Frequently asked questions about Form 289

a) When the entity holder of the account is a Non-Financial Company and it provides a declaration of tax residence in which the only missing data is that stating if it is active or passive.

No. The omission of stating the active or passive condition of the entity does not oblige the Financial Institution to block the account. Notwithstanding , the entity shall be required to complete the declaration with this information.

b) When the person who is owner of the account or holds control provides a declaration of tax residence in which the tax identification number is missing, if it has been issued.

Yes. The tax identification number is an essential piece of information in the aforementioned declaration and must always appear therein, in accordance with the provisions of section 2 of Section I of the Annex to Royal Decree 1021/2015. In this case, as well as blocking the account, the Financial Institution must report this situation, according to the country or jurisdiction of tax residence stated in the Tax return (unless it is aware or may be aware that this is incorrect or not reliable). Notwithstanding, this person shall be required to complete the declaration with this information.

In the event that the person holding ownership or control of the financial account continues to fail to provide the required declaration, despite having made a total block on it, the Financial Institution must communicate the account with each and every one of the data available at that time, as long as this circumstance continues. All of this, without prejudice to contacting said person to provide the aforementioned statement.

The Financial Institution may accept the client's declaration of tax residence unless it is aware or may be aware that this is incorrect or not reliable. The OECD has enabled a portal on automatic exchange of information in which you can consult the information of each country in relation to the issuance, obtaining and, where applicable, structure and operation of the corresponding NIF ( Portal on automatic exchange information ).

It is considered that a Financial institution is aware, or may be aware that a declaration of tax residence is incorrect or not reliable if it does not contain a NIF and the information in the web portal states that the country in question issues a NIF to all its tax residents. Although the Financial Institution is not obliged to collate the format and other specifications of the NIF with the information in the aforementioned web portal, it can contrast this information in order to reinforce the quality of the information it reports and minimise the administrative charges derived from a possible administrative order for having reported an incorrect NIF (for example, by means of the use of programs that check the structure of the NIF).

Yes. This commitment must be included in the contents of the declaration of tax residence.

The Financial Institution may establish periodically (annually, for example) internal instructions and training to those employees who can be considered personal managers. This includes the file of replies of each personal manager stating that they are aware of their obligations and how to report any knowledge of fact on the tax residence of the account holders they have been assigned.

There is no specific limit. In any case, the responsibility for the correct fulfillment of these obligations falls on the financial institutions obliged to communicate information and both these and the third parties to which they turn must be able to comply with the obligation provided for in section 6 of the Twenty-second Additional Provision of Law 58/2003 General Tax Law.

No.

In accordance with provisions of section 2 letter d) of the Annex of Royal Decree 1021/2015, the declaration of tax residence (declaration of the account holder) must contain a NIF. Thus, for the purpose of complying with the obligation of article 3 of Royal Decree 1021/2015, the determining of the tax residence of Persons who hold the control by means of a declaration of this type requires the Financial Institution to obtain the NIF (if it has been issued).

In accordance with the OECD Common Reporting Standard for the Automatic Exchange of Financial Information, there is no general obligation to carry out a manual search of this type. The general requirement in this procedure is that the address is based on documentary evidence. If the Financial Institution has maintained a record of the documentary evidence on which the address is based or has policies and procedures in place to ensure that the updated address is the same as the address shown on the documentary evidence provided, it has met the requirement that the address be based on documentary evidence.

Yes. It may be the case that the Financial Institution has two addresses that meet the requirements of this procedure, for example in the case that the account holder works and lives half the year in foreign country A and the other half of the year in foreign country B. In this case, a declaration of residence of the account holder could be requested or the account holder could be considered to be a tax resident of both countries A and B. 

The outline for the presentation of Form 289 CRS, based on the outline of the OECD, is prepared to declare several tax residences, if required.

The Financial Institution is not obliged to provide tax advice to its clients or to carry out a legal analysis to verify the reasonableness of the declaration of tax residence. The Financial Institution can rely on the declaration of tax residence of the client unless it is aware, or may be aware that it is incorrect or not reliable ("reasonableness" test), which is based on the information obtained on the opening of the account, including any document obtained in the application of the procedures foreseen in accordance with Act 10/2010, of 28 April, on the prevention of money laundering and terrorist financing and its implementing regulations.

