On October 29, 2014 in Berlin (Germany), on the occasion of the Global Forum on Transparency and Exchange of Information (entity linked to the Organization for Economic Cooperation and Development - OECD), the authorities of 51 countries signed a multilateral agreement on the automatic exchange of information (IAI) on financial accounts, with the aim of promoting international cooperation in tax matters through the exchange of information and implementing better control of tax fraud, and therefore, an increase in public revenue by virtue of the tax obligations of taxpayers.
The multilateral agreement for IAI It is the result of the project launched by Germany, Spain, France, Italy and the United Kingdom. The call G-5 In 2013, he sent a letter to the European Commissioner for Fiscal Affairs, showing his intention to advance in the extension of the IAI following the model FATCA agreement with the United States, in whose preparation they actively participated. From this G-5 project, the OECD approved on January 17, 2014 a model agreement on this common and standardized system of information exchange.
Through this agreement, 101 countries have committed to this exchange of information, which in a first stage will be implemented by some 55 countries by 2017 and the rest, 46 countries, from 2018.
It affects natural and legal persons resident for tax purposes in a country that has capital or investments in another country where it is not a tax resident.
JURISDICTIONS THAT WILL EXCHANGE INFORMATION IN 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, The Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles , Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, and the United Kingdom.
JURISDICTIONS THAT WILL EXCHANGE INFORMATION IN 2018
Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Bahrain, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Ghana, Granada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, the Marshall Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Saint Martin, Switzerland, Turkey, the United Arab Emirates, Uruguay and Vanuatu.
SPECIAL CASE: SWITZERLAND
Special attention deserves the bank accounts in Switzerland, since, for the moment, although the agreement they have signed will begin to provide information from 2018, banking entities will provide information from 2018, but with retroactive effect as of January 2017. Therefore, from As of December 31, 2016, existing bank accounts in Switzerland will be reported to the respective Tax Authorities of the beneficiary's country.
Banks and other financial institutions undertake to communicate to the national tax authorities the information required by them. The information to be exchanged through this system is extensive and covers all types of financial accounts, that is, current accounts, savings accounts, bank deposits, negotiable securities, investment fund shares, insurance or income, and will include data regarding balances , amounts received by income, as well as the identification of the person or entity that owns and who effectively controls the account.
The authorities of the signatory countries will be in charge of collecting the bank information of their foreign residents to transmit them to the countries of origin and for the implementation of the CRS system or Common Reporting Standard. Starting in 2016, the data of all new bank accounts will be registered and they will begin to be exchanged routinely from September 2017.
The Agreement has been prepared by the Working Group of the Global Forum on Transparency and Information Exchange It brings together jurisdictions, members and non-members of the OECD, which have engaged in transparency and the exchange of information, who have worked together to develop international standards for transparency and the exchange of information in tax matters.
The Agreement arises from the work carried out by the OECD on harmful tax practices. This study considered “the lack of an effective exchange of information” as one of the key criteria to determine harmful tax practices. The task entrusted to the Working Group was to develop a legal instrument that could be used to establish an effective exchange of information.
Since 2006, the Global Forum has published annual evaluations of legal and administrative frameworks for transparency and information exchange in more than 80 countries.
AUTOMATIC EXCHANGE OF INFORMATION AND SPANISH FISCAL RESIDENTS
Depending on the tax laws of each country, they may or may not be required to declare the money you have abroad, in the case of Spain in 2012 the law was passed that requires all natural and legal persons to declare the assets (companies and accounts) that you have abroad by presenting the Model 720.
The Model 720 aims to report on accounts in financial institutions located abroad, on securities, rights, insurance and income deposited, managed or obtained abroad and on real estate and rights on real estate located abroad.
Those individuals and legal entities residing in Spanish territory, the permanent establishments in said territory of non-residents or entities are obliged to file Form 720.
There will only be an obligation to report for those groups in which the sum of the assets that comprise it exceeds 50.000 euros, therefore, for lower amounts there will be no obligation. With regard to the group of accounts in financial institutions, it will suffice for it to exceed it or the sum of the balances as of December 31 of the corresponding year or the average balances. In subsequent years, information will only be provided on the groups in which there has been an increase of more than 20.000 euros with respect to the last declaration filed.
The penalties for not presenting it will be 10.000 euros per omitted data and in the case of filing the return outside the established deadline (between January 1 and March 31 of the year following that referred to in the information in Form 720), You may suffer a penalty of up to 150% of the value of the declaration if it has been required by the Public Treasury or a 20% surcharge if the presentation of the declaration is voluntary.
We can process your case before the Spanish tax authorities to find a solution always within the absolute legality. A possible solution available to our clients is the regularization of assets or capital abroad that have not yet been declared and are pending a possible request from the AEAT.
Check your case with us at Foster Swiss.