Expatriates who have portfolios and financial management plans in place that are specifically designed to reduce their tax payments in their home countries have been warned that they now need to take into consideration new European tax laws that will be implemented to promote information sharing between European jurisdictions.
Countries throughout the European Union are preparing to implement new procedures that will allow banks and financial institutions throughout the region to share information about their client’s activities.
The law, which will be based on the same principles as the US Foreign Tax Compliance Act (FACTA), will encourage the routine exchange of information between tax authorities that are based within the European Union. As such, European expatriates who live in one jurisdiction but have accounts in other countries can soon expect details of their accounts and earnings activities to be shared between financial institutions. Expatriates who have failed to declare income on a tax return may subsequently find their activities being questioned by higher authorities.
According to the taxation experts, the tax exchange initiative is aimed at identifying expatriates who move between European countries without paying sufficient tax. It is envisaged that all European citizens will be provided with a tax reference code that will allow tax authorities to track their activities and calculate any interest, earnings and financial gains that the individual makes while living in European Union countries.
“Tax authorities will have the information they need to calculate and enforce collection of any taxes due,” said the Commissioner for Taxation, Algirdas Šemeta.
“This is a powerful method for controlling tax evasion and will set an example to the rest of the world and lead the way in the move towards better tax governance.”