What CRS means?
CRS - Common Reporting Standard is a mechanism by which tax authorities in signatory countries receive information on financial assets held in other countries by their residents (PI/API/LE) in order to detect, prevent and deter tax evasion, a framework implemented at the initiative of OECD (Organization for Economic Cooperation and Development).
Legislation
In European Union, CRS was implemented by Directive 2014/107/EU on the automatic exchange of information in the field of taxation, subsequently transposed into Romanian Law no. 207/2015 on the Tax Procedure Code, with subsequent amendments and additions, applicable as of 01.01.2016.
Starting January 1st, 2016, annually, each tax administration of a CRS partner country, such as Romania, sets up a list of reporting jurisdictions, among all CRS participating countries with which that country has decided to exchange information automatically. CRS regulations and obligations are applicable to all Societe Generale entities that are financial institutions located in a CRS partner country, including BRD as a Reporting Financial Institution.
As clients, you can consult the complete list of CRS member states, continously updated, by clicking on the following links:
https://www.oecd.org/tax/automatic-exchange/international-framework-for-the-crs/crs-mcaa-signatories.pdf
http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/crs-by-jurisdiction/#d.en.345489
The purpose of the CRS is to enable tax authorities to receive information for tax purposes on financial assets held abroad by their residents in a systematic way.
To implement the automatic exchange of information, the CRS relies on the combined action of:
- account holders (non-resident individuals, authorised natural persons and legal persons) who hold or manage assets;
- financial institutions, which are obliged to apply certain precautionary procedures regarding the identification of reportable accounts and to report annually to the tax authorities a series of tax-related information;
- tax authorities in participating countries, which are required to report tax information collected to the tax authorities in the country/countries of the client's tax residence.
Reporting obligation
The Bank shall report to the National Tax Administration Agency (A.N.A.F.), the competent tax authority in Romania, for the purpose of fulfilling the legal obligations regarding the exchange of information for tax purposes, the following information regarding each reportable account:
1. In case of an individual who is a reportable person, also the account holder: identification data, country/countries of tax residence, tax identification number(s) date and place of birth;
2. Reportable account number or its functional equivalent;
3. Balance or value of the account valid at the end of the relevant calendar year or if the account was closed during the reporting year, the balance or value of the last transaction initiated by the customer immediately prior to the account closure, etc;
4. In case of an entity that is both an account holder and a reporting person: identification data, country/countries of tax residence and tax identification number(s);
5. In case of an entity which is an account holder and which, after the application of tax due diligence procedures, is identified as a Non-Financial Foreign Passive Entity with one or more controlling persons (beneficial owners) who are reporting persons: the identification data, country/countries of tax residence and tax identification number(s) of the entity, and the identification data, country/countries of tax residence and tax identification number(s) for each such reporting person;
6. Besides these elements for:
i. A Custody Account subject to reporting:
a. the total gross amount of interest, the total gross amount of dividends and the total gross amount of other income earned in respect of assets held in the account, in each case paid or credited to or in respect of that account, during the calendar year or other appropriate reporting period;
b. the total gross proceeds from the sale or redemption of financial assets paid or credited to the account during the calendar year or other appropriate reporting period for which the reporting financial institution acted as custodian, broker, nominee or other agent of the account holder;
ii. A Deposit Account subject to reporting the following information will be subject to reporting too:
a. the total gross amount of interest paid or credited to the account during the calendar year or other reporting period, as required by law
This information will be reported to the Romanian tax authority (ANAF) in the calendar year following the year to which it refers, in the currency in which the account is denominated. In turn, ANAF will transfer the data to EU Member States or other CRS participating countries in the automatic data exchange (CRS).
Processing personal data
For the purpose of exchanging information under international legal instruments to which Romania is a party and to improve tax compliance, reporting financial institutions are required to report annually to ANAF the information relating to the financial accounts mentioned in the above section.
The information provided for above obtained by the fiscal body of the A.N.A.F. shall be used by it only for the purpose mentioned above.
