Which tax information may the Federal Tax Service receive about individuals and legal entities that carry out activities abroad?
Our client decided to develop his business in Cyprus. Apart from other matters related to incorporation of a legal entity abroad and local taxation system, the client wished to get some clarifications concerning the automatic exchange of information between tax authorities of the two countries.
Under the international agreement signed by the FTS RF (Multilateral Competent Authority Agreement dated 29th October 2014) and the Common Reporting Standard (CRS), the following information is subject to the automatic exchange:
- information on a bank the account is opened at; receipts to the account and account balance; reporting period;
- information on personal accounts: full name; date of birth; residential address; Taxpayer’s ID; country code;
- information on corporate accounts: company name; Taxpayer’s ID; registered office; country code; controlling person’s personal details (beneficiary).
As regards individuals, maximum account balance threshold that falls within the automatic exchange of information is not established; as regards corporate accounts, maximum account balance threshold amounts to $250 000.
However, if corporate account balance as of 31st December of the reporting year is less than $250 000 (applicable only for accounts opened by 01.01.2016), banks may not transmit information on the controlling person of the company via automatic exchange of information. Person that owns, directly or indirectly, over 25% of shares (stakes) in a company or any other person that actually controls the company is recognised as a controlling person.
Tax authorities, based on the information received, may bring such person to tax, administrative and, in some cases, criminal responsibility.
It is worth mentioning, that currently tax authorities of the Russian Federation may, under the automatic exchange of information, receive data from 74 countries. List of signatories of the CRS Multilateral Competent Authority Agreement is available on the official website of OECD (The Organisation for Economic Co-operation and Development).