EURO-FATCA - Bank Spółdzielczy w Szczytnie

Poland, as a member state of the European Union and the Organisation for Economic Co-operation and Development, has committed to exchanging information on the financial assets of tax residents of these states held in accounts maintained by Polish financial institutions, expecting to receive similar data in return regarding financial accounts held for Polish tax residents by foreign financial institutions.

To this end, governments around the world are introducing a standard for the automatic exchange of information on tax matters (Common Reporting Standard, CRS), which is a requirement for reporting and gathering information applicable to financial institutions worldwide, including the Cooperative Bank in Szczytno.

Within the European Union (EU), a significant legal act enabling the exchange of such information is the Council Directive 2011/16/EU concerning administrative cooperation in the field of taxation. This Directive establishes all necessary procedures for better cooperation between tax administrations within the European Union. This Directive was amended by the Council Directive 2014/107/EU, thereby expanding the scope of cooperation between tax authorities to include the automatic exchange of information regarding account status. The Directive was published in the Official Journal of the European Union on December 16, 2014 – link: http://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=OJ:L:2014:359:FULL&from=PL

The legal basis in Poland for the exchange of such information is – The Act of March 9, 2017 on the exchange of tax information with other countries – link: http://dziennikustaw.gov.pl/DU/2017/648

Under Euro-FATCA regulations, the Cooperative Bank in Szczytno is obliged to determine where its clients should pay taxes (which often involves determining their tax residency). To obtain this information, the Cooperative Bank in Szczytno will use the data it already has about its clients, and may also request the provision of missing data.

If it turns out that a client is a tax resident of a country other than the one in which their bank accounts are held, the Cooperative Bank in Szczytno will forward this information to the local tax authorities. The tax authorities may then exchange this information with the tax authorities of the country where the client is a tax resident.

This obligation applies to Clients who have acquired or, after May 1, 2017, will be interested in acquiring, inter alia, the following products: current accounts, auxiliary accounts, term deposits, trust accounts, open residential trust accounts, credit cards.

NECESSARY ACTIONS

To confirm their status under Euro-FATCA regulations, Clients may be required to complete the appropriate form. There are two types of forms required for Euro-FATCA. These forms can be found at the links below, along with an explanation of which entity each of these forms applies to:

1. CRS Declaration for Individual Clients – this form is intended for individual clients, to determine their status under Euro-FATCA rules;

2. CRS Declaration for Institutional Clients/Entities – this form is intended for institutional clients, to determine their status under Euro-FATCA rules.

Failure to submit the Euro-FATCA status Declaration will result in the inability to acquire products from May 1, 2017.

In case of questions regarding Euro-FATCA and your tax situation, please contact an independent advisor, as the Cooperative Bank in Szczytno does not provide tax or legal advisory services.

Additional information can also be found on the OECD portal – link: http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/

EURO-FATCA – transitional period

According to the amendment of the Act of April 4, 2019, changing the Act on the exchange of tax information with other countries and certain other acts, financial institutions, including the Cooperative Bank in Szczytno, are obliged to determine the tax residency of Clients who opened their first account during the period from 01.01.2016 to 30.04.2017 by obtaining CRS declarations regarding the tax residency of the account holder on the date of account opening within the mentioned period.

In this regard, if your first account at the Cooperative Bank in Szczytno was opened during the period from 01.01.2016 to 30.04.2017, you should submit a CRS declaration to confirm your tax residency status on the date of opening that account. You need to download the CRS Declaration form, complete it, sign it, and submit it at the branch of the Bank maintaining the account or send it to the address:

Cooperative Bank in Szczytno
Łomżyńska 20, 12-100 Szczytno

If you have already submitted the CRS declaration, you do not need to do anything.

Documents to download:

CRS DECLARATION FOR INDIVIDUAL CLIENT (including individuals conducting business activities and farmers)

CRS DECLARATION FOR INSTITUTIONAL CLIENT (legal entities, commercial partnerships, entities without legal personality, and civil law partnerships)

1. CRS:
The Common Reporting Standard (CRS) is a global standard for automatic exchange of information on tax matters, applicable to financial institutions around the world, including cooperative banks, aimed at protecting the integrity of tax systems and combating tax avoidance.

Under the CRS regulations, the Bank is obliged to determine where its clients should pay taxes (which often involves determining their tax residency). If a client is a tax resident outside the country where their bank accounts are held, the Bank will forward this information to the relevant tax authorities. The tax authorities may then exchange such information with the tax authorities of the country where the client is a tax resident.

2. Individual Client:
An individual not conducting (including individuals with limited legal capacity) or conducting business activities; a farmer engaging in agricultural activities individually (one individual irrespective of the role they fulfill).

3. Entity:
Euro-FATCA defines Entities as legal persons or entities having legal personality, such as corporations, organizations, partnerships, trusts, or foundations. This definition therefore includes clients of the Cooperative Bank who hold accounts, business products, or use business services of the Bank. However, this term does not include entities conducting sole proprietorships or farmers, as per Euro-FATCA regulations they are treated as individuals.

4. Organisation for Economic Co-operation and Development (OECD):
The Organisation for Economic Co-operation and Development (OECD) is an international organization comprising 34 member countries, the European Commission, as well as Brazil, China, India, Indonesia, and South Africa as permanent guests.

5. Tax residency:
The jurisdiction or country in which a client is a resident/registered for tax purposes. Each country has its own rules for determining tax residency. For more information regarding your tax residency, please contact an independent advisor, as the Cooperative Bank in Szczytno does not provide tax or legal advisory services. Additional information can also be found on the OECD AEOI portal.

6. TIN (Tax Identification Number):
TIN is a tax identification number made up of a unique combination of letters or digits assigned to businesses. In some countries, instead of a TIN, a different assigned number is used, e.g., a social security number.

7. Declarations
Declarations are forms that clients use to specify their tax residency status according to Euro-FATCA requirements. Detailed information on these forms can be found at the links for Euro-FATCA Declarations for Individual Clients and Euro-FATCA Declarations for Entities.

8. Passive income
For Euro-FATCA purposes, passive income generally includes part of gross income consisting of:

1. dividends,
2. interest,
3. income equivalent to interest,
4. rental income and lease payments other than operating income and rents received in the course of actively engaged business, at least in part, by employees of NFE,
5. annuity payments,
6. excess from positive differences arising from the sale or exchange of financial assets that give rise to the passive income described above,
7. excess from positive differences arising from transactions (including futures, forwards, options etc.) involving any financial assets,
8. excess from positive currency exchange differences,
9. net income from swaps,
10. amounts received under cash value insurance contracts,

* In the case of an NFE generally acting as a dealer in financial assets, passive income does not include any income from transactions entered into in the normal course of such dealer's business.

** The term NFE means any entity that is not a financial institution.

9. Automatic exchange of information
Automatic exchange of information (AEOI) is practiced by governments around the world to effectively combat tax evasion on a broader scale. It serves as the basis for automatic exchange of information regarding foreign clients – tax residents – conducted between the competent tax authorities.

10. Controlling Person
An individual who has control ownership interests in an entity. If no individual exercises control based on ownership interests, the Controlling Person of the entity shall be the individual who exercises control over the entity in another manner. In the case of a trust, the term Controlling Person means the settlor(s), trustee(s), protector(s) (if any), beneficiary(ies) or class(es) of beneficiaries, and any other individuals exercising ultimate effective control over the trust.