Automatic exchange of tax information within the EU

A revised version of the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation entered into force in the EU since January 1, 2016.

The Council Directive 2014/107/EU of 9 December 2014 synchronizes the EU rules with the global Standard for Automatic Exchange of Financial Account Information in Tax Matters developed by the OECD.

The new order obliges banks and other financial institutions of the EU member states to inform their country’s tax authorities annually about the accounts of their clients who are residents of the other EU states. The accounts of resident customers in local banks are exempt from this rule.

The exchange covers both individuals and legal entities – tax residents of the EU countries. The so-called “passive non-financial entities” are mentioned separately (it is referred to companies which do not run active business and are not financial institutions. The main factor is their passive income (dividends, interest, rentals etc.) or assets on which the passive income accrued is not less than 50 percent of the total income or assets). If such company has a beneficial owner who is the EU tax resident, the information on its account is subject to automatic exchange as well.

The information to be exchanged includes:

• name, surname (for individuals) or company name (for legal entities),
• address,
• taxpayer’s number,
• date and place of birth,
• information about the person operating an account (for companies),
• account number,
• name of a financial institution,
• account balance as on 31 December of the respective year,
• total amount of interest, dividends, income from financial assets credited to an account during the year.

By the end of 2015 all the EU countries were to oblige their financial institutions statutorily to collect and transfer to tax authorities the information on the EU residents’ accounts. The financial institutions, for their part, must identify residents of the other EU countries among their customers.

The first automatic information exchange is to take place in 2017 (with exception to Austria, which will implement the automatic exchange in 2018).

It should also be noted that the EU countries will participate in automatic exchange not only between themselves, but also with other countries, which signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. At the end of January 2016 the number of such countries is 79. The countries that have committed to automatic exchange of information and the starting dates of this exchange are listed below.