Active non-financial organization examples. Instructions for filling out the Self-Identification (Self-Certification) Form for clients of legal entities (except credit institutions) for fatca purposes - Instructions

Taking into account the requirements of the regulations of the Republic of Latvia, arising from the regulations of the European Union binding on the Republic of Latvia and international tax agreements binding on the Republic of Latvia or the European Union, the purpose of which is to strengthen mutual administrative cooperation between countries in the fight against tax fraud and tax evasion taxes, liquidated ABLV Bank, AS has a legal obligation to summarize and document data on the tax residence of the client / client beneficiaries, as well as provide the State Revenue Service of the Republic of Latvia with information about residents of those countries, administrative cooperation with which involves the exchange of information on financial assets.

A client is any individual and any legal structure (with or without the status of a legal entity) to whom ABLV Bank, AS in liquidation or any of its subsidiary provides financial services or who have submitted an application to ABLV Bank, AS in liquidation or any of its subsidiary to receive financial services.

A beneficiary (true beneficiary) is any individual:

who owns or has direct or indirect control of at least 25 percent of the capital stock or total number of voting shares of the merchant or who otherwise controls the activities of the merchant;
which directly or indirectly has ownership or control, directly or indirectly, of at least 25 percent of a legal entity that is not a merchant. The true beneficiary of a non-profit organization (institution) is the person or group of persons in whose favor the organization (institution) was created. The true beneficiary of a political party, partnership and cooperative society is the relevant political party, partnership or cooperative society;
in whose favor or interests business relations have been established or
in whose favor or interests a separate transaction is conducted without establishing a business relationship.

FATCA

On July 1, 2014, the requirements of the US Foreign Account Tax Compliance Act came into force for Latvian financial institutions ( Foreign Account Tax Compliance Act of the United States of America; hereinafter referred to as FATCA). FATCA requirements came into force on the basis of an intergovernmental agreement.

ABLV Bank, AS in liquidation has accepted the obligation to comply with FATCA requirements, and its FATCA status according to the above-mentioned intergovernmental agreement is “a reporting financial institution under Model 1” ( Reporting Model 1 FFI). ABLV Bank registration number for FATCA compliance purposes ( Global Intermediary Identification Number r) - 5G93DV.99999.SL.428.

In order to comply with FATCA requirements, ABLV Bank, AS in liquidation may contact the client/beneficiaries of the client to request information or documentary evidence (including tax forms from the US Internal Revenue Service) confirming whether the client/beneficiary of the client is or is not a US person, and if the client is a financial institution, whether the client participates or does not participate in the implementation of FATCA requirements.

For the purposes of FATCA, a US person may be recognized as:

US citizen;
US resident;
any legal entity (or other entity) that is organized/registered in the United States, any state of the United States or the District of Columbia, or that is organized/registered/operates under the laws of the United States, any state of the United States or the District of Columbia;
a trust if, under applicable statutes or articles of incorporation, a U.S. court is authorized to make orders or make decisions regarding substantially all matters relating to the administration of the trust, and one or more U.S. persons are authorized to exercise control over all material decisions of the trust;
the property of a deceased person who was a citizen or resident of the United States.

A US citizen can be recognized as:

an individual who is a US citizen/national;
an individual holder of a US-issued identification document;
an individual born in the United States, Puerto Rico, Guam, the United States Virgin Islands;
an individual whose parent is a US citizen;
a former alien who became a U.S. citizen by naturalization.

A US resident may be recognized as:

an individual who meets the criteria for substantial stay ( substantial presence test), that is, staying in the United States for ≥31 days in the current calendar year and ≥183 days in the past three years, which includes the current year and the two years immediately preceding the current year. To fulfill the 183-day criterion, all days of a person’s stay in the United States in the current year, 1/3 of the number of days of stay in the year preceding the current year, and 1/6 of the number of days of stay in the second year preceding the current year are taken into account. Representatives of foreign government delegations, teachers/students with J/Q/F/M visas, athletes/participants participating in charitable sporting events for a short-term stay in the United States may not be recognized as US residents;
a person with permission to permanently reside in the United States (US permanent resident card ( Green Card)).

For the purposes of FATCA, the following are not recognized as US persons:

an enterprise whose shares are regularly traded on one or more registered securities exchanges;
an enterprise participating in the same extended group of related enterprises (according to paragraph 2, paragraph e) of Art. 1471 US Internal Revenue Code ( U.S. Internal Revenue Code)) whose shares are regularly traded on one or more registered securities exchanges;
the United States or any wholly owned United States agency or instrumentality;
any U.S. state, U.S. territory, political subdivision of any U.S. state or territory, or any wholly owned agency or instrumentality thereof;
any organization exempt from paying taxes in accordance with paragraph a) of Art. 501 of the Internal Revenue Code (www.law.cornell.edu/uscode/text/26/501), or an individual retirement plan as defined in sec. 37 paragraph a) art. 7701 of the said Code (www.law.cornell.edu/uscode/text/26/7701);
any U.S. lending institution that meets the definition in Sec. 581 US Internal Revenue Code (www.law.cornell.edu/uscode/text/26/581);
any trust that invests in real estate as defined in s. 856 US Internal Revenue Code (www.law.cornell.edu/uscode/text/26/856);
any regulated investment company meeting the definition in Art. 851 of the U.S. Internal Revenue Code (www.law.cornell.edu/uscode/text/26/851), or any entity registered with the U.S. Securities and Exchange Commission ( U.S. Securities and Exchange Commission) under the Investment Company Act of 1940 (15 U.S.C. 80a-64; www.law.cornell.edu/uscode/text/15/80a-64);
any general trust fund that meets the definition in paragraph a) of Art. 584 US Internal Revenue Code (www.law.cornell.edu/uscode/text/26/854);
any trust exempt from taxes in accordance with paragraph c) of Art. 664 of the US Internal Revenue Code (www.law.cornell.edu/uscode/text/26/664) or as defined in sec. 1 paragraph a) art. 4947 of the said Code (www.law.cornell.edu/uscode/text/26/4947);
a dealer in securities, commodities or derivatives (including principal contracts, futures, forwards and options) and registered as such under the laws of the United States or any state of the United States;
a broker meeting the definition in paragraph c) of Art. 6045 of the US Internal Revenue Code (www.law.cornell.edu/uscode/text/26/6045), or
any tax-exempt trust compliant with the plan specified in paragraph b) of Art. 403 (www.law.cornell.edu/uscode/text/26/403) or paragraph g) of Art. 457 (www.law.cornell.edu/uscode/text/26/457) of the United States Internal Revenue Code.

The concept of a US person is interpreted in accordance with the US Internal Revenue Code.

IRS tax forms:

1. Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) - W-8BEN, instructions for completion;
2. Certificate of Foreign Status of Beneficial Owner (legal entity) (“Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)”) - W-8BEN-E, instructions for filling out;
3. Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting") - W-8IMY, instructions for filling out;
4. Certificate of a foreign person (individual or legal entity) whose income is related to the conduct of trade or business activities in the United States (“Certificate of Foreign Person"s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States” ) - W-8ECI, instructions for filling out;
5. Certificate of Taxpayer Identification Number (US Resident) (“Request for Taxpayer Identification Number and Certification”) - W-9 and instructions for filling out;

OECD CRS

OECD CRS is a unified standard for the automatic exchange of financial information for tax purposes, which was developed by the Organization for Economic Cooperation and Development (Russian: OECD, English: OECD), and is based on the principles of FATCA.

Within the framework of the OECD CRS, Latvia cooperates with EU member states on the basis of Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation, which repeals Directive 77/799/EEC, and with non-EU countries, on the basis of agreements concluded with such countries.

To ensure compliance with the requirements of the OECD CRS in Latvia, amendments to the laws “On taxes and duties” and “On credit institutions” were approved, and Cabinet Rules No. 20 of 05.01.2016 “The procedure in which a financial institution carries out due diligence procedures for financial accounts and provides the State Revenue Service with information on financial accounts.”

Australia, Austria, Republic of Azerbaijan, Albania, Andorra, Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Bahrain, Belize, Belgium, Bulgaria, Brazil, Brunei, Vanuatu, Great Britain, Hungary, Ghana, Germany, Guernsey, Gibraltar, Hong Kong, Grenada, Greenland, Greece, Denmark, Jersey, Dominica, Israel, India, Indonesia, Ireland, Iceland, Italy, Islamic Republic of Pakistan, Spain, Canada, Cyprus, China, Colombia, Costa Rica, Kuwait, Curacao, Lebanon, Lithuania, Liechtenstein, Luxembourg, Mauritius, Macau, Malaysia, Malta, Marshall Islands, Mexico, Monaco, Montserrat, Netherlands, Niue, New Zealand, Norway, Cook Islands, Isle of Man, Panama, Poland, Portugal, Republic of Korea, Russian Federation, Romania, Samoa, San Marino, Saudi Arabia, Seychelles, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Saint Lucia, Singapore, Sint Maarten, Slovakia, Slovenia, Trinidad and Tobago, Turkey, Uruguay, Faroe Islands, Federal Republic of Nigeria, Finland, France, Croatia, Czech Republic, Chile, Switzerland, Sweden, Estonia, South Africa, Japan.

In order to comply with the requirements of the OECD CRS, ABLV Bank, AS in liquidation may contact the client / beneficiary of the client to request information or documents confirming the tax residence of the client / beneficiary of the client, and in the event that the client is a legal entity (or an unincorporated structure ) - client classification according to OECD CRS.

Tax residence for OECD CRS purposes

The OECD CRS does not contain a standard definition of tax residence, therefore the client/beneficiary of the client must be guided by the laws of his country of residence to confirm his tax residence.

