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Banks to Share Data on Foreign People and Foreign Companies

The Convention on Mutual Administrative Assistance in Tax Matters of the Organization for Economic Co-operation and Development (OECD)—to which the Republic of Costa Rica has adhered by law number 9118—establishes in article 6, titled "Automatic

Banks to Share Data on Foreign People and Foreign Companies

The Convention on Mutual Administrative Assistance in Tax Matters of the Organization for Economic Cooperation and Development (OECD)—to which the Republic of Costa Rica has adhered by law number 9118—establishes in article 6, titled “Automatic Information Exchange,” that the parties will exchange any information that is foreseeably relevant to the administration and enforcement of Costa Rican local laws in relation to the taxes covered by the Convention.

The Convention constitutes a supra-legal norm, as it is an international agreement that serves as a source for tax law, as established in article 2 of the Tax Code.

Above all, the Government of Costa Rica, by adhering to the Declaration on Automatic Exchange of Information in Tax Matters of the OECD, signed in May 2014 and promoted by the Global Forum on Transparency and Exchange of Information for Tax Purposes, agreed to implement the automatic exchange of information on bank accounts known as “Common Reporting Standard.”

According to official letter No. DGT-R-16-2020, dated August 5 and titled Resolution on due diligence for the supplying of information as it relates to the standard for the automatic exchange of information on bank accounts known as Common Reporting Standard (CSR), banks are obligated to report, at the end of each year (December), the name, address, tax residence, IBAN account number and balance of the  people and companies of foreign origin listed in the General Directorate of Taxation, an organ of the Ministerio de Hacienda (Ministry of Finance or Tax office).

The order is based on Law 9118, of May 2014, in which Costa Rica ratified the Convention on Mutual Administrative Assistance in Tax Matters of the OECD.

In many ways, the agreement establishes the confidentiality and data protection of individuals and companies since the information is only made available to the treasury of each country. Financial institutions must provide the Tax Administration with the accounts and payments information referred to in this resolution, in accordance with the OECD’s Common Reporting Standard. Financial institutions are also obliged to abide by the procedures and definitions, as well as what is outlined in the comments, set by this standard and published under the section “Common Reporting Standard” of the official website of the Ministry of Finance and adopted by the OECD Council.

Each financial institution subject to the report must verify that the types of accounts required meet the definition of reportable accounts. The bank must report, each December, the current account balance that the foreign person has in Costa Rica. The bank that does not comply with the reports may be fined up to 2% of the bank’s gross income.

The resolution establishes the standard procedure for how the information should be delivered and the Taxation of each country will determine the use that will be given to the information.

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kbaldioceda@outlierlegal.com

Paralegal Assistant with customer service certificate. More than 3 years of experience in Real Estate and Paralegal Services. Has worked as an International Customer Service Agent for Delta Airlines USA.

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