This Aminews is to inform you about the global tax transparency developments and environment, focusing on automatic exchange of information on financial accounts. These developments are aimed to combat tax evasion by taxpayers on their foreign financial accounts and cross border investments. This can have a deep impact in relation to your contemplated/existing structure.
Today, new global regulations similar to FATCA are rapidly being finalized by the OECD and G20. The OECD has established the Standard for Automatic Exchange of Financial Account Information in Tax Matters – which comprise the Competent Authority Agreement (CAA) and the Common Reporting Standards (CRS, or the Standards).
Information on all financial accounts and related transactions will be annually reported by Financial Institutions to local tax authorities and subsequently automatically be exchanged between participating jurisdictions. The Standard set out the financial account information to be exchanged (balances, interest, dividends, and sales proceeds), which financial institutions need to report and the different types of accounts and taxpayers covered (individuals and entities, including trusts and foundations).
Up to date 94 jurisdictions around the world have committed to implement this AEOI Standard and 61 of them have already signed the Multilateral Competent Authority Agreement (MCAA). Out of these 94 jurisdictions there are 56 jurisdictions that committed to start exchanging information by September 2017 regarding information corresponding to fiscal year 2016, thus effectively starting 1 January 2016.
These early adopters include all EU countries (with the exception of Austria, which will start one year later). Also the UK Crown Dependencies and Overseas Territories, such as BVI and Cayman Islands, committed to implement the AEOI Standard with a ‘go live’ date by 1 January 2016. 38 jurisdictions (including Switzerland, Singapore, the BRICS) are committed to introduce the AEOI Standard one year later, i.e. by 1 January 2017 with first exchange by September 2018. Please find these 94 jurisdictions listed at the bottom of this Aminews.
The impact on your investment structure
Due to the automatic exchange of information between participating jurisdictions, the foreign bank accounts and foreign assets held directly or indirectly by a resident in the participating jurisdictions will likely become known to the tax authorities of an individual´s country of tax residence. Tax inspectors will match this information with local tax returns filed and any taxable income not yet disclosed may trigger tax audits, assessments and penalties. These developments will lead to global tax transparency.
Due to the introduction of anti-abuse legislation (Blacklist, CFC regime, etc.) or other domestic tax disclosure rules in many jurisdictions, you may have to disclose the assets/entities of your contemplated/existing structure or may have to report the income that distributed from that structure in your personal tax return, regardless of whether such income is distributed to you. We therefore recommend that you check this circumstance with your tax advisor.
Alternative Structuring Solutions for HNWI’s
Given the developments mentioned above, now is the time to determine whether your structure provides the benefits you intended, or whether the structure needs to be adjusted. Any structuring solutions must be tailor-made based on each UBOs specific circumstances, the objectives of the structure and the tax and legal regulations in its country of residence. In this regard, Amicorp can help you in:
- Initial assessment of tax disclosure requirements of a structure and/or related income per country of residence
- Voluntary disclosure of foreign accounts/entities and related income with or without local amnesty regimes
- Alternative structuring solutions to meet objectives of asset protection, estate planning for next generation, confidentiality to third parties and/or tax optimization
- Migration of the individual to become (tax) resident in a low/zero tax location.
For these and other structuring solutions we can refer you to our private client services and trust services.
Please feel free to contact your Sales Officer or Relationship Manager in case you require any clarification with regard to the above.
The 94 jurisdictions/groups of jurisdictions which are directly or indirectly committed to the Global Standard AEFAI (GATCA) are:
Jurisdictions that committed to start exchanging information in 2017 (over FY 2016): Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria,* Cayman Islands, Chile, 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, Mauritius, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom.
Jurisdictions that committed to start exchanging information in 2018 (over FY 2017): Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Belize, Brazil, Brunei Darussalam, Canada, China, Costa Rica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Marshall Islands, Macao (China), Malaysia, Monaco, New Zealand, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Turkey, United Arab Emirates, Uruguay.
This list includes all G20, all BRIC, all OECD, all EU, and many offshore jurisdictions. This list is continuously updated on the following website: the list of 94 countries is http://www.oecd.org/tax/transparency/AEOI-commitments.pdf or http://www.oecd.org/tax/oecd-releases-full-version-of-global-standard-for-automatic-exchange-of-information.htm
This link takes you to the most recent updated list of MCAA signatories: http://www.oecd.org/tax/exchange-of-tax-information/MCAA-Signatories.pdf