A major increase in reporting requirements – are you ready for the new single Global Standard?
You may have heard or recently received information from your financial institution or financial adviser regarding a new initiative involving governments obtaining information from their financial institutions and exchanging data automatically with other nations. You will be forgiven for thinking that this is nothing new. However, financial institutions (and other financial entities) now have significant additional reporting responsibilities in order to disclose details of their account holders, with potential penalties for those unable or unwilling to comply fully. This involves reviewing their existing customer base and is known as the COMMON REPORTING STANDARD (CRS).
The CRS is a further anti-avoidance measure which has now been introduced globally in respect of the automatic exchange of information from 2016. Information regarding investment, savings and bank account balances and withdrawals will be collected automatically on 31 December 2016 and each year thereafter by each financial institution and passed to the tax office of your country of residence if the account is held in a country other than which you reside. Domicile, nationality or citizenship is not taken into consideration.
How will this affect me?
The CRS involves the systematic transmission of large amounts of information (such as investment income) from the tax administration where the account is held to the tax administration where the taxpayer is resident. The resident tax administration can then verify whether the taxpayer has accurately reported his or her income. While the main focus is on exchanging information about financial accounts, many types of income and other information may be relevant, including employment income, pensions, and changes of residence and purchases or sales of property.
For instance, bank account details as at 31 December 2016 for an account held in the Isle of Man will be reported by the bank to HMRC in the UK on 30 September 2017 if you are a UK resident. The same information will be sent to the Hacienda in Spain if you are a Spanish resident.
To summarise, if you live in Spain and have monies deposited in another country using your Spanish address, information will be shared with Spanish tax authorities each year.
Why is the Common Reporting Standard such a big change?
The big change is that from this year the CRS allows tax authorities globally to automatically receive information, without which individuals or organisations can simply continue to route investments through other countries and evade their local tax authorities.
I live in the same country as I pay tax so why do I need to give my details?
Under CRS, financial entities are legally required to establish the tax residency status of all customers, even if you are tax resident in the same country as where you hold your investments and savings. However, typically in this instance your details will not be reportable to tax authorities for CRS purposes.
How do I know my finances are positioned well to deal with the Common Reporting Standard?
Navigating the complex world of financial reporting is difficult (even for the professionals!). The clock is ticking and this year is the year to get your finances in order to make sure you don’t get caught out – in fact, if you have managed to avoid full disclosure and live under the radar or even part and part until now … you are not running out of places to hide … YOU HAVE RUN OUT!
Can my financial adviser help me?
As expats in Spain often the problem we have is that we receive differing information from each source we ask. Your tax adviser and financial adviser should be able to assist but this may largely depend on their individual experience, international knowledge and industry qualifications.
Speed Financial Solutions are a highly qualified financial services provider on the Costa del Sol looking after clients throughout Spain and the UK. We provide a discreet and comprehensive service to individuals, our service is tailored to your needs. We seek innovative solutions for our clients and employ our skills, based on years of experience, to apply tax legislation to our clients’ advantage. Our team’s relationships with clients is built on trust and mutual respect. We are accessible and approachable, and ready to answer your questions, giving you the confidence you want when dealing with a sensitive issue such as discussing your pensions, investments and savings.
Our Principal, Andrea Speed, is a Fellow of the Personal Finance Society (PFS) which is the professional body for the financial planning community. The PFS is part of the Chartered Insurance Institute, which is the world’s largest professional body for insurance and financial services in the world.
Fellowship is the highest qualification awarded by the CII and is universally regarded as the premier qualification. It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels.
Along with a Fellowship, Andrea is a Chartered Insurance Institute qualified Chartered Financial Planner specialising in Taxation and Trusts.
Please take a look at our website – www.speedfinancialsolutions.com for further information and contact us (Tel 951 315 271 or 951 318 529) – we are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Meetings with us are free and without obligation.
Andrea J Speed FPFS(DM), M.A.
Principal, Discretionary Inv Manager, Fellow and Chartered Financial Planner
Speed Financial Solutions
15 July 2016