International information exchange requirements

We would like to draw your attention to the changes in the Taxes and Duties Act which will come into effect as of 1 January 2016 and which will affect customers holding financial assets abroad.

Exchange of tax information

Financial institutions that manage the financial assets of customers, such as banks, trustees, funds, as well as the insurance companies offering savings products, are required to document the country of tax residence and taxpayer's number of their customers and forward this information to the State Revenue Service.

The exchange of tax information with the United States of America (USA, U.S.) is regulated by the Foreign Account Tax Compliance Act (FATCA). The exchange of tax information with other countries of the world is required under the Common Reporting Standard (CRS) of the Organisation for Economic Cooperation and Development (OECD). These requirements are implemented through the local legislation (e.g., in Latvia – through the provisions of Chapter 12 of the Taxes and Duties Act) and the purpose thereof is to prevent tax evasion on an international scale.

Tax residence

Based on the requirements of Latvian and international laws, we will ask you to provide us with information on the country (countries) of your residence, as well as your taxpayer's number(s) in those countries. We will ask this information also about our customers - legal entities and, in certain cases – about their ultimate beneficial owners.

Usually a person is tax resident in the country where he/she has his/her principle place of residence and employment, and in which he/she is subject to income tax on his/her worldwide income, no matter in which country the income is derived.

If you are only subject to taxes on specific objects in a country, such as real estate tax, tax on dividend income or value added tax (VAT), you are not considered tax resident in that country. An exception is the USA, under the laws of which the U.S. citizens are considered tax resident in the U.S. even if they have their principle place of residence and employment in another country.

In certain cases, a person may be considered tax resident in more than one country simultaneously, e.g., if a person has his/her principal place of residence in more than one country.