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Tax and Information Sharing is real

By Daniel Shillito - Topics: Italy, Spain, Tax, Uncategorised
This article is published on: 4th July 2015

Recently within our network of advisers we were made aware of this experience retold by one of our Spectrum IFA group clients.

Here are the reprinted words of my adviser colleague in Spain:

“This is the first time that I have almost first-hand knowledge of full exchange of information between two countries’ tax authorities.  I was having a review meeting with a Swedish client last week and he has a friend, also Swedish, living in Marbella who was summoned to the Hacienda’s office to discuss his Modelo 720 return (foreign assets). He was ushered in and invited to sit at their computer where the page was open directly into the Swedish tax authority site, with their logo, etc. There in front of him was displayed all his Swedish assets listed.”

I repeat this story for you here, to bring a real practical view to what the implications of information sharing between countries, can be. This is not a prediction and of course there is absolutely no guarantee or suggestion that the Italian authorities will take this approach (not that they would forewarn us about such an approach anyway), however it is a timely reminder about changes in international cooperation when it comes to tax and foreign assets held by Italian citizens. I have actually seen them act on information exchanged between the UK and Italy, so it is in force and it is a matter of whether they choose to use the info rather than if they have it.

This reminder is perhaps most timely as the tax Voluntary Disclosure program is now in full swing in Italy, providing an opportunity for citizens to disclose foreign assets and income this year (until September 15 at this stage) and be charged much reduced penalties for getting your affairs ‘in regola’ and up-to-date.

Read more about Voluntary Disclosure, here. Contact us if you have queries or concerns about Voluntary Disclosure or information sharing.

History and future of information sharing
Increased information sharing amongst countries began in 2012 between at least members of OECD countries (Separately of course many countries have bilateral agreements in place to share information about their respective citizens). In 2014, the OECD released the Standard for Automatic Exchange of Financial Account Information in Tax Matters. This standard calls on governments to obtain detailed account information from their banks and to exchange that information automatically with other jurisdictions on an annual basis.

Then, on 29 October 2014, 61 countries signed an agreement to implement the standard, which describes what will be exchanged, and when. Further countries have signed up since then.

The USA has implemented exchange of information in 2015 since the introduction of their FATCA regime. Of the list of countries adopting the exchange agreement, 58 have agreed to have implemented the system by September 2017 (aside from exchanges already agreed to take place between 2 countries, as indicated above, for example Italy and Switzerland). These countries include places like Italy, Luxembourg, France, Jersey, Isle of Man, Ireland, Spain, Portugal and Cayman Islands.

There are a further 36 remaining countries and territories currently signed up to implement by 2018 (these countries include Switzerland, Australia, New Zealand, Monaco, The Bahamas and Israel, just to name a few as examples).

The above article is provided for general information purposes only, and does not constitute personal advice.

Article by Daniel Shillito

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