Reporting financial institutions shall be required to keep in electronic and/or paper format all records obtained through the application of the tax due diligence and reporting procedures, special tax due diligence procedures, supplementary reporting and tax due diligence procedures for exchanges of information relating to financial accounts set out in Annexes 1 and 2 of the Tax Procedure Code, and any evidence relied upon to comply with the provisions set out in those Annexes for a period of 10 years from the date of the last report, in accordance with the time limit set out in art. 62 paragraph. (7).
The processing, including reporting, of financial information by BRD - Groupe Société Générale SA takes place in compliance with the provisions of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC ("GDPR"), applicable as of 25 May 2018.
Please note that BRD - Groupe Société Générale SA only processes data that it is obliged to report by law. Refusal by customers to allow their personal data to be processed by BRD - Groupe Société Générale SA for CRS purposes may lead to the termination of the contractual relationship with the bank.
Customers have the right to request confirmation at any time that their personal data is being processed for CRS purposes. Detailed information on the rights that customers enjoy in relation to the processing of personal data and how they can be exercised is contained in the Information on the processing of personal data, a document available for free consultation on the BRD website, section https://www.brd.ro/prelucrarea-datelor-cu-caracter-personal and in any BRD branch.
CRS Indicia?
Natural person and Authorised natural person: tax resident or residence address (domicile/residence)/ mailing address in another CRS state other than Romania / one or more telephone numbers in another CRS state and no telephone number in Romania or power of attorney/power of attorney granted to a person with address in another CRS state, standing order payment instructions to a beneficiary in another CRS state other than Romania.
Entity (legal person): CRS status, tax residence (place of effective management) or residence address / correspondence / place of registration / incorporation in a CRS State other than Romania. In case of Non-Financial Foreign Passive Entity, also the ones with one or more controlling persons (beneficial owners) who are themselves reporting persons.
What to do as a BRD Group Societe Generale client?
In order to confirm your status as a CRS reportable/non-reportable person in relation to the tax authorities, self-certification is required whereby you declare under your own responsibility your country/countries of tax residence, the tax identification number(s) allocated by the relevant authorities (if applicable) and submit the document(s) supporting the declared information, if applicable.
In case of entities, additionally, declare the entity status for CRS purposes. The CRS status for legal entities is determined by the client, based on its self-declaration, depending on the type of legal entity, main object of activity, main source of income.
Supporting information for determining entity CRS status
Financial Institution
There are 4 types of financial institution:
1. Custodian Institution: an entity that holds, as a substantial part of its business, financial assets on behalf of third parties (especially customers). An entity holds financial assets on behalf of third parties as a substantial part of its business if the entity's gross income attributable to the holding of financial assets and related financial services equals or exceeds 20% of the entity's gross income over a shorter period than:
• three years preceding the current year;
• period during which the entity existed.
2. Depositary Institution: an entity that attracts deposits in the ordinary course of banking or similar business. For example, a bank or a financial leasing company.
3a. Investment Entity: an entity which carries out as its principal activity one or more of the following activities or operations for or on behalf of a client:
• transactions in money market instruments (cheques, treasury certificates, certificates of deposit, derivatives, etc.); foreign exchange; foreign exchange, interest rate and stock index instruments; transferable securities; or forward transactions in commodities;
• individual and collective portfolio management; or
Investing, administrating or otherwise managing money or financial assets on behalf of others.
3b. Investment Entity: an entity whose gross income is primarily attributable to the investment, reinvestment or trading of financial assets, if the entity is managed by another entity that is a type 1, 2, 3a or 4 financial institution.
Observation: An investment entity includes an entity that functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or finance companies and then hold capital in those companies in the form of capital assets for investment purposes.
4. Determined Insurance Company: an entity that is an insurance company (or the holding company of an insurance company) that issues or is obligated to make payments in connection with a cash surrender value insurance contract or annuity contract.
