CRS (COMMON REPORTING STANDARD) REGULATIONS TAX
RESIDENCE CHECK RELATED TO FINANCIAL ACCOUNTS

Legal background

In October 2014, over 50 countries, including Hungary, signed a multilateral agreement–based on the OECD model–concerning cooperation between competent authorities on the application of the multilateral Competent Authority Agreement and Common Reporting Standard (CRS) on the automatic exchange of financial account information. 

In December 2014, the Council of the European Union adopted Directive 2014/107/EU (DAC2) amending Directive 2011/16/EU (DAC) as regards mandatory automatic exchange of information in the field of taxation. The Directive makes the application of the OECD model mandatory for Member States. 

In Hungary, the promulgation of the multilateral Competent Authority Agreement on the automatic exchange of financial account information was provided for by Act CXC of 2015 (Annex 1 of which specifies the participating states), and the provisions on the automatic exchange of information were promulgated by Act XXXVII of 2013 on certain rules for international administrative cooperation in relation to taxes and other public charges (Act on taxes and other public charges) as well as is Act CXCII of 2015 on the amendment of certain acts (the CRS Regulation).

Under the CRS Regulation, the assessment of the tax residence of customers is mandatory for the Raiffeisen Bank Zrt. (the “Bank”) as of 1 January 2016. 
 

The purpose of the CRS Regulations is to

• establish in which CRS participating country/countries the accountholders have tax residence,
• and inform the tax authorities of the countries participating in the treaty (including the Hungarian National Tax and Customs Administration) of this in the scope of cooperation and information exchange.

In accordance with the CRS Regulations, the information is collected and provided to the tax authority by the Reporting Financial Institutions, including Raiffeisen Bank Zrt. (the “Bank”).

In the scope of this, in accordance with the customer due diligence rules specified in the law the Bank

• examines its customers and their accounts,
• and as a result of the due diligence process forwards the data specified in the law to the tax authority in respect of the Reportable Financial Accounts specified in the CRS Regulations by the date of 30 June following the fiscal year (the period from 1 January to 31 December).

Declaration in the case of new customers

In the scope of the examination, all Customers opening an account at the Bank after the date of 1 January 2016 (new Customers) must make a declaration regarding their tax residence as per the CRS (the “Declaration”).
In the Declaration, the Customer should specify in which state/states he/she has tax residence.
The Customer should also in the Declaration provide his/her tax identification number (except Hungarian tax identification number) relevant in the CRS participating state (if such number is issued to taxpayers in the participating state). An accountholder may as well have CRS tax residence in several states, therefore multiple tax residences may be identified in the Declaration.

Non-individual customers should in the Declaration additionally identify

• their CRS status (Active Non-Financial Entity, Passive Non-Financial Entity, Investment Entity Managed by Another Financial Institution, Financial Institution, Government Entity, International Organisation, Publicly Traded Corporation, Related Entity of a Publicly Traded Corporation),
• and Passive Non-Financial Entities should also identify the tax residence and tax identification number of their beneficial owner(s) too (except Hungarian tax identification number) and (if such number is issued to taxpayers in the participating state).

For more information please click on the following links:
List of CRS participating countries >
Guide for the determination of the status of non-individuals >

According to the requirements of the CRS Regulations, the Bank must not establish contractual relationship with customers who fail to submit a Declaration.

The Bank must on the basis of the data recorded in its systems and documents available to it examine the correctness of the Declaration made by the Customer; for this purpose, the Bank may use publicly available data as well. In case the Bank becomes aware or has reason to assume that the declaration or the documentary evidence given or provided by the Customer is erroneous or ungrounded, it may demand that the Customer make a new declaration or provide new documentary evidence.

Establishment of the tax residence of and declarations made by existing customers

The tax residence of the Customers who on the date of 31 December 2015 have active accounts (existing Customers)

I. may be established by the Bank on the basis of the documents obtained in the course of the customer due diligence process, i.e. on the basis of the customer data included in the Bank’s registries.
When verifying customer data, the Bank examines which customer has any data indicating CRS participating countries, in the scope of which the following customer data are taken into account:

• the customer’s address, place of stay, and mailing address,
• the customer’s landline and mobile phone numbers,
• the address and place of stay of the customer’s authorised representative.

II. In its discretion, the Bank may demand that the Customer make the above Declaration, and the customer may also make a declaration concerning tax residence(s) different from those established on the basis of the customer data included in the Bank’s registries, supporting such assertion with documentary evidence where necessary. The Customer should also in the Declaration provide his/her tax identification number (except Hungarian tax identification number) relevant in the CRS participating state (if such number is issued to taxpayers in the participating state).
In case the Bank becomes aware or has reason to assume that the declaration or the documentary evidence given or provided by the Customer is erroneous or ungrounded, it may demand that the Customer make a new declaration or provide new documentary evidence.

Reporting by the Bank and by the tax authority

The Bank is required to report to the Hungarian tax authority by 30 June in each year regarding the affected financial accounts on all states participating in the CRS Regulations that are identified as a result of the tax residence check, whether they feature in the customer’s declaration or are identified through the examination of data recorded in the Bank’s registries or publicly available data.

In the case of existing customers, in the absence of a declaration or documentary evidence, starting from year 2017 the Bank shall determine the tax residence(s) of customers on the basis of the customer data included in its records until the customer concerned makes a valid declaration at the Bank.

Exceptions from the obligation of reporting

Exceptions from the obligation of reportingThe Bank’s obligation of reporting to the tax authority does not concern customers whose status as per the CRS Regulations is as follows:
Financial Institution
Governmental Entity
International Organisation
Publicly Traded Corporation
Related Entity of a Publicly Traded Corporation

The Bank shall within 30 days following the report to the tax authority inform the Customer in writing or electronically of the fact of the reporting.

In the scope of the automatic information exchange, the tax authority shall by 30 September of the year following each year communicate the information concerning the financial accounts concerned by the CRS Regulations to the tax authorities of the states participating in the CRS Regulations.

In the scope of the information exchange, the tax authorities share the following information with one another: identification data of the accountholder, tax identification number of the accountholder (if he/she has one), number and balance of the account, and further data listed in the CRS Regulations, e.g. in the case of a Passive Non-Financial Entity the CRS tax residence of the beneficial owner(s).

Thank you for your cooperation in the implementation of the CRS Regulations!