FATCA and CRS

Agreement to improve International Tax Compliance and to implement FATCA (Foreign Account Tax Compliance Act)

1. General information

The United States of America (USA) enacted in 2010 the Hiring Incentives to Restore Employment Act (HIRE Act). The part of the Act governing tax matters is called the Foreign Account Tax Compliance Act – FATCA. The purpose of FATCA is to prevent tax evasion by U.S. tax residents with regard to assets held in financial accounts or undertakings outside the USA.

The Republic of Slovenia and the USA concluded on 2 June 2014 the Agreement to improve International Tax Compliance and to implement FATCA (Agreement) which sets out detailed requirements for Slovenian financial institutions and the Tax Authority with regards to FATCA. The Agreement builds upon pre-existing cooperation arrangements between the Republic of Slovenia and the USA in the field of double taxation and exchange of information for taxation purposes.

Per FATCA, financial institutions are required to identify customers and record their status as U.S. tax residents for purposes of reporting on assets of these clients to the U.S. Tax Authority. To partake in the FATCA system financial institutions need to register with the U.S. Tax Authority and obtain a special FATCA identification number.

2. GIIN and Nova KBM, d.d.

Per the U.S. Internal Revenue Services (IRS) website, Nova KBM d.d. holds the status ‘Registered Deemed-Compliant-Financial Institution (including a Reporting Financial Institution under a Model 1 IGA)’ and was given the GIIN (Global Intermediary Identification Number): UH5299.00031.ME705.

3. Obligations of financial institutions

Should a financial institution decide against partaking in the FATCA system, it would be subject to a special 30% withholding tax on certain U.S.-source payments, regardless of whether the payment is intended to the financial institution or its clients.

Under the Agreement, Slovenian financial institutions are required to report information on account holders classified as specified U.S. Persons (U.S. tax residents) to the Slovenian tax authority for further delivery to the IRS.

3.1. IRS forms W-9 and W-8

For identifying account holders, the U.S. tax procedure prescribes special IRS forms W-8 (for non-U.S. residents) or W-9 (for U.S. residents).

The following are the most common W-8 series forms:

W-8BEN, used to identify a non-U.S. resident individual as the final beneficiary of the payment;
W-8BEN-E, used to identify a non-U.S. resident legal entity as the final beneficiary of the payment.

Slovenian financial institutions do not provide legal or tax advice to account holders on U.S. tax regulation, and do not provide services of regulating the status or tax obligations of account holders in the USA.

4. Useful links

For details on the Agreement, click here: Agreement to improve International Tax Compliance and to implement FATCA.

For more information on FATCA, click here: FATCA Brochure.

SLOVENIA

USA

OECD and EU

The fight against tax fraud and tax evasion

OECD Standard of Automatic Exchange of Financial Account Information and Council Directive 2014/107/EU

1. General information

Member States of the Organisation for Economic Cooperation and Development (OECD) have undertaken to jointly combat cross-border tax fraud, tax evasion and aggressive tax planning.

The OECD Council adopted on 15 July 2014 the uniform Standard of Automatic Exchange of Financial Account Information (OECD Standard).

1.1. The Republic of Slovenia is party to a multilateral agreement

The Republic of Slovenia was one of the 52 jurisdictions to sign on 29 October 2014 the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (MCAA), committing to implement CRS and engage in the first automatic exchange of financial account information as early as 2017.

To ensure the extended automatic exchange of financial account information within the European Union is aligned with international developments in this field, the European Council adopted on 9 December 2014 Council Directive 2014/107/EU amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation.

Council Directive 2014/107/EU and the contents of the OECD Standard were transposed into Slovenian law by the Tax Procedure Act (ZDavP-2). The Act Amending and Supplementing the Tax Procedure Act (ZDavP-2l) was adopted on 19 November 2015 and entered into force 1 January 2016.

2. Obligations of financial institutions and self-certification

With the adoption of the new law, Nova KBM d.d., as a Slovenian reporting financial institution, is obligated to annually report to the Financial Administration of the Republic of Slovenia (FURS) information on financial accounts of non-residents. For this purpose, the Bank is obligated to obtain from new clients, and, in specific cases, from pre-existing clients prescribed data, including information about the client's tax residency. Clients shall notify this information to the Bank using a special form – self-certification. FURS shall notify annually the prescribed financial account information to the competent authority in another country of which the client is a tax resident.

The law applies to natural and legal persons who:

Become clients of Nova KBM d.d. after 1 January 2016; or
Were clients of Nova KBM d.d. as at 31 December 2015 and have permanent/temporary residence outside the Republic of Slovenia; or
Change their information during the period of doing business with a financial institution.

In addition to data that constitutes the self-certification form, a financial institution may obtain from the client information on tax residency and his tax number in the country of tax residency.

Financial institutions do not provide tax advisory services. Details on the new legislation are available on the website of the Tax Administration of the Republic of Slovenia.

3. Useful links

FATCA and CRS | NKBM

Automatic exchange of financial account information.

FATCA and CRS

Agreement to improve International Tax Compliance and to implement FATCA (Foreign Account Tax Compliance Act)

OECD Standard of Automatic Exchange of Financial Account Information and Council Directive 2014/107/EU

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