Product innovations in German life insurance
Since the end of September 2017, there has been an automatic exchange of information on financial accounts between Germany and numerous other countries. The basis for this is the Common Reporting Standard (CRS), which was enacted in 2014 by the Organisation for Economic Co-operation and Development (OECD) in the fight against tax evasion. The new global standard came into force in Germany at the beginning of 2016.
The international data exchange took place for the first time in September 2017. As a result of transitional provisions, however, in some states the exchange will only be carried out at a later point in time. In Germany, the affected financial and insurance companies must forward information on accounts of foreign account holders to the German Federal Central Tax Office (BZSt). For this purpose, the authorities have established a communication procedure for which the financial institutions must provide the appropriate functionality.
The international agreement has significant consequences for life insurers. With these legal provisions, companies are obligated to identify all of the policies in their portfolios which are subject to reporting as part of the information exchange. Each year, data relating to the policies such as the value of the policy at the end of the reporting year, the accumulated income, the termination of the policy (if applicable) as well as information about the account holder must be compiled. This information must be provided electronically to the competent national tax authority – the BZSt in Germany – by 31 July of the following year at the latest.
Furthermore, life insurers are obligated to carry out an annual data transmission according to the known requirements of the Foreign Account Tax Compliance Act (FATCA) for their customers who are required to pay taxes in the United States. This information must also be transmitted electronically to the competent authorities by 31 July of the following year at the latest.
With the help of our flexible standard software msg.Tax Connect, insurers can significantly reduce the resulting expenses, because msg.Tax Connect can represent both procedures: CRS and FATCA.
Through its implementation in a separate component, no ‘independent intelligence’ of policy management is required with regard to CRS/FATCA notifications. msg.Tax Connect processes the notification interfaces (XML format) of the portfolio system and, from this, creates the notification data for the respective national tax authorities. Another advantage of msg.Tax Connect is that the notification data can be transferred to msg.Tax Connect from a wide range of systems.
Our solution msg.Tax Connect enables the completely automated implementation of the CRS and the FATCA procedures. The manual processing and correction of malfunctions is optimally supported by its own user interface. For portfolios that cannot automatically be linked to msg.Tax Connect, the notification data can also be collected manually.
By using msg.Tax Connect, our customers are able to comply with the legal requirements with regard to CRS and FATCA – on time and at all times. Like other legal communication procedures, this procedure will most likely be adapted a few times over the coming years. msg life has been approved as a participant in the test procedures of the BZSt for CRS and FATCA. This ensures that the necessary adaptations can be carried out at an early stage.
With msg.Tax Connect, in addition to CRS and FATCA notifications, CRS notifications pursuant to the provisions of the national tax authorities in Luxembourg, Austria or Ireland can be generated. In these countries, our standard software can thus also be used for the processing of the CRS.
With our proven standard software msg.Tax Connect, you can efficiently and quickly implement the requirements of CRS and FATCA with a single solution. The upgradable standard software not only ensures that both procedures are supported, but also creates enormous cost advantages. With msg.Tax Connect, extensive in-house developments and necessary future adjustments are things of the past. Additionally, the flexible tool can also be integrated simply and easily into existing IT landscapes.
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