Common Reporting Standard (CRS)
We have put these FAQs together to help you understand the Common Reporting Standard (CRS) and why Lloyds Bank Corporate Markets Plc needs to comply as it plays its part in the world-wide fight against tax evasion.
Important Note: Lloyds Bank Corporate Markets Plc and its branches cannot provide advice to customers on the Common Reporting Standard (CRS) or any other tax related matter. If your questions are not answered by the literature or FAQs, or, if you do not understand your tax obligations, you may need to decide if you want to seek independent tax advice from a tax or financial advisor.
Below are some quick definitions of some common tax compliance jargon.
- Reportable Person or Reportable Entity
A ‘Reportable Person’ is any individual identified by a reporting entity (such as Lloyds Bank Corporate Markets Plc) in one country as being resident for tax purposes in another reportable country (e.g. a jurisdiction with which the participating party has signed an agreement under CRS), who holds a Financial Account.
As well as personal account holders, certain entities resident in a Participating Country or those which have individual Controlling Persons who are resident for tax purposes in Participating Countries may be reportable.
For tax purposes a ‘jurisdiction’ is defined as an area subject to its own distinct tax regulations such as a US state, city, county or country.
- Participating Country
This is a country which has made a commitment to exchange information in accordance with the OECD CRS but may not yet have an effective agreement in place with Jersey, Guernsey or the Isle of Man such that reporting is not yet required but is expected to be in due course.
- Reportable Country
This is a country that has an agreement in place to exchange information.
- Reportable for CRS purposes
Each country has its own rules for defining tax residence and countries have provided information on how to determine whether a person or an entity is tax resident in the country. Generally, an individual or an entity is resident for tax purposes in a country, if, under the laws of the country, they should be subject to the tax laws of that country. When we determine a customer who is holding a Financial Account, is resident for tax purposes in a Participating Country and is reportable for CRS, we will pass the relevant information to the local tax authority.
- Tax Residency Self-Certification
If a customer opens a new account, invests in a new product, or has a change in circumstances which may make them tax resident in a Participating Country, we may write to them asking them to complete a Tax residency Self –Certification form to confirm their country of tax residence. We may also write to some pre-existing customers who have Financial Accounts with us where this information has not previously been captured. This is called ‘Tax Residency Self-Certification’.
- Controlling person
Controlling persons are the Natural Persons who have ultimate control over an entity. In the case of a trust, the Controlling Person(s) are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, or any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership).
For the Common Reporting Standard (CRS) this is defined as a legal person or a legal arrangement such as a corporation, organisation, partnership, trust or foundation. An entity will therefore be any customer that holds a business account, product or service. Under CRS, sole traders are not treated as entities but as individuals.
- Financial Account
The term “Financial Account” means an account maintained by a Financial Institution, and includes a Depository Account, a Custodial Account, certain equity or debt interest in investment entities and certain Cash Value Insurance Contract and Annuity Contract issued or maintained by a Financial Institution. A Financial Account is not an excluded account as per the CRS.