Question Time

Question Time section from Trans World Compliance. Test your CRS and FATCA knowledge with a new question each week. Find here all the questions that were asked on our social media profiles, and their answers and see how many you get right. 

Test your CRS knowledge

1. You have a new Active NFE registered in your jurisdiction with an account balance of $100,000 and two Controlling Persons, both tax residents of another CRS member country.  Does this account need to be reported?

1. Yes, it needs to be reported.
2. No, it does not need to be reported.

2. You have a pre-existing entity account whose assets have never exceeded $150,000 with a Controlling Person in a CRS partner jurisdiction.  A different entity, also with a Controlling Person in a CRS partner jurisdiction, opens a new account with $150,000.  Which accounts are reportable?

1. Both.
2. Only the newly opened account.
3. Neither. Both are below the $250,000 threshold.

3. An account should be marked undocumented if:

1. If you have never been able to get self-certificates from the owner.
2. If the account is open less than 90 days and you’re still waiting for self-certifications.
3. If the self-certifications are not in writing.
4. You can’t verify the self-certifications.

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Answers to CRS questions

1. No, it does not need to be reported. Active NFEs are reportable under CRS, but not under US FATCA.  However, the Active NFE is not reported with any Controlling Persons (only Passive NFE Controlling Persons needs to be reported under the CRS).  Since the Active NFE tax residency is local, the Controlling Persons do not come into play and so the Active NFE does not need to be reported.

2. Only the newly opened account.  There is a reporting exemption for pre-existing entity account less than $250,000.  There is no lower limit for new accounts.

Test your FATCA knowledge

1. If a US Citizen has an account less than $50,000 is it reportable?

1. No.  Low dollar accounts do not need to be reportable.
2. Yes.  There is no lower limit to US FATCA accounts that need to be reported.
3. No if it is a Depository Account, but yes if it is any other type of account.
4. No.  Only accounts greater than $1,000,000 need to be reported.

2. Can an Entity be a Substantial Owner under US FATCA?

1. Only if the entity is a US Entity.
2. Only if the entity is a foreign entity and has individuals that are US Substantial Owners.
3. Only individuals can be Substantial Owners under US FATCA.

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Answers to FATCA questions

1. No if it is a Depository Account, but yes if it is any other type of account. US FATCA has an exclusion for Depository Accounts less than $50,000. CRS has no exemption. The $1,000,000 limit is for High Value accounts that require manual review.

2. Only if the entity is a US Entity. US FATCA allows for US Entities to be Substantial Owners. It is presumed the US IRS already knows the Substantial Owners behind a US Entity, so there is no need to provide the owners of the US Entity. CRS only allows for individuals to be Controlling Persons.