Nov 7th, 2022
May 13th, 2014
Major steps have been taken in recent months to move towards an automatic exchange of financial account information between various jurisdictions for tax purposes. Such measures have been made possible in large part by the passage by the United States of the Foreign Account Tax Compliance Act (“FATCA”) in 2010, which is to come into effect on July 1, 2014 (in this regard, see this article).
At a meeting of the Council of the Organization for Economic Co-operation and Development (the “OECD”) on May 6, 2014, over 40 countries and the European Union adopted a declaration in support of an automatic exchange of information in tax matters (the “May 6 Declaration”). The countries involved include Canada, France, Greece, India, Israel, Singapore, the United States and, notably, Switzerland and Luxembourg.
The May 6 Declaration commits to implement a single, common global standard on the automatic exchange of financial account information (the “Common Reporting Standard”). The OECD has already published a document which sets out key elements for establishing such a standard and is currently working on a detailed implementation plan, which is anticipated to be completed and approved by September 2014.
In a joint statement by an “early adopters group” of over 30 countries on March 19, 2014, the intention was declared to implement an automatic exchange of information based on an “ambitious but realistic timetable”, as follows:
|Due diligence to identify accounts to be completed by||Exchange of information to begin by|
|Pre-existing “high value” individual accounts as at December 31, 2015||December 31, 2016||End of September 2017|
|Pre-existing “low value” individual accounts as at December 31, 2015||December 31, 2017||Either the end of September 2017 or September 2018, depending on when identified as reportable accounts|
|Pre-existing entity accounts as at December 31, 2015||December 31, 2017||Either the end of September 2017 or September 2018, depending on when identified as reportable accounts|
|New accounts opened from January 1, 2016||Immediately, based on new account opening procedures to be developed||End of September 2017|
Of note regarding the statement by the “early adopters” are that:
It is of particular note that, unlike the early adopters’ statement, the May 6 Declaration does not address when monitoring of financial accounts is to begin nor when it is anticipated that the automatic exchange of information will be initiated. Whether it may be inferred that the timetable of the “early adopters” was thought by the broader group to be unrealistic is unclear but, nonetheless, it remains possible that such timetable could eventually be adopted by the latter group.
Steven Sitcoff is a tax lawyer at Spiegel Sohmer who works on a variety of corporate and personal tax planning matters, as well as handling disputes with tax authorities. He has extensive experience in making voluntary disclosures to the federal and provincial tax authorities regarding offshore accounts.