Tax Residency | NatWest International

Tax residency

International tax legislation, how it affects you and your bank

  • Overview

  • FATCA

  • CSR

Overview

We recommend you contact a professional and independent tax adviser to discuss your personal tax situation, help you understand the international regulations and ensure you comply with them. We can't help you decide your tax status or guide you with filling in forms, as NatWest International does not offer tax advice, we can however offer guidance on the terms in the forms.

What is Customer Tax Operations (CTO)?

The CTO team at NatWest International doesn't offer advice but we're here to help you understand how international tax regulations and practices have changed the way in which information is gathered on our customers and reported to tax authorities, as well as our commitments to those regimes. We deliver, maintain and continually improve compliant operational tax services.

 

To combat tax evasion and avoidance, many governments now investigate where their citizens hold overseas assets. So while we were initially focused on supporting the bank's compliance with the US FATCA (Foreign Account Tax Compliance Act) requirements, our activity now includes working to a range of operational tax regulations, such as CRS.

 

We also consider the broader response of the bank to these regulations and how we meet our obligations to them. This enables the bank to identify who is or isn’t a US citizen under FATCA and identify the country of tax residency to meet our CRS obligation.

What is Foreign Account Tax Compliance Act (FATCA)?

You may be aware that the USA was one of the first countries to legislate on global tax evasion and avoidance. This is now supported by governments around the World. FATCA aims to identify and report specified 'US persons' responsible for paying US tax, who hold accounts and/or investments outside the US.

 

It requires foreign financial institutions (i.e. those outside of the USA), such as NatWest, to identify and report this information to the local tax authority, who in turn will report to the US Internal Revenue Service (IRS). Numerous countries around the world have entered into agreements with the US, and passed local legislation to enable and mandate compliance with FATCA.

 

Find out more about FATCA

What is the Common Reporting Standard (CRS)?

To enable the automatic exchange of tax information, the Organisation for Economic Co-operation and Development (OECD) has led the development of a global Common Reporting Standard (CRS). This new agreement requires financial institutions (in participating areas) to identify customers who are tax resident in jurisdictions other than where their account is held.

 

The financial institutions must also report information about these customers to the relevant authority. For example, if a customer holds an account in England, but is tax resident in France, a report must be filed. To ensure we can comply with this legislation we need to have in place the appropriate policies and processes.

 

Find out more about CRS

Why do I need to complete a tax status declaration (TSD)?

We’ve a legal requirement to identify customers’ tax residencies and tax statuses. This is because local tax authorities have signed international agreements to share information for tax reasons.

What is a Tax Identification Number (TIN)?

A Taxpayer Identification Number (TIN) is a generic term for the unique reference held for an individual or entity by Tax authorities. For example this might be your National Insurance number or Social Security Number for individuals. For entities, this might be your Employer Identification Number, Unique Business Reference or Corporation Tax Number. Other examples can be found via: Tax identification numbers (TINs) webpage

What information do I need to send?

If the Bank has contacted you by letter you will need to complete the tax status declaration (TSD) form. The letter will also set out what information is required from you. 



If you agree with the information outlined in the letter you are only required to return the completed form to confirm this as being correct. 



If the information isn’t correct you will need to provide evidence of where you are a tax resident or a citizen, guidance on what documentation is required can be found via the Identification and Residency documents . 

What is the difference between a passive and an active NFFE/NFE? (Entities only)

A Passive NFFE/NFE are those whose income is at least 50% derived from passive income, for example, dividends, interest, rents and patent royalties (copyrights) and whose assets are mainly assets that generate such income.



An Active NFFE/NFE includes most trading entities such as: Building Companies, Retail Companies and Services Companies.



The NFFE/NFE also meets the following: 


Religious, charitable, scientific, artistic, cultural, athletic, educational purposes, or is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation. It is also a civic league or an organisation operated exclusively for the promotion of social welfare. 



Sponsored NFFE/NFE’s are those already registered with the internal revenue service. 

FATCA

The Foreign Account Tax Compliance Act (FATCA) is United States legislation passed in March 2010. It requires non-US financial institutions to provide reports to the US regarding their customers who are 'US persons' for US tax purposes and who hold accounts with the financial institution. US financial institutions will also have separate reporting obligations.

