How do foreign-related high-net-worth people determine their tax resident status when CRS goes online?

CRS(CommonReporting Standard), namely * * * the same reporting standard, is one of the contents of the Standard for Automatic Exchange of Tax-related Information in Financial Accounts (AEOI Standard) issued by OECD in July 20 14, aiming at cracking down on cross-border tax evasion and maintaining the integrity of the tax system.

The purpose is to make general settlement of financial accounts hidden by non-domestic tax residents in various countries.

It is worth noting that the financial accounts disclosed this time include not only personal financial accounts of non-residents, but also corporate accounts controlled by non-residents.

The exchange of tax-related information under CRS will be automatic, without providing reasons, that is, the signatory countries (regions) will automatically provide financial account transaction information to relevant parties through the information platform.

Take the residents of country B as an example. If a resident of country B has opened a bank account in country A or country C, because both countries have signed an exchange agreement with country B, if a resident of country B has deposited funds in a bank of country A or country C, the banking institutions of country A and country C will first feed back the account information of the resident of country B to their respective tax authorities, and then the tax authorities of country A or country C will exchange the information to country B. The relevant information of this deposit is known to the tax authorities of country B, and the tax authorities of country B can levy taxes accordingly.

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How to judge your possible tax resident status?

The following lists the rules for identifying "natural person" tax residents in several major countries (or regions).

1) Definition of tax residents in China:

First, residents who have domicile in China, that is, people who have household registration in China and habitually live in China because of family or economic interests. The first thing mentioned is the hukou. If you have registered permanent residence in China, 99% of them are residents who pay taxes in China. China is taxed globally. In other words, residents who use China tax should pay taxes to the China government for their income in all parts of the world.

Second, those who have no residence in China but have lived for one year. Most of them refer to foreigners with foreign passports. Those who have lived in China for one year and left the country for a single time for no more than 30 days or for multiple times for no more than 90 days are deemed to have lived in China for one year. Based on this situation, a person only needs to pay taxes to the China government on his income in China for five consecutive years. In the sixth year, he needs to pay taxes according to the first situation, that is, all income in the world is obliged to pay taxes to the China government. Therefore, there can be some planning space in this respect.

If it is not any of the above two situations, then it belongs to non-China tax residents.

2) Definition of tax residents in China and Hongkong:

The definition of individual tax resident status in Hong Kong includes: individuals who usually live in Hong Kong and individuals who temporarily work and live in Hong Kong, and individuals who have stayed in Hong Kong for more than 65,438+080 days in one tax year or for more than 300 days in two consecutive tax years (one of which is the relevant tax year).

A residents of the party who shall be deemed to have a permanent residence; If both parties have fixed residences at the same time, they should be recognized as residents of the side with closer personal and economic relations (center of important interests);

B if the party where the center of its vital interests is located cannot be determined, or if there is no habitual residence in either party, it shall be considered as a resident of the party where it has a habitual residence;

C. if he has a habitual residence in both parties, or neither of them has a habitual residence, it shall be settled by the competent authorities of both parties through consultation.

Gabe principle: The tax treaty provides a "Gabe rule" for the contracting state, which lists the judgment order of the above standards to coordinate the contradiction of dual resident status. This order is: permanent residence-center of important interests-habitual residence-nationality.

3) The definition of American tax residents:

Generally speaking, according to domestic tax laws and regulations, all American citizens and residents are regarded as American taxpayers.

For non-American citizens (foreign individuals), it is necessary to judge whether they are foreign individual tax residents according to the "green card standard" or "actual stay days standard". American resident standards are usually calculated according to the Gregorian calendar year.

Green card standard:

According to American immigration law, if a foreigner is a legal permanent resident of the United States LPR at any time in a calendar year, then this person meets the green card standard. The above-mentioned "legal permanent residents" refer to individuals who have obtained USCIS (or its predecessor) permission to live permanently in the United States as immigrants.

Generally speaking, when an individual obtains a foreigner registration card (that is, a "green card") issued by USCIS, he obtains the permanent residency in the United States. Unless there are special provisions on double tax resident status discussed below, as long as an individual's legal permanent resident status has not been revoked or legally abandoned by USCIS, the individual will always be regarded as a US tax resident. The expiration of the green card does not necessarily mean the end of the US tax resident status.

Actual stay days standard:

A foreign individual shall be deemed to meet this standard if his stay in the United States meets the following two conditions:

① Stay in the United States for not less than 365,438+0 days in this calendar year;

② According to the following calculation formula, stay in the United States for three years in this calendar year and the past two calendar years shall not be less than 183 days:

Total number of days in the United States this year, plus;

One third of the number of days spent in the United States in the previous year, plus;

One sixth of the number of days spent in the United States in the previous year.

Generally speaking, a person's presence in the United States at any time of the day is regarded as his stay in the United States. However, in some specific cases, the individual's stay in the United States is not included in the actual number of days of stay. For information, please refer to the IRS publication No.519, Foreign Individual Tax Guide.

Note: It is necessary to understand that the United States did not join CRS, because the ancestor of CRS was the famous FATCA (American Tax Compliance Act), and the United States signed bilateral tax information exchange agreements with most countries in the world as early as 20 10, which is what we often call the FATCA Act.

4) Definition of tax residents in Singapore

Individuals who meet any of the following criteria are regarded as tax residents in Singapore:

① Quantitative standard:

A) Living in Singapore for more than 183 days in the calendar year before the tax year;

B) Worked in Singapore for more than 183 days in the calendar year before the tax year (except as a company director).

② Qualitative criteria:

Individuals permanently reside in Singapore unless there is a reasonable temporary departure.

5) Definition of Canadian tax residents

Whether an individual is a tax resident depends on the specific situation. Canadian individual tax resident status can be divided into ordinary residents (also known as de facto residents) or deemed residents. To judge an individual's tax resident status, we need to judge according to his overall situation and all relevant facts, and refer to the Canadian tax law and the court's judgment. Canadian tax residents include individuals who regularly, usually or habitually live and live in Canada. Therefore, it is important to consider that Canada has residential relations, such as home in Canada, social and economic interests in Canada and other links with Canada.

In addition, the "presumption clause" in Canadian tax law is also very important for judging whether an individual constitutes a Canadian resident. (These "deemed identification regulations" apply to those individuals who do not live in Canada but have connections with Canada, such as staying in Canada for more than 183 days or more in a tax year and being employed by the Canadian government or a Canadian province).

When individuals decide whether they are Canadian residents, they also need to consider the definition of residents in the tax treaties signed by Canada.