Posted on: 02 February 2016
International tax reporting, rules and regulations
As part of an international drive to ensure global citizens are paying tax fairly, there have been a number of developments in recent years to help tax authorities worldwide share information. Increasingly, the governments of different countries are joining forces to ensure the accurate global reporting of an individual's income and wealth to ensure the appropriate tax is paid. Banks, including Duncan Lawrie, are legally obliged to support these directives and submit account information to the relevant authorities. It is important to remain compliant with the ever-changing tax rules and regulations so you are not unwittingly caught out.
FATCA (Foreign Account Tax Compliance Act)
The Foreign Account Tax Compliance Act (FATCA) is a US law which requires foreign financial institutions (FFIs), such as Duncan Lawrie, to enter into an agreement with the Internal Revenue Service (IRS) to search through their customer databases to identify US persons, and to disclose the account holders' names, taxpayer identification number (TIN), addresses, and the transactions of most types of accounts.Some types of accounts, notably retirement savings and other tax-favoured products, may be excluded from reporting on a country by country basis. At Duncan Lawrie, we are committed to implementing FATCA while maintaining our highest standards of service to our clients.
If you would like more information on whether FATCA is relevant to you, please contact your tax adviser or your Duncan Lawrie Private Banker or Investment Manager who will be pleased to help.
Common Reporting Standard (CRS)
CRS refers to the global approach to transparency and exchange of financial account information that was brought into being by the G20 nations, drawing extensively on the intergovernmental approach to implementing FATCA. Over 90 countries are committed to adopting CRS from 1 January 2016.
The new regulations grant HM Revenue and Customs powers to force UK financial institutions, such as Duncan Lawrie, to disclose information about clients' accounts. This information will be forwarded every year to the other participating jurisdictions. Financial institutions will be required to carry out specified due diligence procedures to identify accountholders who are resident overseas. They will also have to determine each client's tax residency so that their bank account information can be forwarded to the correct jurisdiction.
Each participating jurisdiction is required to exchange with the other participating jurisdiction the below information (in the case of Jurisdiction A with respect to each Jurisdiction B Reportable Account, and in the case of Jurisdiction B with respect to each Jurisdiction A Reportable Account):
- the name, address, TIN and date and place of birth of each Reportable Person;
- the account number;
- the name and identifying number of the Reporting Financial Institution; and,
- the account balance or value as of the end of the relevant calendar or, if the account was closed during such year or period, the closure of the account.
If you would like more information on whether CRS is relevant to you, please contact your tax adviser or your Duncan Lawrie Private Banker or Investment Manager who will be pleased to help.
EU Savings Directive
The European Union Savings Directive is designed to ensure that people pay tax in their country of residence on any money they have invested in other EU Member States.
The Isle of Man is not an EU Member State. However, it has similar laws which, depending on your circumstances, may mean we have to disclose any interest income you receive to the tax authorities in the EU Member State where you live.
If you feel you would benefit from some tax support and advice, please contact your Private Banker or Investment Manager. If you are not an existing Duncan Lawrie client, please contact us to find out how we may be able to help you.
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