05.2 EU-FATCA

EU-FATCA – Tax Transparency in Europe

Effects on private and business bank accounts within the EU

Having taken an in-depth look at the OECD CRS , we must now turn our attention to the EU-FATCA and the associated EU directives. In short, these agreements make it mandatory for European financial institutions to pass on all account information necessary for tax purposes to the relevant authorities.

For Example: Mr. Glotzbach, an Austrian citizen with a tax residence in Austria, owns a company on the Seychelles. The business bank account of the Seychelles company is maintained by a bank in Malta (an EU member state). According to the law and banking regulations, Mr. Glotzbach is named as the Beneficial Owner of the business bank account in Malta.

According to Directive 2014/107/EU, adopted on 9th December 2014, financial institutions based in the EU must examine accounts according to several criteria, to assess where the client (for companies, the “Beneficial Owner”) has his tax residence.

In the case of Mr. Glotzbach this means, that information from the business bank account which may be relevant for taxation, must be passed on to the local tax office (where the bank account is based), and from there be communicated to the tax authority in Austria.

DatenaustauschEU Member States: Austria, Belgium, Bulgaria, Croatia, Denmark Estonia, Finland, France, Germany, Greece, Great Britain, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Sweden, Slovakia, Slovenia, Spain, Czech Republic, Hungary and Cyprus.

The revised Directive is to be adopted in the domestic law of all EU Member States by 2017. The communications will initiate on 01/01/2017 and will include all relevant data from 2016. Due to technical reasons Austria’s implementation period was extended to 2018.

Unlike the OECD CRS , the EU-FATCA does not provide for exceptions.

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