In the Comments of the OECD Automatic Exchange of Information Standard you will find examples of the application of the "reasonableness" test.

Declarations of tax residence must comply with the requirements set forth in section 2 of Section I of the Annex of Royal Decree 1021/2015. Regarding the form in which this must be carried out, in accordance with this precept, any form is accepted, including electronic and telephone channels, provided that the Financial Institution holds and keeps records of its content and date of issue and can accredit if it has been carried out by the account holder or the representative to this effect.

This requirement will be considered not met when the holder, in order to open the account, is obliged to provide the Financial Institution with new, additional or amended information on the same as a result of a legal, statutory, contractual or similar obligation. (See Comment 82 of Section VIII of the OECD Common Reporting Standard).

No.

A substantial number of jurisdictions offer "Citizenship by Investment" (CBI) and "Residency by Investment" (RBI) schemes and allow foreign individuals to obtain citizenship or temporary or permanent residence rights on the basis of local investments.

CBI/RBI schemes can be misused to undermine CRS due diligence procedures. This may result in inaccurate or incomplete reporting under the CRS, particularly where not all tax residency jurisdictions are disclosed to the Financial Institution.

Such a scenario could arise where a person is not actually resident or not only in the CBI/RBI jurisdiction, but declares himself to be resident for tax purposes only in such jurisdiction and provides his financial institution with supporting documentation issued under the CBI/RBI scheme (for example, a residence certificate, identity card or passport).

Not all RBI/CBI schemes pose a high risk of being used to circumvent the CRS. Schemes that are potentially high risk for these purposes are those that give the taxpayer access to a personal income tax rate of less than 10% on offshore financial assets and do not require a significant physical presence of at least 90 days in the jurisdiction offering the CBI/RBI Scheme.

Where CBI/RBI schemes meet both criteria, but the residence documentation provided to successful applicants is clearly identified as having been issued under the respective CBI/RBI scheme, such specific residence documentation should only be perceived as potentially high risk in the context of CRS due diligence procedures, and be subject to the additional guidance for financial institutions, detailed below.

These schemes and the corresponding residence documentation are listed in the table below.

Under Section VII of the CRS, a financial institution may not rely on a self-certification or documentary evidence if the financial institution knows, or has reason to know, that the self-certification or documentary evidence is incorrect or unreliable. The same applies with respect to high-value pre-existing accounts where a relationship manager has actual knowledge that the self-certification or documentary evidence is incorrect or unreliable.

When determining whether a financial institution has reason to know that a self-certification or documentary evidence is incorrect or unreliable, it should take into account all relevant information available to the financial institution, including the results of the OECD CBI/RBI risk analysis. As a result, when, taking into account all relevant information, the facts and circumstances would cause the Financial Institution to have doubts about the tax residency(ies) of an Account Holder or the Person exercising control over the Account, it should take appropriate steps to determine the residency of such persons.

To the extent the doubt relates to whether the account holder or the person exercising control over the account proves residency in a jurisdiction offering a potentially high-risk CBI/RBI scheme, financial institutions may consider raising further questions, including:

• Did you get residence rights under a CBI/RBI scheme?
• Do you have residency rights in any other jurisdiction(s)?
• Have you spent more than 90 days in other jurisdictions during the previous year?
• In which jurisdiction(s) have you filed your personal tax returns during the previous year?

The answers to the above questions should assist financial institutions in determining whether the self-certification provided or documentary evidence is incorrect or unreliable.

In cases where we are faced with an “undocumented financial account”, all the data available to the financial institution at that time will be indicated, as long as this circumstance continues. In no case will accounts whose ownership or control is held by persons whose sole jurisdiction of tax residence is Spain be included in Form 289.   

This will apply generally and specifically in the following cases:

• Pre-existing lower-value accounts of natural persons (section B.5 of Section III of the Annex to Royal Decree 1021/2015): If the financial institution does not apply the domicile procedure and the only clue discovered in the electronic search procedure to determine tax residency has been an instruction for the retention of correspondence or an address for the receipt of correspondence, provided that, subsequently, it was not possible to obtain any clue with the paper search and the attempt to obtain a declaration or documentary evidence from the account holder to determine his tax residency is unsuccessful. This procedure must be repeated when there is a change in circumstances or when the account acquires the status of a high-value account. However, the account will have to be declared with all available information every year as long as these circumstances persist.