As a rule, a person is considered a tax resident of the country in which he pays income tax, permanently resides, citizen or subject of which he is (individuals), or in which he is established, registered / his permanent executive body is actually located (legal entities) . At the same time, a person is not considered a resident of a country in which income taxes are imposed only on his income that is received exclusively from sources located in this country or from capital placed in this country.

It must be taken into account that each country has its own rules for determining tax residency. Additional information on the rules for determining residence in each OECD CRS member country is available. Additional information on determining a taxpayer number is available.

It should be borne in mind that a person may be a tax resident of several countries (dual residence).

In cases where a legal entity is not recognized as a tax resident in any country, for the purposes of the OECD CRS it is recognized as a resident in the country of actual location of its permanent executive body (address of actual management of the company).

The address of the actual management of the company is considered to be the address at which meetings / meetings of the main (managing) officials of the organization (for example, board of directors, council, management) usually take place, at which the main issues related to management and core activities are essentially considered and resolved. Management of a legal entity can be carried out from several places, but only in one place are the main issues of the organization’s activities mentioned above considered and resolved. To determine the place of effective management of a company, it is important to consider all relevant facts and circumstances.

Client classification according to OECD CRS

Active non-financial organization- any non-financial organization (i.e. an organization that is not a financial institution), with or without legal personality, that meets at least one of the following criteria:
1) less than 50% of the gross income of a non-financial organization for the previous calendar year or other reporting period is passive income and less than 50% of the assets of a non-financial organization for the previous calendar year or other reporting period are assets held for the purpose of obtaining passive income;
2) the shares of a non-financial organization are regularly traded on a generally recognized securities market, or the non-financial organization is a related person of another organization whose shares are regularly traded on a generally recognized securities market;
3) the non-financial organization is a government agency, an international organization, a central bank or a legal structure owned by such;
4) the activities of a non-financial organization are related to the ownership (in whole or in part) of shares issued by one or more such enterprises associated with this organization that are engaged in trade or other commercial activities that are not the activities of a financial institution, as well as the provision of financing and other services to such associated enterprises. A non-financial entity may not be recognized as an active non-financial entity if it operates (or holds itself out) as an investment fund, such as a private equity fund, a venture capital fund, a leveraged buyout fund, or any investment vehicle whose purpose is to acquire or finance companies. with subsequent ownership of shares in these companies as capital assets for investment purposes;
5) the non-financial organization does not yet conduct or has not previously conducted a business activity, but invests capital in assets with the intention of conducting a business activity that is not the activity of a financial institution, provided that the non-financial organization does not meet the criteria for this exception after 24 months after the date of initial establishments of the organization;
6) the non-financial organization has not been a financial institution for the previous five years and is in the process of liquidating its assets or reorganizing with the intention of continuing or resuming a business activity that is not the business activity of a financial institution;
7) the non-financial entity is primarily engaged in the business of entering into financing and hedging transactions with or on behalf of related persons that are not financial institutions, and does not provide financing or hedging services to any other entity that is not a related person, and a group of any such related persons are primarily engaged in business activities that are not the activities of a financial institution;
8) the non-financial organization meets all of the following criteria:

is established and operates exclusively for religious, charitable, scientific, artistic, cultural, sporting or educational purposes, or is established and operates in its country of residence and is a professional association, trade union, chamber of commerce, labor organization, agricultural or horticultural society, a civil union or organization acting solely for the purpose of promoting the public welfare;
is exempt from income tax in the jurisdiction of its location;
has no shareholders or members who have an ownership or beneficial interest in its income or assets;
In accordance with the applicable legal acts of the country of residence of a non-financial organization or in accordance with its constituent documents, any distribution or use of the income or assets of the organization for the benefit of others who are not a charitable organization is not permitted, unless such distribution is related to the charitable activities of that organization to a non-financial organization, or by payment of a reasonable fee for services received by the organization, or by a payment reflecting the fair market value of property acquired by the organization; And
in accordance with the applicable legal acts of the country of residence of the non-financial organization or in accordance with its constituent documents, in the event of liquidation or reorganization of the non-financial organization, all its assets are subject to transfer to a government agency or other non-profit non-profit organization.

Passive income - share of the gross income of a passive non-financial organization, consisting of:

dividends;
interest and similar income;
rents and royalties, in addition to rents and royalties received in the course of conducting the main business activities of the organization;
annuity;
income from the alienation of such financial assets that generate the passive income specified in clauses 1–4 (except for income received as a result of the main activity of the broker/dealer);
income from transactions (including futures, forwards, options and similar transactions) with any financial assets (except for income received as a result of the main activity of the broker/dealer);
income from foreign exchange transactions (excluding income received as a result of the main activity of the broker/dealer);
net income from swap transactions (excluding income received as a result of the main activities of the broker/dealer);
amounts received under insurance contracts with accumulation of funds;
other income, which in its economic essence is equivalent to the income specified in paragraphs 1–9.

