Automatic Exchange of Information for Tax Purposes
Automatic Exchange of Information for Tax Purposes
The Act on Administrative Co-operation for Tax Purposes (hereinafter: Act), in force as of 1 January 2017, regulates administrative co-operation with regard to taxes between the Republic of Croatia and the European Union member states, automatic exchange of information on financial accounts between the Republic of Croatia and other jurisdictions, and implementation of the Agreement between the Government of the Republic of Croatia and the Government of the United States of America on enhancing the fulfilment of tax obligations on the international level and on implementing the FATCA (Foreign Account Tax Compliance Act). The procedure of collecting data on tax residency of customers, due diligence rules and implementation of automatic data exchange are further regulated under the Rules on Automatic Exchange of Information in the Field of Taxation (hereinafter: Rules).
Customer Due Diligence Rules
In keeping with the above Act and the due diligence rules prescribed thereunder, financial institutions in the Republic of Croatia, including also Raiffeisenbank Austria d.d. (hereinafter: Bank), are subject to:
• inspecting their customers and their respective accounts,
• as a result of the due diligence process, forwarding the data as prescribed under the Act to the tax authority with regard to the reporting accounts until 30 June of the following calendar year (the period from 1 January until 31 December).
Information for clients
- New Customers
Within the inspection, all customers opening an account with the Bank after the day of 1 January 2016 (new customers) are required to fill in the Self certification document for private individuals (hereinafter: Statement) and the Self certification document for sole trader and for business entities (hereinafter: Statement).
By filling the Statement, the respective customer is to define in which state they are a tax resident. Further information on the rules for determining tax residency in individual states is available on the following link.
Further, in the Statement the customer is required to state their tax identification number for the state that they entered as their state of tax residency (if they were issued any such number). If the Customer does not know his tax identification number, more information is available on the following link.
Business entities fill a special Statement and, along with the tax residency information, in the Statement they are required to define their status (active non-financial subject, passive non-financial subject, financial institution, public government body, central bank, international organization, a company the stock of which is regularly traded on an established securities market), and if defined as a passive non-financial entity, they are obligated to provide the tax residency information of their actual owners.
In keeping with the requirements of the existing regulations, the Bank will not establish any business relationship with a customer who refuses to fill the Statement of Tax Residency. On the basis of the available data recorded in its systems and documents, the Bank will inspect the accuracy of the customer's Statement.
If the data collected from the Statement indicate that the respective customer is a potential taxpayer of the United States of America (hereinafter: USA), the customer will be asked to confirm or contest their tax obligation towards the USA by filling the corresponding FATCA forms:
• form W-9 or
• form W-8BEN (for private individuals)
• form W-8BEN-E (for business entities)
- Existing Customers
The Bank determines the tax residency of customers who hold active accounts as on 31 December 2015 (existing customers) on the basis of the documentation collected from customers at the moment of establishing or during the course of the respective business relationship. If the information from the existing documentation indicates that a customer is a potential taxpayer of any of the participating jurisdictions, the Bank will request that the customer fills the Statement of Tax Residency.
If any circumstances referring to a customer or their account change, and on the basis of which changed circumstances the Bank would learn (or would have reason to assume) that the obtained Statement became inaccurate or unfounded, the Bank will request that the customer fills a new Statement.
On the basis of the obtained tax residency information of its customers, the Bank will deliver data on the financial assets for the customers whom it identifies as the residents of the USA, of the European Union member states and of other participating jurisdictions as in compliance with Article 4 of the Rules exclusively to the Ministry of Finance of the Republic of Croatia, Tax Administration.
The list of participating jurisdictions is available on the web site of the Tax Administration.
The Tax Administration of the Ministry of Finance of the Republic of Croatia will exchange the respective information with the tax authorities of other jurisdictions including the tax authority of the USA.
Within the scope of the information exchange, the tax administrations will share mutually the following data: account holder's identification information, account holder's tax identification number, account number and balance, and other data as stipulated under the Act in Article 26 (concerning the participating jurisdictions), or in Article 61 (concerning the USA).
Additional information on automatic information exchange and obligations of all banks in Croatia towards the Tax Administration are available on the web site of the Tax Administration.
Useful Links and Documentation:
Act on Administrative Co-operation for Tax Purposes
Act on Administrative Co-operation for Tax Purposes (available in Croatian only)
Rules on Automatic Exchange of Information in the Field of Taxation
Rules on Automatic Exchange of Information in the Field of Taxation (available in Croatian only)
Council Directive 2014/107/EU
Council Directive 2014/107/EU of 9 December 2014 on amending Directive
Act on Verification of the Agreement between the Government of the Republic of Croatia and the Government of the United States of America
Act on Verification of the Agreement between the Government of the Republic of Croatia and the Government of the United States of America on enhancing the fulfilment of tax obligations on the international level and on implementing the FATCA
Automatic Exchange of Information