Automatic Exchange of Information (AEOI)

Clients will also need to consider newly introduced global tax regulations implemented by the OECD called the Automatic Exchange of Information (AEOI).
What is the AEOI?

AEOI is the exchange of financial account information between Tax Authorities in relevant countries. The law requires this information to be collected by Financial Institutions around the world for reporting to Tax Authorities.

AEOI is made up of two information-sharing frameworks:

• The Foreign Account Tax Compliance Act (FATCA) which is a US framework to identify US citizens and tax residents with accounts in foreign (non-US) jurisdictions. This has been in place since 1 July 2014; and
• The Common Reporting Standard (CRS) under which details of foreign tax resident accounts are shared between participating Governments. Phased implementation of this regime commenced 1 January 2016

How does AEOI work?

With AEOI, information regarding bank and safekeeping accounts is reported by the banks to the domestic tax authorities. These then exchange the information with the tax authorities in their AEOI partner countries. Responsibility for levying the taxes thus lies fully with the tax authorities in the AEOI partner countries.

The following information is to be reported by the financial institutions and will be exchanged with the tax authorities in the client’s country of tax residence:
CRS requires the following information on private individuals to be exchanged:

• Name, surname;
• Address;
• Country of individual’s tax residence;
• Place and date of birth;
• TIN;
• Bank account/contract number (or its equivalent);
• Name and identification number of Financial Institution (name and details of the bank);
• Account balance as of 31 December of the reportable year (alternatively, account statement on the date of account closure if closed during the year);
• Gross amount of dividends, interest and other income, as well as gross proceeds from sales of assets

Following information about reportable accounts of entities is gathered and exchanged under CRS:

• Name
• Address
• Country of tax residency
• Taxpayer number
• Bank account/contract number (or its equivalent);
• Name and identification number of Financial Institution (name and details of the bank);
• Account balance as of 31 December of the reportable year (alternatively, account statement on the date of account closure if closed during the year);
• Gross amount of dividends, interest and other income, as well as gross proceeds from sales of assets.

Disclaimer
This information is to help you understand your obligations under the AEOI laws. It does not constitute any form of advice, has not taken into account your personal circumstances and is general in nature. If you have questions about your tax residence status, you should contact your relevant tax authority (in your country of residence), as applicable, or contact HXL so we can advise how to deal with these new regulations with effective taxation planning.