The EU Savings Directive was a rude wake-up call when the Belgian tax authorities started enquiring about overseas bank accounts.
And when Belgian banks started reporting to the tax authorities abroad, they thought “Surely, Luxembourg and Switzerland would never do that … “. Even that is a thing of the past.
Common Reporting Standard
The Common Reporting Standard is the world’s answer to FATCA, the American law obliging banks all over the world to report the bank accounts of American citizens to the IRS.
The Common Reporting Standard goes further; it is a Global FATCA (“GATCA”?). This year, banks, brokers and certain insurance companies and collective investment vehicles in 50 countries will be reporting about your financial situation and income in 2016 to the Belgian tax authorities.
What information will they receive?
- the numbers of all your bank accounts,
- the investment income before tax: interest, dividends, income from certain insurance contracts, …);
- the proceeds from the sale of financial assets (stocks, bonds, mutual funds, …);
- the account balance or the value of the account or insurance policy;
This is why your bank keeps asking for a copy of your identity card: they need your contact details and your taxpayer identification number (TIN) so that the information ends up in your tax file. And if you have a company or a trust, the bank has to look through it to find the ultimate beneficiary.
50 more states will follow suit in 2018, and this Global FATCA network will only expand. All offshore financial centres (like Liechtenstein or Panama) are already participating, except for Palau (where is that?). You cannot hide your wealth any more unless you open a bank account in Afghanistan or Zimbabwe.
The EU Member States have agreed to go even further. Since 2014 they are exchanging other information that they have, e.g. through tax returns, employer’s or pension office declarations. They know that you have:
- income from employment;
- director’s fees;
- life insurance products;
- real estate and rental income.
All this means is that you cannot forget to report any income.
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