CRS – Definitions
Common Reporting Standard description:
From 01/01/2016, tax authorities require financial institutions to collect and report account holder’s details to their local authorities. Tax authorities may subsequently exchange this information with tax authorities in other jurisdictions or Governments under information exchange agreements entered into under the provisions of the OECD Common Reporting Standard for Automatic Exchange of Financial Account Information.
Controlling person (including re trusts) means:
- For Companies and Cooperative Societies the ultimate beneficial owner, which is/are the person / persons that ultimately own or control directly or indirectly the legal entity. The percentage of 10% plus 1 share shall be sufficient measure for the determination of ultimate beneficial owner. In cases where no natural persons that control and entity exist, then persons who exercise control shall be the persons belonging to the Senior Management of the Company, except where the entity’s shares are listed in a regulated market and are subject to regulatory controls and disclosure requirements.
- For unions, societies, clubs and provident funds, the members of the Board of Directors/Management Committee and the persons that are authorised to manage the account.
- In the case of a trust, the settlor, the trustees, the protector(if any), the beneficiaries or class of beneficiaries and any other natural person exercising ultimate effective control over the trust.
NFE means Non-Financial Entity
Active NFE means an NFE that meets any of the following criteria:
- Less than 50 per cent of the NFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50 per cent of the assets held by the NFE during the preceding calendar year or other appropriate period are assets that produce or are held for the production of passive income.
- The stock of the NFE is regularly traded on an established securities market or the NFE is a Related Entity of an Entity the stock of which is regularly traded on an established securities market.
- The NFE is a Governmental Entity, an International Organisation, a Central Bank, or an Entity wholly owned by one or more of the foregoing.
- Substantially all of the activities of the NFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an NFE does not qualify for this status if the NFE 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 find companies and then hold interests in those companies as capital assets for investment purposes.
- The NFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFE does not qualify for this exception after the date that is 24 months after the date of the initial organisation of the NFE.
- The NFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganising with the intent to continue or recommence operations in a business other than that of a Financial Institution.
- The NFE primarily engages in financing and hedging transactions with, or for Related Entities that are not Financial Institutions and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution.
- The NFE meets all of the following requirements:
- It is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare.
- It is exempt from income tax in its jurisdiction of residence.
- It has no shareholders or members who have a proprietary or beneficial interest in its income or assets.
- The applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased.
- The applicable laws of the NFE’s jurisdiction of residence or the NFE’s liquidation or dissolution, all of its assets be distributed to a Governmental Entity or other non-profit organisation, or escheat to the government of the NFE’s jurisdiction of residence or any political subdivision thereof.
An Entity is a Related Entity of another Entity if either Entity controls the other Entity, or the two Entities are under common control. For this purpose control includes direct or indirect ownership of more than 50 per cent of the vote and value in an Entity.
Passive NFE means (i) an NFE that is not an Active NFE or (ii) an Investment Entity that is not a Participating Jurisdiction Financial Institution.
TIN means the Tax Identification Number (or functional equivalent).