Common Reporting Standard is more and more important in the era of globalization and fight against tax evasion. This article is a comprehensive guide to the CRS procedure. You will learn about participating countries and financial institutions’ obligations. We will also discuss the sanctions for violation of CRS and the data that must be reported. Find out why following CRS standards is becoming a priority for financial institutions. What benefits come from implementing this procedure? Let’s learn more about the international standard for exchanging tax information.
What is Common Reporting Standard?
The CRS system is also known as the Common Standard on Reporting and Due Diligence for Financial Account Information. It is a standard for automatic exchange of information in the field of taxation. It concerns countries that are members of the OECD. The OECD abbreviation stands for Organization for Economic Co-operation and Development.
The purpose of the Common Reporting Standard is to protect the integrity of tax systems and fight tax evasion.
Which legal acts regulate issues of the Common Reporting Standard?
| Which legal acts regulate CRS issues? | – Multilateral Competent Authority Agreement –COUNCIL DIRECTIVE 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, The amended directive of the Council 2014/107/EU of 9 December 2014. – The Act of 9 March 2017, on the exchange of tax information with other countries. |
Which countries are subject to the Common Reporting Standard procedure?
Cooperation under Common Reporting Standard involves information exchange. The participating jurisdictions must have relevant agreements concluded with Poland. Such agreements form the basis for automatic exchange of information on reported accounts.
| Participating States | – Member states of the European Union other than Poland – Countries or territories other than the USA with which Poland has concluded agreements forming the basis for automatic exchange of information on reported account – Countries or territories other than the USA with which the European Union has concluded agreements forming the basis for automatic exchange of information on reported accounts, as listed by the European Commission |
The Minister of Public Finance publishes and updates the list of participating jurisdictions. The list is for information purposes.
Who is subject to reporting under Common Reporting Standard?
Only residents of countries that have joined the CRS will be reported to the Ministry of Finance. According to the regulations, a “reportable person” means a person from a participating jurisdiction and a person from a third country other than:
a. a corporation with shares traded on at least one of the recognized securities markets
b. a company related to a corporation referred to in point a
c. a government entity, international organization, or central bank
d. a financial institution
What obligations rest on the reporting financial institutions?
Reporting financial institutions must:
- apply due diligence and reporting procedures,
- record actions taken within the due diligence procedures,
- collect documentation required for due diligence procedures. Especially tax residency statements of account holders and controllers, and other supporting documents.
What data should be included in the information on reported accounts under the CRS?
| Data required in information about reported accounts | – name and surname – current residential address – country of residence – taxpayer identification number for each country of residence – date and place of birth – account number – account balance/value – identity document number and series |
What sanctions are imposed for failure to fulfil Common Reporting Standard obligations?
Failure to fulfil obligations under the Act of 9 March 2017 on the exchange of tax information with other countries may result in administrative penalties. It is also penalized under the Fiscal and Penal Code.
Common Reporting Standard – summary
The CRS system is a standard for the exchange of tax information among countries. Its goal is to protect the integrity of tax systems and to fight tax evasion. The implementation of Common Reporting Standard results from varius legal acts. The CRS procedure involves the exchange of financial information between participating jurisdictions. It forms the legal basis for the automatic exchange of tax data. Information on reported accounts must include various data. These include name, address, account number and balance. Failure to fulfil CRS obligations may result in administrative penalties. Other penalties under the Fiscal Penal Code are also possible.
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FAQ – Frequently Asked Questions about Common Reporting Standard
Which countries take part in the Common Reporting Standard procedure?
Participating countries are those that have signed a multilateral agreement on the exchange of financial information. Most of the EU countries and other OECD member states belong to this group.
Which financial institutions are subject to reporting under Common Reporting Standard?
Financial institutions such as banks, investment firms, funds, and other entities offering financial services must report information on financial accounts under the CRS.
What are the obligations of reporting financial institutions?
Financial institutions must apply due diligence procedures. Moreover, they have to record actions taken within these procedures. Collecting required documentation, and reporting financial information under CRS requirements is also necessary.
What are the sanctions for failing to fulfil CRS obligations?
Failure to fulfil CRS obligations may result in administrative fines. Fiscal penal sanctions may be also imposed as per the law on the exchange of tax information.
What data must be included in the information on reported accounts under the CRS?
Information on reported accounts under the CRS must include, among other things:
-name and surname,
-address,
-taxpayer identification number,
-account details,
-and account balance or value.
What is the Multilateral Competent Authority Agreement (MCAA) in the context of CRS?
The MCAA provides a framework for the international exchange of tax information among CRS participating jurisdictions.
Who is subject to the automatic exchange of tax information under CRS?
Individuals and entities holding financial accounts in financial institutions that must report under CRS are subject to the automatic exchange of tax information.
What are the benefits of implementing the Common Reporting Standard procedure?
Implementing the CRS procedure contributes to increased financial transparency. It also supports fighting tax evasion and tax fraud.
Will my data be safe under the Common Reporting Standard procedure?
The CRS procedure includes high standards of data security. It ensures confidentiality and protection of personal and financial data.
How does the Ministry of Finance monitor compliance with the CRS procedure?
The verification may take the form of audits, inspections, and information exchange with other participating jurisdictions. This ensures compliance with the procedure’s requirements.
