Everything you need to know about the Automatic Exchange of Information

From the 1st of January 2016, the Automatic Exchange of Information (AEOI) is coming into effect. Companies from some jurisdictions have approximately 5 months to arrange their financial affairs which means business owners and compliance officers will be ensuring their businesses are adhering to the new regulations.

Everything you need to know about the Automatic Exchange of Information

 Even those working in the financial services industry unrelated to compliance, it is important to make yourself aware of the changes, as the new regulations will impact your work and individual life in some form.

Becoming the global standard

AEOI has been developed by the Organisation for Economic Co-operation and Development (OECD) with the European Union and is a Global Common Reporting and Due Diligence Standard (CRS). The new initiative will require financial institutions to report information on accounts held by all non-domiciled individuals and entities (including foundations and trusts) to their tax administration, which will then be securely transmitted to the account holders’ countries of residence once annually.

So far 90 jurisdictions have agreed to implement the new regulations by two separate dates currently agreed either by September 2017 or September 2018. Regarding the implementation, the CRS will need to be translated into domestic law for each country, whereas the Competent Authority Agreements can be executed within existing legal frameworks such as Article 26 of the Double Tax Treaties Agreement that can provide assistance for all tax matters in each jurisdiction.

Essentially, participating authorities will receive comprehensive account information from their financial institutions and automatically exchange that information with everyone else participating in the scheme on a yearly basis. The initiatives main objective is to protect the integrity of individual tax systems and try to reduce the number of companies who attempt to reduce their tax burden by using offshore jurisdictions.

Who will be affected professionally?

All financial institutions i.e:

  • Banks.
  • Brokers.
  • Collective investment vehicles.
  • Custodians
  • Insurance companies (where individually specified).

What information will be shared?

  • Any investment income (namely dividends or funding from certain insurance contracts).
  • Account balances.
  • Sales profits from financial assets.
  • Other income generated with respect to payments made with respect to the account,
  •  Income earned from assets.

Reportable accounts and individuals:

  • Personal bank accounts (name, address, country of current residency, National Insurance Number, date & place of birth).
  • Corporate accounts (trusts & foundations) (business name, owners name & address, country of current residency, National Insurance Number).
  • Trustees details, i.e individuals who control any entities, trusts or foundations (name, address, residency, National Insurance Number, date & place of birth).
  • Estate of wills, details of Trustees and beneficiaries.

When each country will participate

By September 2017

Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Cayman Islands, Chile, Colombia, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom, Uruguay.

By September 2018

Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Belize, Brazil, Brunei Darussalam, Canada, China, Costa Rica, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Marshall Islands, Macao (China), Malaysia, Monaco, New Zealand, Qatar, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Saudi Arabia, Singapore, Saint Maarten, Switzerland, Turkey, United Arab Emirates.

No reply when they will commit

Bahrain, Cook Islands, Nauru, Panama, Vanuatu.

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