Worldwide: Tax Information Exchange – Where Are We Now?

Since the financial crisis there has been a marked acceleration in the number and scale of initiatives designed to enable states to get information about income its taxpayers earn abroad. The aim is to prevent tax evasion through automatic exchange of information between states and, unlike proposals aimed at aggressive tax planning (e.g. BEPS), they are being implemented with some speed. They create significant administrative burdens for legitimate financial institutions and investment vehicles and, due to significant overlap between initiatives, may create duplicate or conflicting obligations.

FATCA

The Foreign Account Tax Compliance Act ("FATCA") is US legislation that requires non-US financial institutions ("FFIs") to report information on accounts held by US persons or else face a 30% withholding on payments they may receive from US sources. The definition of an FFI is broad and includes "investment entities" which would encompass investment funds and structured finance vehicles.

The US has signed inter-governmental agreements ("IGAs") with several countries, including Ireland and the Cayman Islands, both Model 1 IGA jurisdictions, which permit information to be provided to local tax authorities rather than the US Internal Revenue Service ("IRS"). The Irish Revenue published draft regulations and guidance on FATCA in May 2013 and is expected to publish revised drafts before the end of 2013. Maples and Calder published a number of updates on 29 November 2013 with regard to the Cayman Islands IGA with the US.

The FATCA portal is now open on the IRS website. This allows FFIs to register for a Global Intermediary Identification Number ("GIIN"). If an FFI has a GIIN or is able to certify that it is deemed compliant, payments may be made to it by US payers without withholding. GIINs will be issued from 1 January 2014 and a list of registered FFIs will be published on 2 June 2014 and monthly thereafter. If an FFI located in a Model 1 IGA jurisdiction is not registered or deemed compliant by 31 December 2014 it may be subject to a 30% withholding on US source income received from that date.

OECD Convention

The OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters is a multilateral agreement that provides for administrative co-operation between states in the assessment and collection of taxes. The original 1988 Convention was amended in 2010 following the April 2009 summit in London to provide, in Article 6, for automatic exchange of information instead of, as previously, information on request. As at 21 November 2013, there were 63 signatories to the Convention, including Ireland.

However, to implement Article 6, an administrative agreement between two or more parties to the Convention is required. The OECD is therefore working with G20 countries to develop a standardised multilateral model (otherwise known as the "Common Reporting Standard") for such agreements as a more efficient alternative to signing bilateral treaties based on Article 26 of the OECD Model Tax Convention.

EU Directives

At the EU level, two proposals have been tabled to extend the scope of the existing EU Savings Directive ("EUSD") and EU Administrative Cooperation Directive. Their aim is to establish automatic exchange of information for a multitude of income types by 2015. These include not only interest income but also dividends, capital gains and all other types of income with respect to the assets held in a financial account. The directives were to be adopted by the end of 2013 with exchanges of information starting from 2015. However, the Economic and Financial Affairs Council ("ECOFIN") meeting on 10 December 2013 was unable to approve amendments to the EUSD due to objections from Austria and Luxembourg. Given the other EU and OECD initiatives to introduce a global multilateral system of automatic tax information exchange based on FATCA, the relevance of the EUSD as a separate system beyond the short term appears in doubt.

"EU FATCA"

In April 2013, the UK, France, Germany, Spain, and Italy (the "G5") entered into a pilot multilateral exchange facility for automatic exchange of tax information. The agreement is based on the five countries' model agreement to implement FATCA with the US. Under the G5 programme, states agree to automatically share information about bank accounts held by taxpayers in their jurisdiction, but resident in another participating state. 37 countries have now agreed to participate including, most recently Ireland, Luxembourg and Malta.

"UK FATCA"

Financial institutions in Jersey, Guernsey and the Isle of Man (the "Crown Dependencies") have signed agreements to automatically provide information to the UK tax authorities relating to the financial affairs of UK resident clients in respect of 2014 onwards. This is sometimes referred to as "UK FATCA", as it is based on the US FATCA regime. The British Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands have also committed to exchange information with the UK. Both the Cayman Islands and the British Virgin Islands have formalised their agreements with the UK.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
William Fogarty
Lynn Cramer
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.