What is Common Reporting Standard? Why is important?

In this new article we talk about an important aspect that every individual and company should know, the automatic exchange of tax information, better known the Common Reporting Standard or by its acronym CRS. In this article we will resolve the doubts around What is Common Reporting Standard? Why is important?

CRS - Business
CRS – Business

What is Common Reporting Standard?

The CRS is a system of automatic exchange of tax information between the different signatory countries of the agreement. Through this agreement, the Treasury of the affiliated countries may periodically and automatically dispose of the tax information of their taxpayers abroad.

For what purpose?

The main objective is to control and corroborate the financial assets of their respective taxpayers abroad, in order to check for anomalies in IRPF returns and/or tax evasion.

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Who does it affect?

This regulation applies to both natural and legal persons with tax residence other than the reporting country in the event of an agreement. For example, a German entrepreneur who lives and resides in Germany and has an account of more than 50,000 euros in Andorra. From 2017 banks must automatically inform the german country’s estate of the existence of this account and its details such as investments, insurance or rents. At this point it is necessary to highlight two important aspects:

However, if you have an account in the name of a legal entity in which you depositor initially, for example, 25. 000€ before the agreement and subsequently with the time and development of its activity has been growing and currently has more than 250. 000€, this would not be involved in the exchange as it is considered active.

What is Common Reporting Standard?
Financial statments

Which countries have signed and whois not?

As we said earlier, the automatic tax exchange system began in January 2017, with the initial participation of 49 States. Subsequently in 2018, 51 more states were added. We attach the list to date,15 May 2020:

In 2017:

Anguilla, Argentina, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, South Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks Islands and United Kingdom.

In 2018:

Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Barbados, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Curacao, Dominica, Greenland, Grenada, Hong Kong, Indonesia, Israel, Japan, Lebanon, Macau, Malaysia, Marshall Islands, Mauritius, Monaco, Nauru, New Zealand, Niue, Pakistan, Panama, Qatar, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Saudi Arabia, Singapore, Saint Martin, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates,

In 2020:

Albania, Ghana, Kazakhstan, Kuwait, Maldives, Nigeria, Oman and Peru.

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Countries that have not signed:

Armenia, Benin, Bosnia and Herzegovina, Botswana, Burkina Faso, Cape Verde, Cambodia, Cameroon, Chad, Ivory Coast, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, United States, Swaziland, Macedonia, Gabon, Georgia, Guatemala, Guyana, Haiti, Jamaica, Kenya, Lesotho, Liberia, Madagascar, Mauritania, Moldova, Mongolia, Montenegro, Morocco,Niger, PaptoNewGuinea, Paraguay, Puerto Rico, Philippines, Rwanda, Senegal, Serbia, Tanzania, Thailand, Togo, Tunisia, Uganda, Uganda.

As of 15 May 2020, with respect to countries that have not signed any automatic information exchange agreement, they should not be concerned. They can continue to exercise their activity quietly or keep their savings there.

United States Department of the Treasury
United States Department of the Treasury

How does the CRS affect a Spaniard or a British person?

As mentioned above, there will be automatic exchange of information with the Treasury of your country of residence provided that you have an account in your name or company in a country other than your current residence and whose amounts are greater than 50 000 euros for a natural person or 250 000 euros for legal persons. In order not to enter into non-compliance, you must inform your Treasury::

– In the case of a Spaniard, he must inform the Spanish Treasury through the model 720 of more than 50 000 euros abroad;

– Since 2018, every British person must declare on his tax return any mount or investment he has available abroad.

We take this opportunity to introduce you to two interesting jurisdictions that do not have CRS and may be equally of interest to you: Morocco and Puerto Rico. In both territories Blue Consulting is an authorized provider of financial services. financieros

Morocco - Puerto Rico
Morocco – Puerto Rico

Here are 7 good reasons to choose one or the other territory.

And why Morocco and Puerto Rico among many others?

Morocco and Puerto Rico do not have CRS:

As we discussed earlier, these countries do not share their tax data with the tax estate of their country of residence. Both countries have important standards of confidentiality, information, etc;

They have international banks:

Both territories have branches of large international banks. So, your assets are safe. In addition, these banks offer good solvency ratios which guarantee the security of their savings;

Online Banking:

You don’t need to travel to the country to open an account. We have collaborators who guarantee complete anonymity and security in the opening of your account in these territories. You will in turn have a credit card through which you can withdraw money, pay in shops and the means necessary to manage your account remotely;

Political-economic stability:

Over the past two decades, both territories have shown political-economic stability that brings even more security to international investors. Thanks to this stability, both countries continue to attract foreign investors and capital to their economies;

Open to foreigners:

Thanks to this stability and facilities in both territories, foreign investors are welcome, have good conditions and advantages to settle in the country, undertake activities, start businesses and create a pro-business system that contributes wealth and well-being to the entire population;

Economic growth and opportunities;

Both territories present great investment opportunities in different sectors such as maritime trade, industrial, tourism… In addition, they have a young population and good rates of training and IDR.

Language:

In both territories, language will not be a barrier when it comes to conducting business or expanding contacts, among others. Unlike other territories where the national language dominates. In Morocco and Puerto Rico, Spanish and English are languages that are spoken in all naturalness as much for business as leisure.

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Conclusion:

As you can see in this article, there are many advantages presented by both jurisdictions for investors, the most noteworthy, is the absence of the CRS, which can bring you anonymity and security for your savings. If you want to open a bank account in Morocco or Puerto Rico or, you want to know which one best suits your needs, do not forget to follow our blog in which we will publish more articles and/ or contact us for more information.

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Sources:

  1. http://www.oecd.org/tax/automatic-exchange/international-framework-for-the-crs/exchange-relationships/
  2. https://www.oecd.org/tax/transparency/AEOI-commitments.pdf
  3. https://www.oecd.org/ctp/exchange-of-tax-information/automatic-exchange-of-financial-account-information.htm
  4. https://www.oecd.org/tax/exchange-of-tax-information/international-exchange-framework-for-mandatory-disclosure-rules-on-crs-avoidance-arrangements-and-opaque-offshore-structure.pdf
  5. https://www.oecd.org/tax/exchange-of-tax-information/common-reporting-standard-xml-schema-user-guide-for-tax-administrations-june-2019.pdf
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