in the all states that acceded to or intend to accede to the CRS.
Regarding the CRS, the Slovak republic has enacted an act No. 359/2015 Coll. on automatic exchange of financial account information in the field of taxation and on the amendment to certain acts, which entered into force on 1st January 2016.
More than 100 countries including all EU member states and countries that represents major word financial centers have acceded to the CRS.
The CRS applies to natural persons, legal entities with residency and/or seat in the other country than the Slovak Republic (generally called “tax non-residents”), whereas the aim is to provide to participating countries the review of financial assets of their tax residents abroad. Primarily, the CRS is related to deposit accounts and to the investment products.
In compliance with CRS, OTP Banka Slovensko, a.s. is obliged to identify tax residence of its clients (place of the registration for payment of income tax) and their TIN. OTP Banka Slovensko, a.s. fulfills this obligation through client´s declaration contained in the product application form. In case of tax residence change, the client shall be responsible to change his/her tax residence data through new tax residence declaration compliant with client´s factual and legal status. The client is entitled to change the information about his/her tax residence at any time, by means of respective form at the bank´s point of sales.
All participating countries are required to report financial accounts directly or indirectly owned by tax resident of foreign countries to their local tax authority. The CRS also requires the exchange of information between tax offices of the participating countries.
The USA is excluded from the scope of the CRS as far as USA is obliged to exchange the information on the basis of existing international agreements FATCA. The main difference between FATCA and CRS is, that FATCA requires to identify and report American tax subjects exclusively, whereas CRS requires to identify and report tax residents of all the participating countries.