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The Common Reporting Standard

To help fight against tax evasion and protect the integrity of tax systems, governments around the world are introducing a new reporting and information-gathering requirement for financial institutions. This is known as the Common Reporting Standard (CRS) and we’d like to explain what it means for you. Under the CRS, we are required to determine where you may be paying tax (often referred to as where you are “tax resident”). We will base this on information we have already or we may ask you for additional details.
If you are tax resident/paying taxes outside the country where you bank then we will give this information to our local tax authority, which may then be shared with the tax authority where you are tax resident.

Any queries?

If you have any further queries regarding CRS and your tax position, please contact a tax advisor, as M&S Bank is unable to provide tax advice. You may also find useful guidance on the OECD Portal.

Frequently asked questions

What is CRS?

The Common Reporting Standard (CRS) is a new reporting and information-gathering requirement for financial institutions in participating countries, to help fight against tax evasion and protect the integrity of tax systems.

Who is reportable?

The CRS seeks to establish the Tax Residency of customers. Under the CRS, financial institutions are required to identify customers who appear to be tax resident outside of the country where they hold accounts and products, and report certain information to their local tax authority, which may then be shared with the tax authority where the customer is a tax resident.

Why are you asking me for my jurisdiction(s) of Tax Residency?

Under the CRS, tax authorities require financial institutions such as M&S Bank to collect and report certain information relating to their customers’ tax statuses. If you open a new bank account, invest in new financial products or change your circumstances in some way, we will ask you to certify a number of details about yourself. This process is called “Self-Certification” and we are required to collect this information under the CRS.

Are all banks doing this?

All financial institutions in participating countries are required to be compliant with the CRS.

What information are you asking customers to provide and verify?

In line with the CRS requirements, we will ask you for your:

  • Name
  • Address
  • Place of birth* (for Individual and Controlling Persons)
  • Date of birth* (for Individual and Controlling Persons)
  • Country(ies) of tax residence
  • Taxpayer identification number(s)*
  • Place of registration/incorporation (for Entities)
  • Entity Type (for Entities)
  • Controlling Person Type for certain Entity Types (for Controlling Persons)

*This does not apply in all participating countries and is subject to local law requirements.

How is my tax residence defined?

This will depend on where you live and your circumstances. Please contact a professional tax advisor or your local tax authority for more information on how to determine your Tax Residency, as M&S Bank cannot give tax advice.

The information I have been asked for on the forms is similar to the information I have been asked for under FATCA. Why is this different?

Even if you have already provided information under the United States’ government’s Foreign Account Tax Compliance Act (FATCA), you may still need to provide additional information for the CRS as these are different regulations with different requirements. FATCA is US law and requires financial institutions to identify US persons and report in line with FATCA regulations, based on citizenship. The CRS requires financial institutions to identify Tax Residency of customers and report information on customers who are tax resident outside of the country where they hold their accounts.

I live in the same country as I pay tax so why do I need to give you these details?

Under the CRS, we are legally required to establish the Tax Residency status of all our customers, even if you are tax resident in the same country as where you hold your account. However, typically your details will not be reportable to tax authorities for CRS purposes.

How often will I need to provide this information?

Once we have a valid Self-Certification on file, you will only be asked to complete another when you update certain information on your account or we believe your reportable status may have changed.

Why is M&S Bank providing tax authorities with my tax details?

M&S Bank is required to report your tax details under the legal requirements introduced by countries participating in the CRS.

Will M&S Bank respect my data privacy?

Yes. We will only disclose your information to the relevant tax authorities for the purposes of CRS if we are legally required to do so.

Is my information safe?

Customer information is protected by a strict code of secrecy and security which all members of the HSBC Group, their staff and third parties are subject to.

I have provided you with my details. Why are you asking me for supporting documents?

We are required by law to verify the details you have provided as part of your Self-Certification. We might ask you for a copy of your passport to verify your identity or for some other evidence of your Tax Residency declared in your Self-Certification.

What information will be reported to tax authorities?

The information provided in the Self-Certification form, and details about the accounts and products you have with us, including:

  • the balance or value
  • the total amounts of interest or payments credited.

Where can I find further information and advice?

For further information and advice, please contact your tax adviser or national tax authority. You can also find out more at the OECD Automatic Exchange of Information portal.

