A depository institution is any entity that accepts deposits in the ordinary course of a banking or similar business. This category includes savings banks, commercial banks, savings and loan associations and credit unions.
Taxation of Household Savings
Report
OECD Tax Policy Studies
Table of contents
Share
Facebook
Twitter
LinkedIn
ANNEX C. Financial institutions, financial accounts, and the common reporting standard
Financial institutions and the common reporting standard
Financial Institutions that are specifically included in the Common Reporting Standard
Depository institution1
Custodial institution
A custodial institution is any entity that holds as a substantial portion of its business financial assets for the account of others. This category includes entities that keep financial assets for the account of others, such as custodian banks, brokers and central securities depositories.
Investment entities
An investment entity is any entity that primarily conducts as a business investment activities or operations on behalf of other persons, and entities that are managed by those entities or other FIs. An entity would generally be considered within this category if it functions or holds itself out as a collective investment vehicle, mutual fund, exchange traded fund, private equity fund, hedge fund, venture capital, fund leveraged buy-out fund or any similar investment vehicle established with an investment strategy or investing, reinvesting or trading in financial assets.
Specified insurance companies
A specified insurance company is any entity that is regulated as an insurance business under the laws, regulations or practices of any jurisdiction in which the entity does business (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to a cash value insurance contract or an annuity contract. Most life insurance companies would generally be considered within this category.
Financial Institutions that are specifically excluded from in the Common Reporting Standard
Broad participation retirement funds
Non-reportable broad participation retirement funds: these include funds established to provide retirement, disability, or death benefits to beneficiaries that are current or former employee, in consideration for services rendered provided that the fund: i) does not have a single beneficiary with a right to more than 5% of the fund’s assets; ii) is subject to government regulation and provides information to tax authorities; and iii) fulfils one of the following requirements: a) is exempt from tax on investment income; or b) receives at least 50% of total contributions from sponsoring employers; or c) withdrawals are allowed upon occurrence of specified events or penalties apply; or d) contributions by the employees are limited by reference to earned income of the employee or may not exceed USD 50 000.
Narrow participation retirement funds
Non-reportable narrow participation retirement fund: these include funds established to provide retirement, disability, or death benefits to beneficiaries that are current or former employees, in consideration for services rendered, provided that the fund: i) has fewer than 50 participants; ii) is sponsored by employers that are not investment entities or passive non-financial entities; iii) contributions to the fund are limited by reference to earned income and compensation of employee; iv) participants that are not residents are not entitled to more than 20% of the fund’s assets; and v) is subject to government regulation and provides information reporting to the tax authorities.
Qualified credit card issuers
Non-reportable qualified credit card issuers these include a financial institution that is solely a financial institution because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of the balance due, and the overpayment is not immediately returned, and financial institution implements policies and procedures either to prevent a customer from making an overpayment in excess of USD 50 000 or to ensure that any payment in excess of this amount is refunded to the customer within 60 days.
Exempt collective investment vehicles
Non-reportable exempt collective investment vehicles are investment entities that are regulated as collective investment vehicles, provided that all of the interests in the vehicle are held by or through individuals or entities that are not RPs (e.g. because they are FIs).
Trustee documented trust
A trust that is a financial institution (e.g. because it is an investment entity) is a non-reporting financial institution to the extent that the trustee of the trust is a RFI and reports all information required to be reported with respect to all the RFAs held by the trust.
Low-risk non-reporting financial institutions
Any other entity that substantially has similar characteristics to any of the entities described as non-reportable FIs that present a low risk of being used to evade taxes, and is defined in domestic law as a non-reporting FIs, provided that the status of such entity as a non-reporting financial institution does not frustrate the purposes of the CRS. The commentaries to the CRS describe the following as low-risk factors as: i) the financial institution is subject to regulation; and ii) information reporting by the financial institution to the tax authorities is required.
Financial accounts and the common reporting standard
Financial accounts that are specifically included in the Common Reporting Standard
Depository account2
A depository account refers to any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instruments maintained by a financial institution in the ordinary course of a banking or similar business. A depository account also includes an amount held by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon.
Custodial account
A custodial account is any account that holds one or more financial assets for the benefit of another person.
Equity interest
Equity interests refer to interests in investment entities, including partnerships and trusts.
Cash value insurance
Cash value insurance is an insurance contract that has a cash value. The term “cash value” is defined as the greater of the amount that the policy holder is entitled to receive upon surrender or termination of the contract, and the amount the policyholder can borrow under or with regards to the contract.
Financial accounts that are specifically excluded from the Common Reporting Standard
Retirement and pension accounts3
A retirement or pension account can be excluded from CRS reporting, provided that it satisfies all the following requirements: i) the account is subject to regulation as a personal retirement account or is part of a registered or regulated retirement or pension plan for the provision of retirement or pension benefits; ii) the account is tax-favoured; iii) information reporting is required to the tax authorities with respect to the account; iv) withdrawals are conditions on reaching a specified retirement age, disability, or death, or penalties apply to withdrawals made before such specified events; and v) either contributions are limited to USD 50 000 or less, or there is a maximum lifetime contribution limit to the account of USD 1 000 000 or less, excluding rollovers.
Non-retirement tax-favoured accounts
Non-retirement accounts may be excluded provided the account i) is subject to regulation as an investment vehicle or as a savings account for purposes other than for retirement; ii) the account is tax-favoured; iii) withdrawals are conditioned or penalties apply; and iv) annual contributions are limited to USD 50 000 or less.
Term life insurance contracts
A life insurance contract with a coverage period that will end before the insured individual attains age 90, can be excluded provided that it fulfils all the following requirements: i) the contract has no contract value that any person can access without terminating the contract; ii) the amount payable upon cancellation or termination of the contract cannot exceed the aggregate premiums paid for the contract, less the sum of mortality, morbidity, and expenses changes; and iii) the contract is not held by a transferee for value.
Estate accounts
An account that is held solely by an estate can be an excluded account if the documentation of such account includes a copy of the deceased’s will or death certificate.
Escrow accounts
An account where money is held by a third party on behalf of transacting parties provided they are established in connection with any of the following i) a court order or judgment; ii) a sale, exchange, or lease of real or personal property; iii) or there is an obligation of a FI solely to facilitate the payment of taxes at a later time.
Depository accounts due to not-returned overpayments
The account exists solely because a customer makes a payment in excess of a balance due with respect to a credit card or other revolving credit facility and the overpayment is not immediately returned to the customer, and the FI implements policies and procedure to prevent a customer from making an overpayment in excess of USD 50 000 or ensures the overpayment is refunded to the customer within 60 days.
Low-risk accounts
An account can be excluded provided that i) the account presents a low risk of being used to evade taxes; ii) the account is similar to the other excluded accounts; iii) the account is defined in domestic law as an excluded account; iv) the status of the account as an excluded account does not frustrate the purposes of the CRS.