Automatic exchange of financial information in the field of taxation (FATCA, CRS, and DAC 2)

On 4th December 2015, an amendment to the Bulgarian Tax and Social Security Procedure Code (TSSPC) was published in Issue 94 of the State Gazette. This amendment to the Bulgarian legislation introduced regulations of the automatic exchange of information in the field of taxation, transposing Directive 2014/107/EU of the Council from 9 December 2014 for the amendment of Directive 2011/16/EU regarding the statutory automatic exchange of financial information in the field of taxation (Directive 2014/107/EU – DAC 2) and the Common Reporting Standards (CRS) of the Organization for Economic Co-operation and Development (OECD), adopted and published on 13 February 2014. The new amendments to the TSSPC are compliant with the Agreement to Improve the International Tax Compliance and to Implement FATCA (Foreign Account Tax Compliance Act), which was signed between the government of the Republic of Bulgaria and the government of the United States of America (USA) on 5 December 2014, ratified by law (Bulgarian State Gazette, Issue 47, 2015).

According to the regulations of the automatic exchange of financial information, Bulgaria must regularly provide the other countries participating in this exchange with financial information in the field of taxation regarding their residents for tax purposes. For this reason, Bulgarian financial institutions should provide the legally established information to the Bulgarian National Revenue Agency (NRA), which should in turn provide it to the competent tax authority of the country in which the person is a resident for tax purposes.

In order to fulfill obligations arising from the TSSPC, investment broker Deltastock AD, in its capacity of a Reporting Financial Institution, applies due diligence procedures of the financial accounts maintained by the broker. The due diligence assessment procedures are applied to both new and existing accounts, whose holders are both natural persons and entities (legal entities or legal arrangements, including companies, partnerships, trusts, or foundations). The purpose of the due diligence assessment procedure is for Deltastock AD to collect data that will allow the assessment to be carried out and determine whether the account holder is a person about whom information should be provided, pursuant to the regulations of the TSSPC; i.e. whether the person is a resident for tax purposes in any of the countries participating in the automatic exchange of financial information. With regard to this, during the account opening procedure, Deltastock AD provides to its clients a Declaration for the purposes of the automatic exchange of financial information under Art. 142t, para. 1 of the TSSPC (a form approved by the Executive Director of the NRA), which they should complete; and may request the provision of other forms of proof. With regard to existing accounts, it is up to Deltastock AD to determine whether to request additional information from its clients, including filling out and presenting such a declaration.

Information for the purposes of FATCA

By signing and ratifying the Agreement to Improve the International Tax Compliance and the enactment of FATCA, it is considered that the financial institutions of the Republic of Bulgaria are implementing FATCA.

With regard to this, Deltastock AD, in its capacity of a financial institution approved by the tax authorities in the USA, which implements FATCA, is registered at the official Internet portal of the US Internal Revenue Service (IRS) and holds a Global Intermediary Identification Number (GIIN): 17I94J.99999.SL.100.

More information about the automatic exchange of financial information for tax purposes can be found on the Bulgarian NRA’s website: http://www.nap.bg/en/page?id=581

More information about FATCA can be found on the IRS website:

More information about the CRS can be found on the OECD website: http://www.oecd.org/tax/exchange-of-tax-information/standard-for-automatic-exchange-of-financial-account-information-for-tax-matters-9789264216525-en.htm