Glossary

Active Entity

  • Under the CRS, an Active Entity (typically a business that is a trading entity) is known as an Active Non-Financial Entity (NFE). You must meet any of the following criteria to be an Active NFE:
  • less than 50% of the NFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50% of the assets held by the NFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;
  • the stock of the NFE is regularly traded on an established securities market or the NFE is a related Entity of an Entity the stock of which is regularly traded on an established securities market;
  • the NFE is a governmental Entity, an international organisation, a central bank, or an Entity wholly owned by one or more of the foregoing;
  • substantially all of the activities of the NFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a financial institution (FI), except that an Entity does not qualify for this status if the Entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
  • the NFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a FI, provided that the NFE does not qualify for this exception after the date that is 24 months after the date of the initial organisation of the NFE;
  • the NFE was not an FI in the past five years, and is in the process of liquidating its assets or is reorganising with the intent to continue or recommence operations in a business other than that of an FI;
  • the NFE primarily engages in financing and hedging transactions with, or for, related Entities that are not FIs, and does not provide financing or hedging services to any Entity that is not a related Entity, provided that the group of any such related Entities is primarily engaged in a business other than that of an FI; or
  • the NFE meets all of the following requirements:
  • it is established and operated in its country of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its country of residence and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
  • it is exempt from income tax in its country of residence;
  • it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
  • the applicable laws of the NFE’s country of residence or the NFE’s formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and
  • the applicable laws of the NFE’s country of residence or the NFE’s formation documents require that, upon the NFE’s liquidation or dissolution, all of its assets be distributed to a governmental Entity or other non-profit organisation, or escheat to the government of the NFE’s country of residence or any political subdivision thereof.

Automatic Exchange of Information

The Automatic Exchange of Information (AEOI) is a response by national governments to combat tax evasion more widely and effectively. It refers to the process of tax authorities in CRS-participating countries automatically exchanging data on tax residents with other participating countries.

Controlling Person

This is a natural person who ultimately has a controlling ownership interest in the Entity. Where no natural person(s) exercises control through ownership interests, the Controlling Person(s) of the Entity will be the natural person(s) who exercises control of the Entity through other means. For a trust the Controlling Persons are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(-ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust.

CRS

The Common Reporting Standard (CRS) is a worldwide reporting and information-gathering requirement for financial institutions, to help fight against tax evasion and protect the integrity of tax systems.

Under the CRS, we are required to determine where you should be paying tax (often referred to as where you are ‘tax resident’) and give national tax authorities information on those customers that are tax resident/paying taxes outside the country where they bank. This information may then be shared between different countries’ tax authorities.

Entity

This is defined under the CRS as a legal person or a legal arrangement, such as a corporation, organisation, partnership, trust or foundation. An entity will therefore include any customer that holds a business account, product or service with HSBC except Sole Traders, who are treated as Individuals under the CRS.

FATCA

Foreign Account Tax Compliance Act is the name of the legislation introduced by the United States Government, to help counter US tax evasion by encouraging better reporting of information.

Individual

A customer that holds a personal account, product or service with M&S Bank. Under CRS, this also includes Sole Traders .

OECD

Organisation for Economic Co-operation and Development. The OECD is responsible for developing the Common Reporting Standard (CRS) that governments have signed up to.

Passive Entity

Under CRS, a Passive NFE means any NFE that is not an Active NFE .

A NFE will be deemed a Passive NFE if more than 50% of the NFE’s gross income for the preceding calendar year or appropriate reporting period is passive income or the assets held by the NFE during the same period are assets that produce or are held for the production of passive income.

For the purpose of the CRS, passive income would generally be considered to include the portion of gross income that consists of:

  • dividends;
  • Interest;
  • income equivalent to interest;
  • rents and royalties, other than rents and royalties derived in the active conduct of a business conducted, at least in part, by employees of the NFE;
  • Annuities;
  • the excess of gains over losses from the sale or exchange of Financial Assets that gives rise to passive income described above;
  • the excess of gains over losses from transactions (including futures, forwards, options, and similar transactions) in any Financial Assets;
  • the excess of foreign currency gains over foreign currency losses;
  • net income from swaps;
  • amounts received under Cash Value Insurance Contracts.

*Passive income will not include, in the case of an NFE that regularly acts as a dealer in financial assets, any income from any transaction entered into in the ordinary course of such dealer’s business as such a dealer.

Self-Certification

Self-Certifications are the forms used to confirm your status under CRS. There are 3 types of Self-Certification; Individuals, Entities and Controlling Persons. For some types of Entity, we also need to collect a Self-Certification from the Controlling Persons. This is marked on the Entities and Controlling Persons Self-Certification forms.

Senior Managing Official

Where no natural person(s) is identified as exercising control of the Entity, the Controlling Person(s) of the Entity will be the natural person(s) who holds the position of Senior Managing Official.

Sole Trader/Proprietor

A Sole Trader - also known as a sole proprietorship or simply proprietorship - is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business.

Tax Residency

Jurisdiction or country where you are resident/registered for tax purposes.

Taxpayer Identification Number (TIN)

A Taxpayer Identification Number (TIN) is a unique combination or letters and/or numbers assigned to you/your company. Some countries do not issue a TIN, but rely on another issued number such as social security/national insurance number for example.