EU Tax Information Deal Ends “Bank Secrecy”

EU Tax Information Deal Ends “Bank Secrecy”

The European Union (EU) has reached an agreement among its member countries to extend the scope of the automatic exchange of information between tax administrations. This reflects policy already approved by the Organization for Economic Cooperation and Development (OECD) and the G20 (Group of 20 most developed economies).

Once formally approved at a future European Council meeting (after it has been finalized in all official languages), the current draft would bring interest, dividends and other income, as well as account balances and sales proceeds from financial assets, within the scope of the existing rules, which apply to EU nationals with accounts in other member states.

The European Council President and Italian Finance Minister, Pier Carlo Padoan, said, “We decided to implement within the EU the new global standard on automatic exchange of information developed by the OECD and endorsed by the G20. This shows the EU is still at the forefront of the fight against cross-border tax fraud and evasion, for the benefit of all citizens.” In a statement from the Council, the agreement was described as ending, “bank secrecy in tax matters”. EU member states will be expected to incorporate the new rules into their national legislation by 2017.

The agreement has its roots in the “Standard for Automatic Exchange of Financial Account Information in Tax Matters”, which was launched by the OECD on 21 July this year. This calls on governments to obtain detailed account information from financial institutions and share the information automatically with other jurisdictions each year.

As OECD Secretary-General, Angel Gurria, said at the time, “The G20 mandated the OECD to work with G20 and OECD countries and stakeholders toward the development of an ambitious information exchange model that would help governments fight tax fraud and tax evasion.” He said the launch of the standard, “moves us closer to a world in which tax cheats have nowhere left to hide”.

The OECD added: “Analysis of voluntary disclosure programmes since 2009 shows that more than half a million taxpayers have voluntarily disclosed income and wealth hidden from their tax authorities. Countries have identified more than €37 billion from voluntary disclosure programmes which the OECD encourages countries to consider.”

The OECD’s global “common reporting standard” was endorsed by G20 finance ministers and central bank governors in September. More than 65 countries and jurisdictions have already publicly committed to implementing the standard, with more than 40 of those committed to making the first automatic information exchanges in 2017. The standard provides for the annual automatic exchange between governments of certain financial account information reported to governments by financial institutions.

Some information about EU-resident taxpayers with accounts in other member states is already shared under rules which were adopted in 2011 and came into operation in 2013. The existing directive on “administrative cooperation” provided for mandatory automatic exchange of information – where that information is available – on employment, director’s fees, life insurance products, pensions and immovable property.

The new directive is intended to increase the “efficiency and effectiveness” of EU tax collection, while at the same time discouraging tax fraud and tax evasion. It will require tax authorities in the EU automatically to exchange information on more types of income, account balances and sales proceeds from financial assets.

Most Recent News

UK Will Open New Business Immigration Routes

UK Will Open New Business Immigration Routes

UK Closes Immigration Route to Investors

UK Closes Immigration Route to Investors