According to the Common Reporting Standard (CRS), entities that are not financial entities are divided into Active or Passive Non-Financial Foreign Entities (NFFEs). The classification of a LE as an active or passive NFFE can be made according to the type of activity, guided also by the answers to the questions below. If the LE meets the requirements set out in the questions below, it can be considered as Active NFFE. If it cannot meet the requirements, it can be considered as Passive NFFE. Please note that passive FNE entities must provide information about the persons who exercise control over them.
Passive Foreign Non-financial Entity means:
a. Any NFFE that is not an active NFFE; or
b. An investment entity referred to in paragraph b), item 17 of subsection A, Annex 1 Law 207/2015, (whose gross income is derived principally from investment, reinvestment or trading activities in financial assets, if the entity is managed by another entity that is a depository institution, custodian institution, specified insurance company or investment entity) that is not a financial institution in a participating jurisdiction.
Active Non-Financial Foreign Entity means any NFFE which fulfills any of the below criteria:
(a) less than 50% of the gross income of NFFE for the preceding calendar year or other appropriate reporting period is passive income and less than 50% of the assets held by NFFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held to produce passive income;
(b) NFFE shares are regularly traded on a regulated securities market or NFFE is an affiliated entity of an entity whose shares are regularly traded on a regulated securities market;
(c) NFFE is a government entity, an international organisation, a central bank or an entity wholly owned by one or more of the above entities;
(d) all the activities of NFFE consist essentially in holding (in whole or in part) the subscribed shares issued by one or more subsidiaries whose transactions or activities are different from the activities of a financial institution, or in financing and providing services to such subsidiaries. However, an entity does not have the status of an active entity if it operates (or holds itself out) as an investment fund, such as an unquoted equity fund, venture capital fund, leveraged buyout fund or any other investment vehicle whose purpose is to acquire or finance companies and hold equity in those companies, representing capital assets for investment purposes;
(e) NFFE does not yet carry on commercial activities and has never carried on, but invests capital in assets with the intention of carrying on a commercial activity, other than that of a financial institution, provided that NFFE does not qualify for this exemption after the date that is 24 months after the date of initial establishment of NFFE;
(f) NFFE has not been a financial institution for the past five years and is in the process of liquidating its assets or restructuring with the intention of continuing or resuming operations in activities other than those of a Financial Institution;
(g) the activities of NFFE consist principally of financing and hedging transactions with, or for, affiliated entities that are not financial institutions, and NFFE does not provide financing or hedging services to any other entity that is not a related entity, provided that the group to which those affiliated entities belong is principally engaged in an activity other than the activities of a financial institution ; OR
(h) NFFE fulfills all the following conditions:
(i) is constituted and operates in Romania or in another jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, sporting or educational purposes; or is constituted and operates in Romania or in another jurisdiction of residence and is a professional organisation, a business association, a chamber of commerce, a labour organisation, an organisation in the agricultural or horticultural sector, a civic association or an organisation operating exclusively for the promotion of social welfare;
(ii) is exempted from income tax in Romania or another jurisdiction of residence;
(iii) has no shareholders or members who have ownership rights or benefits related to its assets or income;
(iv) the laws of Romania applicable to NFFE or the other jurisdiction of residence of NFFE or the incorporation documents of NFFE do not allow any income or assets of NFFE to be distributed or used for the benefit of an individual or non-charitable entity other than for the purpose of carrying out the charitable activities of NFFE, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property that NFFE has purchased; AND
(v) the laws of Romania applicable to the NFFE or other jurisdiction of residence of the NFFE or the NFFE’s founding documents require that, upon liquidation or dissolution of the NFFE, all of its assets be distributed to a governmental entity or other non-profit organisation, or revert to the government of Romania or other jurisdiction of residence of the NFFE or any political subdivision thereof.
If the entity cannot meet any of the above requirements, the entity is considered a Passive NFFE.
Note: all the information presented here represents the transposition for clients of the legal provisions on automatic CRS reporting, without reproducing the full content of the provisions of the Tax Procedure Code (Law 207/2015) relevant to this subject.