Passive non-financial organization:
1) a non-financial organization (with or without the status of a legal entity) that does not meet the criteria of an active non-financial organization;
2) the specified investment company.

Specified investment company- an investment company whose income is primarily derived from investing, reinvesting or buying and selling financial assets, if the company is managed by another entity that is a depository institution, a depository institution, a specialized insurance company or an investment company that meets the criteria specified in paragraph. 1 definition of an investment company.

Financial institution- depository institution, depository institution, investment company or specialized insurance company.

Depository institution- an institution in which a significant part of its business activity consists of holding the financial assets of other persons.

Depository institution- an institution that accepts deposits and other means of payment in the ordinary course of banking, savings and loans, payment service providers, electronic money issuers, or similar business activities.

Investment company- institution:
1) whose business activity primarily consists of carrying out one or more of the following activities or operations on behalf of or on behalf of a client:
a) transactions in money market instruments (for example, checks, bills, certificates of deposit, derivatives), foreign exchange, exchange rate, interest rate and index instruments, transferable securities or commodity futures, which are traded on a regulated market,
b) management of individual and collective investor portfolios based on the powers granted by investors,
c) other investment, management or administration of financial assets or funds on behalf of or on behalf of the client;
2) the income of which primarily comes from investing, reinvesting or buying and selling financial assets, if the company is managed by another organization that is a depository institution, depository institution, specialized insurance company or investment company that meets the criteria given in paragraph 1 of this definition.
An investment company is not considered to be a company that is an active non-financial organization that meets the criteria given in paragraphs 4, 5, 6 or 7 of the definition of an active non-financial organization.

Financial assets- these are securities (including equity interests or shares of a business entity, partnership or participation interest, or actual ownership of interests in a partnership or trust with a wide range of participants or being publicly traded, promissory notes, bonds, promissory notes or other instruments of debt), partnership interests, commodity contracts, swap contracts (including interest rate swaps, currency swaps, basis swaps, interest rate caps and floors, commodity swaps, capital stock swaps, capital stock index swaps and similar contracts ), insurance or annuity contracts or any participation (including regulated and non-regulated futures or options) in securities, partnership interests, commodity contracts, swap contracts, insurance contracts or annuity contracts, with the exception of the right to an interest in real estate not related to debt financing.

Specialized insurance company- is an insurance company (or a company that manages an insurance company) that enters into insurance contracts with accumulation of funds or annuity contracts or is obliged to make payments under such contracts.

Government agency- state subject of public law, including territorial units of the state (for example, self-government bodies of various levels, federal units, parish, city, region, state, province, district) or an agency or body formed (established) by an administrative-territorial unit of the state; a person closely associated with the state and a controlled body.

International organization- an organization that meets all of the following criteria:
1) it includes states or their governments;
2) it has entered into a valid agreement to locate its headquarters abroad;
3) private individuals do not benefit from its income.
An international organization is also considered to be an organ of an international organization or an agency wholly owned by an international organization.

Detailed information about the OECD CRS is available on the OECD portal.

The information provided in this section about FATCA and OECD CRS is for informational purposes only. The information does not contain, is not and cannot be construed as legal and/or tax analysis, recommendation or advice. The information has been prepared using the sources indicated in this section, which are considered reliable at the time of publication of this material, but have not been independently verified.

ABLV Bank, AS in liquidation encourages clients to carefully study information on issues related to tax residency and status/classification of a client/beneficiary of a client according to FATCA / OECD CRS, taking into account all individual facts and circumstances, and to immediately notify ABLV Bank, AS in liquidation about all circumstances or changes in previously provided information that may affect the tax residence or status/classification of the client/beneficiary of the client.

In case of any uncertainty, please find the opportunity to contact the competent tax authorities and/or professional legal or tax advisors.

The closer the deadline, the greater the tension around the automatic information exchange (AIE) system, which will be launched next year. The approaching deadlines for the start of the first reporting has also become the reason for the first misconceptions of business, which, still hoping to preserve dwindling confidentiality, is ready to believe in any rumors and unrealistic schemes to escape from the IDF.

Let's take a look and sort everything out in order to finally understand who will be affected by the first wave of mass deoffshorization and declassification of beneficiaries.

In fact, the process of collecting information has already been launched. On January 1, 2016, 56 countries, including 10 G20 members, and all EU countries began mass information collection in preparation for the upcoming information exchange. These countries include: British Virgin Islands, Cayman Islands, Cyprus, Estonia, Gibraltar, Guernsey, Hungary, Ireland, Isle of Man, Jersey, Latvia, Lithuania, Liechtenstein, Luxembourg, Malta, the Netherlands, Seychelles, Great Britain, etc.

