In your article last week you referred to tax authorities in different countries exchanging information. Is there a publication or other information on which countries are participating in this information sharing ?
Mr J.K., email
There has been a radical change in the approach to sharing of information between tax authorities in recent years as increasing and, from their point of view, unwelcome attention has been paid to countries deemed to be tax havens and to taxpayers who have been evading taxes in their home jurisdiction by leaving money offshore.
The term “tax haven” has been bandied around with increasing flexibility and countries, including Ireland, that consider themselves to have robust and responsible tax policies in place have found themselves tarred with the brush.
The drive by cash-strapped governments to source additional exchequer revenue during the period of austerity triggered by the financial crash and since has also played a part in ending tolerance of some long-established practices. And, of course, the growing power of technology, computing and big data has provided the tools to more easily allow governments patch together information from different sources and jurisdictions.
The Revenue now has agreements in place under several headings that cover more than 100 jurisdictions.
First up is the Foreign Account Tax Compliance Act (Fatca) under which bank and other financial account information is automatically shared with the IRS in the United States. The Common Reporting Standard (CRS), which was developed by the OECD, does precisely the same for the 101 countries that have signed up to it.
Essentially, financial services firms – including life companies, pension firms and investment houses – are obliged to report account information on non-residents to their own local tax authorities which then pass it on to the investor/saver’s home tax authority.
PPS numbers
So what information would the Revenue receive from abroad under these accords?
They get the name, address, PPS number of the account-holder and the number for each account held in a named financial institution, along with the amount of income received by way of gross interest, dividend or sale of investments and the account balance on a given “reporting date”. They’ll also be told if an account was closed during the year and, if so, when.
Trusts and even credit union accounts fall under the watchful eye of CRS, though credit unions are exempt from the Fatca regime.
Information must be provided for any account open on July 1st, 2014 under the Fatca rules with the US, while the CRS rules with the wider group of countries apply to accounts open on or after January 1st, 2016.
Of course, within the European Union the now-repealed 2005 Savings Directive would have seen some of this information exchanged within the bloc already. The CRS regime is, however, more comprehensive.
Obviously, with new accounts under modern money-laundering rules, institutions are required to have a country of residence and PPS number before doing business but they are also required with older accounts to trawl through for any clue of a foreign connection.
So which countries are talking to each other? Well, this year, a group of 54 “early adopters” is exchanging information relating to 2016 accounts. They include: Anguilla, Argentina, Barbados, Belgium, Bermuda, the British Virgin Islands, Bulgaria, the Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Estonia, the Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, the Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, the Seychelles, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands and the United Kingdom.
A further 47 countries come on stream next year. They are: Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, the Bahamas, Bahrain, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Dominica, Ghana, Grenada, 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, Sint Maarten, Switzerland, Turkey, the United Arab Emirates, Uruguay and Vanuatu.
Under Fatca, information relating to 2014 and 2015 was shared last year.
As if that was not comprehensive enough, Revenue also receives other information on Irish taxpayers under separate EU law.
The Directive on Administrative Co-operation in the Field of Taxation obliges all EU states to exchange information on the ownership of property, employment income, director’s fees, pensions and life products for non-residents.
As of recently, Revenue says it has received information relating to 2014 from 26 of the other 27 EU states.
And, of course, Revenue also has an extensive network of double-taxation agreements and 25 tax information exchange agreements, under which it can specifically request information relating to individual Irish taxpayers.
And where can you find out more about it?
Revenue has plenty of information available, and revenue.ie/en/business/aeoi/ is a good place to start. The OECD has an information page on how CRS works at iti.ms/2nKEe7j.
Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