Definition of CRS terms
A CRS reportable person is any person resident for tax purposes in a reporting jurisdiction who holds accounts that are subject to reporting.
Reporting person means any entity that is resident in a reporting jurisdiction but is not:
a. a company whose capital is regularly traded on one or more regulated markets;
b. any company that is an affiliated entity of a company referred to in a);
c. a government entity;
d. an international organisation;
e. a central bank;
f. a financial institution.
Financial Account: an account administered by a Financial Institution including a Deposit Account or a Custody Account. This term shall also include any insurance contract with surrender value and any annuity contract issued or administered by a Financial Institution, other than an immediate, non-investment, non-transferable annuity, which is issued to an individual and corresponds to a pension or disability benefit provided under an account which is an account that is not subject to reporting under the automatic exchange of financial data as defined in the Directive.
Deposit account: any current, savings, term or deposit account, or an account whose existence is documented by a certificate of deposit, savings, investment or other similar instrument held by a Financial Institution in the ordinary course of banking business.
Custodial account: an account (other than an insurance or annuity contract) that holds one or more financial assets for the benefit of another person.
A reportable account is a financial account that is managed by a reporting financial institution in Romania (such as BRD) and is held by one or more reportable persons or by a Foreign Non-Financial Passive Entity with one or more controlling persons who are themselves reportable persons.
Reporting jurisdiction is a state (jurisdiction) with which Romania or the European Union has an agreement in force under which that state is obliged to provide information on financial accounts.
Self-certification is the process by which the client declares the unique tax residency and residency for CRS reporting purposes, its status and information on the persons who control the legal entities (beneficial owners) in the case of Passive Non-Financial Foreign Entities. The bank relies on this self-certification to identify the non-resident account holders for tax purposes (for taxation or CRS purposes) for the purpose of reporting their accounts to Tax Authorities (A.N.A.F), in compliance with Law 207/2015 as amended..
Self-certification is mandatory for each new or existing client, upon opening any account and/or updating data, including in the event of a change of circumstances (e.g. a change of country of tax residence). In the case of pre-existing clients a CRS self-certification must also be collected.
The self-certification may be provided in any manner and in any form (e.g. electronically, in pdf. format or as a scanned document), provided that the bank must ensure that the identity of the holder is correct and complete, that the person providing the self-declaration is the person named in the self-declaration, and that the person is able to provide a paper copy of the self-declaration provided electronically upon request.
The self-certification or affidavit of the new natural person account holder may be signed (or otherwise confirmed) by a legal representative, attorney-in-fact, trustee, guardian, custodian or in any other legal capacity. The reporting financial institution shall obtain and verify appropriate information and documentation on the identity of the representative, the nature and limits of the representation.The CRS self-certification remains valid throughout the relationship between the bank and the client or until a change of circumstances occurs (emergence or elimination of a CRS reportability indicator).
Account Holder: the person identified as the holder of a Financial Account held by the Financial Institution with which the account was established. In the case of an insurance or annuity contract it is the person who has the right to access the surrender value or to change the beneficiary of the contract. If no person has these rights the holder will be considered the person entitled to payment according to the terms of the contract.
The tax identification number (TIN) is a personal number, used for tax purposes in the country of tax residence of the tax authority that issued it, or its functional equivalent if no tax identification number/numbers exist. A tax identification number is a unique combination of letters or numbers assigned by a jurisdiction to an individual or legal entity and used to identify the individual or legal entity for purposes of the tax laws of that jurisdiction.
For Romanian residents, the tax identification number is CNP.
For non-resident customers, the tax identification number is represented by the TIN, depending on the issuing country and is mandatory to collect if the country issues such a code.If they also have secondary tax residence, clients may have TINs issued by more than one country. However, not all countries issue TINs.
The reasonableness test is the analysis between the client's self-declaration regarding the country/countries of tax residence and the supporting documents provided by the client.
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