All these countries, or rather financial institutions, have started collecting information on the tax residency of beneficiaries of financial accounts. Next, this information will be transferred to the tax administration of the country of registration of the financial institution, which, on the basis of the AOI, will transfer the data to the corresponding country to the partner whose tax resident is the beneficiary.

Who will be the first to receive information within the IDF?

It was decided to classify all clients into active and passive. This applies to corporate clients who have accounts with the company. Banks and financial institutions will identify whether a company is active or passive for the purpose of AOI.

Passive NFE is a passive non-financial company:

A non-financial organization that does not meet the criteria of an Active NFE;
An investment company that is not an entity from a participating IDF jurisdiction and that is managed by another entity that is a depository institution, depository institution, investment entity, or specialized insurance company;

Active NFE is an active non-financial company:

50% of gross income = passive income and more than 50% of assets generate passive income;
shares are regularly quoted on the stock exchange;
government agency or international organization;
activities of the organization - ownership of issued shares of subsidiaries that are not financial. institutions, and providing them with financing and other services;
an organization that has not been founded for more than 24 months and has not yet started running its business. activities, but invests capital in assets with the intention of starting a business. activities that are not financial activities. institutions;
the organization was not financial. establishment in the last 5 years and is in the process of liquidating its assets or reorganizing in order to resume activities that are not financial activities. institutions;
The entity is primarily engaged in financing and hedging transactions with or for related entities other than financial entities. institutions, and the entity does not provide financing or hedging services to others;
the organization is established and operates exclusively for religious, charitable, etc. purposes (the existence of a property interest in income or assets, or the distribution of income or assets or their use for the benefit of a private person is excluded)

Providing data to tax authorities

Financial institutions will be required to provide full information on all of their clients, both active and passive, but the first wave of exchange will contain the following information:

For individuals this will be:
First and last name
Address in country of residence
Taxpayer number
Date of Birth

For non-financial companies – NFE:
Name
Address in country of residence
Taxpayer number
Financial asset account number(s)
The value of financial assets / balance(s) of the accounting account(s) at the end of the reporting period
Gross amount of income from related financial assets paid during the reporting period
Gross amount of proceeds from the sale of related financial assets paid during the reporting period

For passive non-financial companies – NFE with beneficiaries from participating jurisdictions

Name
Address in country of residence
Taxpayer number
Financial asset account number(s)
The value of financial assets / balance(s) of the accounting account(s) at the end of the reporting period
Gross amount of income from related financial assets paid during the reporting period
Gross amount of proceeds from the sale of related financial assets paid during the reporting period

About the beneficiary:

first and last name
address in country of residence
taxpayer number
Date of Birth

Deadlines for reporting and first transfer of information:

Clients	Information collection period	First report
Existing clients as of December 31, 2015: individuals. persons with total financial assets ≥ $1 million.	until December 31, 2016	2017
Existing clients as of December 31, 2015: individuals. persons with total financial assets< $ 1 млн.	until December 31, 2017
Existing legal clients as of December 31, 2015. faces	until December 31, 2017	2017 (if information was collected in 2016) or 2018 (information was collected in 2017)
New clients from 01/01/2016 (individuals and legal entities)	before establishing a business relationship	2017 and subsequent years for the previous reporting year

The category of passive non-financial companies includes all companies that are not tax residents in any jurisdiction. This is where the so-called loophole begins for allegedly evading the IDF.

In order to determine whether a company is a taxpayer or not, the bank may require you to provide a certain package of documents confirming this fact:

registration certificate
tax registration certificate
tax residency certificate (international tax residency certificate)
another confirmation of tax registration with a taxpayer number (if there is no number, there should be an explanation).

The category of countries in which your company is not a tax payer, in fact, includes all countries with low or no taxation. All classic offshore companies that are profitable for work are not tax residents, therefore, the exchange of information about them is mandatory.

But there are attractive jurisdictions that recognize their companies as tax residents of the country: Malta, Hong Kong, Singapore, Switzerland, Great Britain, etc.

Thus, companies that meet the criteria of active non-financial companies (Active NFE) will not be subject to information exchange. And this is quite logical, since these companies cannot but pay taxes in the country of their registration.

To date, company owners in jurisdictions where their companies are officially tax residents and taxpayers of the country will not exchange information. However, this does not mean that information on the client’s personal account will not be transferred to the relevant tax authorities of the country of tax residence of the beneficiary.

It is important to understand that we have repeatedly tried to convey to the readers of InternationalWealth.info that the future lies in organizing a business in a country with flexible taxation - midshore. This will reduce the tax burden for the company, and, as practice shows, at least temporarily protect your business from the IDF.

But as a private individual, you will not be able to protect yourself from the IDF, and all countries based on CRS will exchange data on the personal accounts of their clients. What, of course, threatens is that your beneficial ownership of a foreign company may also be declassified, even if you own a company in a country that recognizes its companies as tax residents of the country and does not exchange this information. If you have received or are receiving payments within your business to your personal account.

What to do to protect yourself from IDF?

