The Savings Tax Directive originally came into force in 2005 and was put in place to ensure that member States collect data on the savings income of EU residents and automatically forward it to the tax authority of the individual’s country of residence. It quickly became apparent that there were some significant gaps in the Directive in that it excluded many financial instruments but perhaps the most glaring omission of all was that trusts and companies were excluded.
Now the authorities have decided to get really tough in line with the global demand for greater transparency and the fight against tax evasion and a revised Directive is likely to be put in place before the year end specifically designed to close the loopholes so that automatic exchange in every situation becomes the order of the day within the EU.
The EU has made the fight for tax transparency a major theme following on from the US FATCA legislation and the scandal in France where the budget minister admitted hiding over 600,000 Euros in a Swiss account. There have been other issues as well with journalists obtaining information about secret accounts all around the world and the numerous whistleblowers by disaffected employee’s at various banks in Jersey and Switzerland. Recently a database was established helping the public search through thousands of companies, trusts and funds created in so called offshore tax havens.
The net is closing in and financial privacy is fast being consigned to history. Moving forward you have to accept that tax authorities will know exactly where your wealth is and what income and gain that wealth generates and then expect to pay the appropriate amount of tax due on that income and gain. In future it will not be possible to hold assets without the tax authorities being aware of their existence and there will be little sympathy for anyone who thinks that the old standards are still an accepted way of dealing with their finances.
Of course cross border cooperation has and will always have a significant impact on expatriates and we have already seen that in Spain the authorities have taken matters into their own hands by introducing Modelo 720. Those who think that by not disclosing or by giving up their Spanish residency will resolve a problem are seriously misguided. Disclosure will be the norm.
There is some positive news however. Whilst cross border tax planning can be extremely complex Fiduciary Wealth has the expertise and experience to be able to offer clients access to legitimate tax mitigation strategies that can not only lower taxes but also have a positive benefit when it comes to succession planning.
For a personal consultation with a specialist adviser in your area or to attend a local tax and wealth clinic either telephone 956796911 or email firstname.lastname@example.org.