Russia has Signed up to the Standard for Automatic Exchange of Financial Account Information (the Co
On 30 April 2016 the Russian Government ordered the signing of the multilateral competent authority agreement on the automatic exchange of financial account information.
On 12 May 2016, at the Forum on Tax Administration in Beijing, Russia signed the multilateral competent authority agreement on the exchange of financial account information, thereby joining the Standard for Automatic Exchange of Financial Account Information (Common Reporting Standard, the CRS).
Joining the CRS will enable Russian tax authorities to obtain information on financial accounts held by Russian-tax-resident individuals and legal entities abroad (in jurisdictions which have also signed up to the CRS, i.e. “partner jurisdictions”) from the tax authorities of the relevant countries.
The Russian tax authorities will also be obliged to provide similar information to the tax authorities of partner jurisdictions regarding financial accounts held by tax residents of those jurisdictions with Russian financial institutions. The exchange of information will occur automatically on an annual basis.
The first exchange of information with partner jurisdictions will occur in 2018.
Implications for private structures
Special attention is paid in the CRS to the identification and exchange of information on private capital management structures (such as trusts, foundations, partnerships).
On the one hand, such structures may be treated as financial institutions for the purposes of the CRS, thus imposing additional data collection, identification and reporting obligations. On the other hand, the CRS requires the disclosure and transmission of information not only on the beneficiaries of such structures, but also on the settlors, including persons who contribute property and assets in a structure such as trust and other persons exercising control over the structure.
A review of the existing structure in relation to CRS requirements should allow the management of tax risks and help avoid many negative tax consequences in the future. In addition, it will also help to determine and, if necessary, minimize risks of reporting incorrect or incomplete information through the automatic exchange, as well as enabling the normal functioning of financial accounts (including bank accounts).