This is a very sensitive question. If we are talking about the business level, then, as mentioned above, the business must be opened in a country that recognizes its companies as tax residents. This option may not always be the most attractive, since tax resident status for a company means a certain level of taxation. Which is not always lower than in the country of tax residence of the beneficiary.

For the beneficiary, in order to avoid the automatic exchange of information, it is necessary to change his country of tax residence - this will reduce the tax base. Or find a country in which you can open an account, and which is not an IDF member country. But this also has its own nuances and difficulties.

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In the section on the question Give a definition of the term “non-financial enterprises” (not sure - don’t answer) asked by the author Vladimir Minakov the best answer is Very simple.
According to the System of National Accounts, all enterprises are divided into financial and non-financial. Financial - these are banks, investment companies, etc. Now there is no SNA at hand. Non-financial - all the rest, but mostly we mean industrial enterprises. Look at the SNA for more details.
The next step is more difficult.

Answer from User deleted[guru]
A social movement is a mass public association consisting of participants and without membership, pursuing social, political and other socially useful goals supported by participants in the social movement.
A public association is a voluntary, self-governing, non-profit formation created on the initiative of citizens united on the basis of common interests to realize common goals specified in the charter of the public association.
A non-profit organization is an organization that does not have profit as the main purpose of its activities and does not distribute the profits received among its participants.
A private institution is a non-profit organization created by the owner (citizen or legal entity) to carry out managerial, socio-cultural or other functions of a non-commercial nature.
The Foundation is a non-membership organization created by citizens and/or legal entities for the purpose of forming property on the basis of voluntary contributions and other receipts not prohibited by law for the use of this property for social, charitable, cultural, educational and other socially beneficial purposes.
A homeowners' association is a form of association of homeowners for joint management and maintenance of a complex of real estate in a condominium, ownership, use and, within the limits established by the legislation of the Russian Federation, of disposal of common property.
According to the Law, they are all non-financial, although they live by attracting finance...
It’s as silent as in a tank - with such laws...

Answer from User deleted[guru]
Well, I won’t answer

Institutional unit on Wikipedia
Look at the Wikipedia article about Institutional unit

History at school on Wikipedia
Look at the Wikipedia article about History at school

Let's consider changes in international legislation in terms of tax and financial exchange of information, in the disclosure of information on the accounts of individuals and legal entities with assets abroad. In addition to this, we will present information exchange models using the example of different jurisdictions.

CURRENT ISSUES

On May 12, 2016, during the Organization for Economic Cooperation and Development Forum on tax administration in Beijing, the Federal Tax Service of Russia signed a Multilateral Agreement of Competent Authorities on the Automatic Exchange of Information on Financial Accounts. The first such exchange for Russia is scheduled for September 2018. This measure was provided for in the “Main Directions of Tax Policy of the Russian Federation for 2016 and for the planning period of 2017 and 2018.”

Multilateral Competent Authority Agreement(Multilateral Competent Authority Agreement, MCAA) And Unified reporting standard on the automatic exchange of information on financial accounts (Common Reporting Standard, CRS) were developed on the basis of Art. 6 of the Convention on Mutual Administrative Assistance in Tax Matters, 1988, as amended. Protocol of May 27, 2010 (hereinafter referred to as the 1988/2010 Convention).

What does signing the ISA mean for Russian taxpayers, for non-residents with accounts in Russia? What information and to what extent will be subject to automatic exchange? Who, how and with whom will exchange such information?

BETWEEN WHICH COUNTRIES WILL THERE BE AUTOMATIC EXCHANGE?

According to Art. 6 of the 1988/2010 Convention, automatic exchange procedures are determined by mutual agreement of two or more parties. In practice, the model of a multilateral agreement is taken as a basis, due to which countries that have signed such an agreement will no longer need to sign separate bilateral agreements among themselves.

FOR YOUR INFORMATION

As of June 28, 2016, the Multilateral Agreement of the Competent Authorities was signed 83 jurisdictions. Some countries committed to carry out the first (essentially test) automatic exchange of information in September 2017, and some - in September 2018.

In September 2017. Anguilla, Argentina, Barbados, Belgium, Bermuda, Bulgaria, British Virgin Islands, Great Britain, Hungary, Germany, Guernsey, Gibraltar, Greenland, Greece, Denmark, Jersey, India, Ireland, Iceland, Spain, Italy, Cayman committed to carry out the first automatic exchange islands, Cyprus, Colombia, Korea (South), Curacao, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Isle of Man, Turks and Caicos Islands, Poland, Portugal, Romania, San Marino , Seychelles, Slovakia, Slovenia, Faroe Islands, Finland, France, Croatia, Czech Republic, Sweden, Estonia, South Africa.