• Pre-existing high-value accounts of natural persons (section C.5 c) of Section III of the Annex to Royal Decree 1021/2015): When the only clue discovered in the enhanced review of these accounts to determine the tax residence of its owner has been an instruction for the retention of correspondence or an address for the reception of correspondence provided that, subsequently, it was not possible to obtain a declaration or documentary evidence to determine its tax residence. The financial institution must apply the enhanced review procedures of the Royal Decree every year until the account becomes documented. However, the account will have to be declared with all available information every year as long as these circumstances persist.

• In the event that on the last day of the calendar year in question, an account is blocked in application of section 5 of the Twenty-second Additional Provision of Law 58/2003, of December 17, General Tax Law and provided that there is no information regarding the country of residence of the person who holds the ownership or control of the account, all of this without prejudice to the financial institution continuing to try to obtain the declarations that are required.

No. According to the definition contained in point 5 of section D of Section VIII of Annex I of Royal Decree 1021/2015, "persons exercising control" means the natural persons who control an entity. Therefore, an entity cannot be identified as the person exercising control in the indicated case.

No, the financial institution must evaluate the declaration received from a holder with all the means at its disposal, so that it can achieve adequate assurance that the validity and reasonableness of the declaration is accredited.

In this regard, the mere fact that an entity appears on the FATCA GIIN (Global Intermediary Identification Number) list cannot be considered sufficient proof of the account holder's status as a financial institution.

Section VII, Section A, of Royal Decree 1021/2015, of November 13, establishes that when applying due diligence procedures, it must be taken into account that " When financial institutions obtain statements from the holder or documentary evidence, regarding which they know, or may come to know, that they are incorrect or unreliable , they may not rely on them in order to determine the client's condition and they must request a new statement from the holder or additional documentation justifying their condition.

Yes, in the cases and under the conditions described in section B.6 of Section III of Annex I “Due diligence standards” of Royal Decree 1021/2015.

In this way, if the Financial Institution has the declarations and/or documentary evidence described in section B.6 of Section III of the Annex, the tax residence resulting from these will be the one that prevails, instead of the one that would have resulted from applying the system of indications in section B.2 of said Section III, based on the data available to the Financial Institution in its electronic files.

The above also applies to the Enhanced review procedures for high-value accounts , in accordance with section C.5.b) of Section III.

Additionally, in the event that the only resulting country of tax residence is Spain, it is recalled that, under no circumstances, will financial accounts whose ownership is held by persons whose only country of tax residence is Spain be included in Form 289.

The assumptions and conditions provided for in section B.6. of Section III of Annex I of Royal Decree 1021/2015, depend on the type of evidence available, requiring, in some cases, a single type of document from among those indicated in the Royal Decree or, in other cases, a combination of documents. In this way, the Financial Institution will not have to treat the account holder as a tax resident in the country or jurisdiction resulting from the system of indications (section B.2) if :

1. Account holder information includes a current mailing or home address in that country or jurisdiction, one or more telephone numbers in that country or jurisdiction (and no telephone numbers in Spain), or standing orders (relating to financial accounts other than deposit accounts) to transfer funds to an account opened in that country or jurisdiction, and the financial institution obtains, or has previously reviewed and retains on file:

   1. Declaration of the account holder of his/her country(ies) or jurisdiction(s) of tax residence that does not include that country or jurisdiction, AND

   2. Documentary evidence confirming the country(ies) or jurisdiction(s) of tax residence included in said declaration.

2. The account holder information includes a valid power of attorney or signature authorization in favor of a person domiciled in that country or jurisdiction, and the financial institution obtains, or has previously reviewed and retains in its files:

   1. Declaration of the account holder from his/her country(ies) or jurisdiction(s) of tax residence that does not include that country or jurisdiction, OR

   2. Documentary evidence that determines the tax residence(s) of the account holder that is (are) different from that country or jurisdiction.