One of the key financial themes of 2013 has been the European and global fight against tax evasion and unprecedented political support for automatic exchange of information. After a surge of bilateral agreements, the move now is to multilateral agreements which will see several countries all sharing information with each other.
In due course, there is no reason to believe this approach will not take off on a global basis.
Governments will receive much more information on income and assets held overseas. This will significantly help them trace tax evasion and recoup unpaid tax and interest and penalties.
In April, the UK, France, Germany, Spain and Italy announced that they would develop and pilot a new, multilateral tax information exchange agreement, to remove the hiding places for those seeking to evade taxes. Many other EU countries have since indicated they will sign up.
Information to be exchanged
The G5 pilot will be based on the model intergovernmental agreements they signed with the US under its Foreign Account Tax Compliance Act (FATCA).
The information to be automatically exchanged includes: name and address of account holder; account number; bank details; account balance; gross interest, dividends and other income; gross proceeds from the sale or redemption of assets. It covers deposit and portfolio accounts.
EU to share much more information
Two EU directives: the Savings Tax Directive and Administrative Cooperation Directive, provide for automatic exchange of information. There are proposals and commitments to extend both of them. From January 2015, information will be shared on payments from investment funds, pensions, innovative financial instruments, trusts and foundations, employment, director’s fees, life insurance, property, dividends, capital gains and other financial income and account balances.
On 14 June, a government panel report suggested that Switzerland should be ready to share data on foreign depositors with the EU even before a global standard is established.
A Swiss Bankers Association statement said: “Swiss banks are keen to pro-actively negotiate with the EU on expanding the taxation of savings income and a type of information exchange acceptable to the EU.”
On 18 June, G8 leaders signed a declaration promising that “tax authorities across the world should automatically share information to fight the scourge of tax evasion”.
Financial privacy is fast being consigned to history. There are no hiding places. This does not mean tax mitigation is no longer possible. You can still take advantage of tax compliant opportunities to reduce tax on your capital investments and pension income. However , it is more important than ever to take professional advice from a firm, like Blevins Franks, who are experts on tax planning in Portugal.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com
Gavin Scott, Senior Partner,