In September 2018. Australia, Austria, Albania, Andorra, Antigua and Barbuda, Aruba, Belize, Ghana, Grenada, Israel, Indonesia, Canada, China, Costa Rica, Mauritius, Malaysia, Marshall Islands, Monaco, Nauru, New Zealand have undertaken to carry out the first automatic exchange , Cook Islands, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sint Maarten, Chile, Switzerland, Japan.

WHAT IS THE AUTOMATIC INFORMATION EXCHANGE?

Under an automatic exchange, the competent (usually tax) authorities of the participating jurisdiction will:

receive from financial institutions his country information on accounts of individuals and legal entities - residents of other countries— MCAA participants;
annually transmit this information to the competent authorities of these countries;
receive from competent authorities other countries— MCAA participants information about accounts of individuals and legal entities — residents of their country.

The exchange of information will be carried out between the competent authorities of the countries participating in the MCAA (received by them from reporting financial institutions in their countries) annually on an automatic basis in a unified electronic format.

Reporting financial institutions(Reporting Financial Institutions) are any financial institutions of a jurisdiction participating in the automatic exchange (banks, brokers, depositories, insurance and other companies), with the exception of government agencies, international organizations, central banks, state pension funds and other legal entities with a low level risk of being used for tax evasion purposes.

The exchange of information for a specific calendar year between the competent authorities of the respective countries can be carried out provided that:

for these authorities, the MCAA has entered into force;
their countries have and maintain domestic legislation requiring reporting financial institutions to report for such calendar year to the extent and in the manner required by the CRS.

NOTE

By signing the MCAA, each state determines the month and year that information exchange will begin. The exchange must be made within 9 months after the end of the calendar year for which the information is provided.

WHAT INFORMATION WILL BE TRANSMITTED AUTOMATICALLY?

Information,subject to automatic exchange, includes (clause 2 art. 2 MCAA):

name of an individual, name of a legal entity, taxpayer identification number, date and place of birth of an individual, address of a legal entity, as well as the name, tax identification number, date and place of birth of individuals controlling legal entities (after due diligence by the competent authorities in accordance with CRS standard);
bank account number (or equivalent in function if there is no account number);
name and identification number of the reporting financial institution (bank);
the balance of funds in the account at the end of the corresponding calendar year or at the time of account closure, if the account was closed this year;
Byaccountsdepot(Custodial Account):

The total amount of interest, dividends or other income received in respect of assets placed in such account for a calendar year or other reporting period;

The total proceeds received into the account from the sale or repurchase of assets for which the reporting financial institution acted as depository, broker, nominee or agent of the account holder;

on deposit accounts(Depository Account) - the total amount of interest received to the account for a calendar year or other reporting period;
for other types of accounts— the total amount received by the account holder for a calendar year or other reporting period.

Information about both newly opened accounts (starting from a certain date) and existing accounts (already opened as of a certain date) will be subject to exchange. Each state indicates these dates in the annex to the signed MCAA.

PREPARATION FOR AUTOMATIC EXCHANGE WITHIN CRS

Banks report reporting account information to their country's tax authorities in the calendar year following the year to which the information relates.

Prior to the start of automatic exchange, all banks (and other reporting financial institutions) of MCAA participating countries will be required to carry out special due diligence procedures in relation to existing and newly opened accounts of its clients(both individuals and legal entities). The goal is to categorize accounts for the purpose of subsequent transfer of data to the tax authorities and fill in the information missing for this.

Banks will identify information based on:

available information about the client obtained as a result of AML/KYC (“know your client”) procedures adopted by this bank;
information separately declared by the client himself (self-certification).

DUE DILIGENCE OF EXISTING ACCOUNTS OF LEGAL ENTITIES

Speaking about account holders, the CRS Standard understands by the word “entity” not only legal entities themselves (corporations), but also other entities, including partnerships, trusts and foundations.

CRS removes from automatic exchange existing accounts of legal entities (Preexisting Entity Accounts), the aggregated balance of which does not exceed $250,000. USA as of December 31 of the relevant year. That is, identification, reconciliation and transfer of information about such accounts will not be carried out.

Reportable accounts(Reportable Accounts), that is, accounts about which information is subject to transfer, are accounts whose holders are:

one or more accountable person(Reportable Person), that is, an individual or legal entity - a resident of a jurisdiction participating in the automatic exchange;
(or) passive non-financial organization(Passive NFE) (hereinafter referred to as a passive NFE), one or more of whose controlling persons is a resident of a participating jurisdiction.

FOR YOUR INFORMATION

The rules for determining tax residence adopted in each of the MCAA member countries can be found on the OECD automatic exchange portal in the “Rules governing tax residence” section.

Active and passive organizations for information exchange purposes

A passive NFO is a non-financial organization that is not active.

An active NFO is a non-financial organization whose passive income over the past calendar year was less than 50%, and the volume of assets generating passive income or intended to receive it was less than 50% over the same period.