Please note

Our local government and the US Governments have entered into a reciprocal agreement, under which NatWest will report US customers to the local tax authority and not directly to the US IRS. The local tax authority is responsible for sharing this information with the IRS and the bank will play no part in this process.

Need help with the Tax Status Declaration Form?

If you've received a Tax Status Declaration Form in the post and need help with it, please initially read our Guidance Notes. If you still require further assistance then please see the details in our Get in touch Section.

What is the impact on NatWest International?

Every year financial institutions must report information on all financial accounts (for example, current accounts, savings accounts, deposit accounts, custodial account, certain insurance policies and interests in investment funds) held directly or indirectly by 'US persons'. As a result NatWest International will review its customers, to ensure all accounts are correctly identified and reported, where required.

Will I be affected?

NatWest International will be undertaking a review of its customers, as required by the regulations, to understand who is (and is not) a 'US person' for US tax purposes.

 

The term 'US person' includes, but isn't limited to, the following:

 

  • A citizen of the US, including any person born in the US but living in another country (who has retained their US citizenship).
  • A person living in the US, including US Green Card holders.
  • Certain people who spend a significant number of days in the US each year.*
  • US corporations, US partnerships, US estates and US trusts.

*To better understand what is meant by 'certain' people and 'significant' number, please refer to our Glossary.

What does being a 'US person' mean for me?

Rest assured that being classified a 'US person' will not affect your day-to-day banking service, but will help us identify customers whose account details may need to be shared with their local tax authority. If you're identified as a 'US person', we'll write to you for self-certification.

 

If you're an existing NatWest International customer, you may need to provide specific documentation, so we can apply the right FATCA classification to your accounts. If you are classified as a 'US person', we will be required to report information about you and your accounts to your local tax authority, every year.

 

Please note that NatWest International cannot offer any tax advice about FATCA, and we recommend you contact a professional and independent tax advisor to discuss your personal tax situation.

What does being a 'non-US person' mean for me?

FATCA will have minimal impact on most customers, who won't need to take any action. However, NatWest may still contact you to confirm your status as a 'non-US person'.

What does being a 'US person' mean for my entity?

If your entity is classified as a 'US tax person' for tax purposes, we must pass on details of the entity's account(s) to the relevant tax authority.

Where can I get more information?

For more information about FATCA please visit the IRS website.

CSR

CRS is The Common Reporting Standard on Automatic Exchange of Information. This is a legal framework created by the Organisation for Economic Co-operation and Development with close cooperation with the G20 and EU.

It requires financial institutions to report information (to the appropriate tax administration), about financial assets held on behalf of taxpayers, from jurisdictions with which their tax administration exchanges information. This information is exchanged "automatically" every year.

What is the impact of CRS on NatWest International?

Every year financial institutions must report information on all financial accounts (for example, current accounts, savings accounts, deposit accounts, custodial accounts, certain insurance policies and interests in investment funds) held directly or indirectly by account holders "resident" in countries other than their bank's tax jurisdiction.

As a result, NatWest International will review its customers, to ensure all accounts and entity accounts are correctly identified and reported, where required.

Will I be affected by CRS?

NatWest International will be reviewing its customers, as specified by the regulations, to understand who is liable to pay tax in their country of residence. The term 'resident' will differ for each tax jurisdiction.

See the "residency" criteria of each jurisdiction

How we classify you will not affect your day-to-day banking service, but will help us identify customers whose account details may need to be shared with the appropriate tax authority.

What do I need to do about CRS?

If you're an existing NatWest International customer, you may need to provide specific declarations, in order to apply the right CRS classification to your account(s). If we need more information we'll write to our customers.

What does CRS mean for me if I am a resident outside of my bank's tax jurisdiction?

If you are considered a resident of a country participating in the CRS Automatic Exchange of Information you may be asked to provide NatWest International with additional information/documentation. We will also have to report information about you and your account(s) to the local tax authority each year.

What does CRS mean for me if I am NOT a resident outside of my bank's tax jurisdiction?

CRS will have minimal impact on most customers, who won't have to take any action. However, NatWest International may still contact you to confirm your status as a resident of your bank's tax jurisdiction.

Where can I get more information about CRS?

To find out more you can either visit http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/ or your local tax authority website.

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