Big Brother is coming to a bank near you!

An article that landed in my email inbox recently was about the OECD meeting on October 28/29th in Berlin: 

The Global Forum on Fiscal Transparency and Exchange of Information. 

Why is this important? 

The latest OECD meeting effectively brings to an end the world of cross border banking confidentiality! 

Italy has joined another 53 countries to combat tax evasion by companies and individuals and has signed an agreement for an automatic exchange of financial information. Ministers from Spain, Germany, the UK, France and Italy met in Berlin with ministers from another 123 countries and signed the agreement
 

As of 2016 all countries that signed the agreement will start to record the details of new bank accounts and, as of September 2017, they will start to exchange information on them as a matter of routine.

  

Details to be shared will include balances, interest applied, dividends, the proceeds of financial products and the account holder’s tax identification number. 

Switzerland has also signed up to the agreement to make information available on foreigners bank accounts. Once the ruling has gone through parliament it will be applied as of 2018.

We will shortly be seeing nothing other than automatic exchange of all the financial information on an annual basis, which the majority of jurisdictions have agreed to implement on a reciprocal basis with all other countries. The governments also agree to raise the standard level of information exchange when requested.

The Key points of the Agreement

The Bank account register 
It will become obligatory as of 2016 to register all data of newly opened bank accounts and as of September 2017, the annual exchange of information will become routine. Austria and Switzerland will join the system in 2018. All data will be shared, including from 2017: bank balances, interest applied, dividends, income from investment products and tax identification numbers of all account holders who are receiving such income. 

International cooperation 
The global standard to be applied by the 54 countries and territories has been developed by the OECD in collaboration with the G-20 and the EC. It originated back in 2009, when the OECD started the movement which has enabled the collection of 37,000 million Euros in twenty countries. 

Prosecution of crime and “engineering” 
The agreement has a double objective: On the one hand to find and prosecute people who are trying to cheat the Tax authorities by hiding money abroad and on the other hand to avoid legal but dubious tax engineering by certain multinationals (who shall remain unnamed....but a popular fruit used in Cider, a coffee shop and a large search engine company spring to mind) who establish themselves in countries where they pay less tax.

What is the impact on you?

I think that for the majority of expats in Italy this will have little impact other than to serve as an additional measure to ensure that what is reported each year is reported correctly.  But, it does bring up another other question of whether your tax affairs are as tax efficient as they could/should be. There will no longer be room for error given that the information will be freely available to the authorities. There will be no possibility of backing out if wrong decisions have been made. For this reason I would reiterate, as always, that tax planning not just tax reporting is going to become more of a necessity.

If you have any queries on any of this subject matter or would like an initial discussion you can contact me on gareth.horsfall@spectrum-ifa.com or call me on cell: 0039 3336492356. 

The Spectrum IFA group do not charge fees for initial consultations.