The CRS standard provides a number of other features, every (any) of which will also allow the organization to be classified as an active NFO:

NFO shares are regularly traded on organized securities markets

An NFI is a state or international organization, a central bank, or an organization that is wholly owned by any of the above mentioned organizations

Holding non-financial organizations (under certain conditions)

The NFO does not yet operate and has no history of operating, but invests capital in assets with the intention of conducting non-financial activities

The NFO is in the process of liquidation or reorganization in order to continue or resume non-financial activities

The non-financial entity finances or hedges transactions with related non-financial entities and does not provide financing services to others.

A non-financial organization is a non-profit organization (meeting a number of criteria)

The meaning of the term " passive income» must be determined based on the laws of each participating jurisdiction. According to the commentary to Section VIII of the CRS Standard (clause 126) passive income usually refers to the part of total income that includes:

dividends;
interest;
income similar to interest;
rent payments and royalties;
annuities;
the excess of income over losses as a result of the sale or exchange of financial assets generating passive income;
the excess of income over losses from transactions with any financial assets (including futures, forwards, options and similar transactions);
excess of income over losses from transactions with foreign currency;
net income from swap transactions;
amounts received under endowment life insurance contracts.

Reporting financial institution(bank) must carry out the following due diligence procedures(collection or updating of information about the client):

1) determine whether the organization (entity) accountable person. To do this, the bank checks the available information collected as part of the AML/KYC procedures in order to determine tax residence account holder.

If, according to available information, the account holder is a tax resident of a participating jurisdiction, then the account will be considered as a reportable account (that is, the bank will have to transfer information about it to the tax authority of its country);

2) determine whether the organization is passive NFI with one or more controlling accountable persons. To do this you need to install:

whether the account holder is a passive NFI. The bank surveys the client to determine his status (except for cases where the bank has information that allows him to make a reasonable conclusion that the account holder is an active NFI);
controlling persons of the account holder. To do this, the bank relies on information it previously received as part of the AML/KYC procedures;
whether the controlling person is accountable. Here, the bank also relies on information it previously received as part of the AML/KYC procedures, if the aggregate balance of an existing account of a passive NFO does not exceed USD 1,000,000 (or specifically questions the account holder or controlling person in order to determine the jurisdiction, in which such controlling person is a tax resident).

Talking about controlling person The CRS standard refers to the interpretation of the term “beneficial owner” as given in the FATF (Financial Action Task Force) Recommendations. Beneficial owner is the individual(s) who ultimately owns or controls the client and/or the individual on whose behalf the transaction is being made.

NOTE

If any of the controlling persons of a passive NFO is a reporting person, then not only information about the client’s account will be subject to exchange, but also about the person controlling it (the client).

DUE DILIGENCE OF EXISTING INDIVIDUALS ACCOUNTS

To determine whether a client belongs to a participating jurisdiction, the bank, based on available information, establishes tax residence of this client.

The CRS standard divides existing accounts of individuals into two groups:

Low Value Accounts, the aggregate balance of which as of December 31 of the reporting year does not exceed $1,000,000;
Higher Value Accounts with an aggregate balance exceeding $1,000,000 as of December 31 of the reporting year or December 31 of any subsequent year. The collection of information about this category of accounts (and, accordingly, the exchange of information on them) will be carried out as a matter of priority.

Important detail: Information on all individual bank accounts in participating countries will be subject to automatic exchange, since the CRS does not set any balance threshold for such accounts, the failure to exceed which would remove the account from automatic exchange.

DUE DILIGENCE TIMELINES FOR THE FIRST ROLE OF PARTICIPATING COUNTRIES

Banks of countries starting automatic exchange in 2017. (e.g. Cyprus, Latvia, Estonia) must:

carry out due diligence for exchange purposes (in particular, to establish the tax residence of the client, the active/passive nature of the legal entity, etc.) in relation to new clients(individuals and legal entities - non-residents of the bank’s country) before establishing business relations with them - starting from 01/01/2016;
complete due diligence existing clients — individuals(non-residents of the bank’s country) whose account balance exceeds USD 1,000,000 - until December 31, 2016;
complete due diligence all existing clients(individuals and legal entities - non-residents of the bank’s country) - until December 31, 2017.

DUE DILIGENCE TIMELINES FOR THE SECOND ROLE OF PARTICIPATING COUNTRIES

Banks of countries starting automatic exchange in 2018 (for example, Russia, Switzerland, Austria) must:

carry out due diligence for exchange purposes (in particular, to establish tax residency, active/passive nature of a legal entity, etc.) in relation to new clients(individuals and legal entities - non-residents of the bank’s country) - from 01/01/2017;
complete due diligence existing clients — individuals(non-residents of the bank’s country) whose account balance exceeds USD 1,000,000 - until December 31, 2017;
complete due diligence all existing clients(individuals and legal entities - non-residents of the bank’s country) - until December 31, 2018.

E. B. Nesterova, General Director of Helios Trust Solutions LLC

The material is published partially. You can read it in full in the magazine