Tax liabilities in the United States
Local authorities has signed an agreement with the US tax authorities, called FATCA (Foreign Account Tax Compliance Act). Under this agreement financial institutions all over the world are required to identify and report the aggregated amounts on accounts held by U.S. persons to Latvian State Revenue Service, who report to the US Internal Revenue Service (IRS).
You can find all forms on the IRS homepage.
Automatic exchange of information under CRS
The CRS (Common Reporting Standard) is a global reporting standard aimed at addressing the issue of offshore tax evasion by disclosing financial accounts held by non-residents and automatically providing governments with that information. Like all other financial institutions, Luminor is obliged to collect data about new customers starting from 1 January 2016. The first reporting procedure to Baltic tax authorities will take place in the summer of 2017.
Cooperation between tax administrations is critical in the fight against tax evasion and in protecting the integrity of tax systems. A key aspect of this cooperation is the exchange of information. Under the CRS, jurisdictions like State Revenue Service obtain financial information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
The financial information to be reported regarding reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income), as well as account balances and sales proceeds from financial assets.
How will customers in Latvia be affected
Starting 1 January, Luminor will ask all new customers to provide the bank with a list of countries where customers pay taxes and their taxpayer identification number (TIN).
Within the next two years, Luminor will contact existing customers who may be reportable under the CRS.
Frequently asked questions about CRS can be found here.
Please be advised that Luminor cannot provide any CRS-related tax advice. If you have any tax-related questions, please contact a tax specialist or visit oecd.org/tax.
FATCA / CRS Self-Certification forms
What happens if customer does not provide the information to the bank?
If a customer does not provide the requested KYC information and documents the bank may limit provision of banking services or may terminate the business relationship with the customer and request for early execution of obligations. If customer does not meet FATCA and CRS obligations, bank will report an information about those account holders to the State Reveue Service.
Client data confidentiality
The bank is obliged to guarantee the confidentiality of the identity, accounts, deposits and transactions of customers (Article 61 of the Credit Institutions Law).
Information regarding a customer and his or her transactions, which the bank acquires in providing financial services, in accordance with concluded contracts, is non-disclosable information, which does not contain official secrets (Article 62(5) of the Credit Institutions Law).
Non-disclosable information at the disposal of a bank can be provided to the bank and its representatives, and in certain cases stipulated by the Credit Institutions Law – also to state institutions and state officials (Article 63 of the Credit Institutions Law).
The Law on Prevention of Money Laundering and Terrorism Financing
The Credit Institutions Law
Regulatory rules by the FCMC regarding enhanced customer due diligence issued for credit institutions and licensed payment and digital money institutions
FCMC Recommendations for credit institutions and financial authorities for the determination of politically exposed persons, their family members and persons closely related to them, and for the study and monitoring of their transactions
Information by the Financial and Capital Market Commission
List of countries involved in the automatic exchange of information