18 December 2015
In its meeting of 18 December 2015, the German Bundesrat approved the Act on the Automatic Exchange of Information on Financial Accounts in Tax Matters and on the Amendment of other Acts (Finanzkonten-Informationsaustauschgesetz (“FKAustG”)). The German Bundestag had previously adopted the draft law on 12 November 2015. The Act governs the application of a common reporting standard for the automatic exchange of information on financial accounts with EU member states and third countries. It will enter into force on the day after its promulgation.
The Organization for Economic Co-operation and Development (“OECD”) has developed a global standard for the automatic exchange of information on financial accounts in tax matters. This standard was the basis for a multilateral agreement that was signed by Germany and 50 other states on 29 October 2014; in this agreement, the signatory states committed to the exchange of information on financial accounts. In December 2014, the Council of the European Union adopted Directive 2014/107/EU which provides for an extension of the Mutual Assistance Directive. The latter implements the standard for the exchange of information developed by the OECD and provides for a first exchange of the information collected with respect to the year 2016 as per 30 September 2017. Previously, the exchange of information on EU level has primarily been governed by the EU Savings Directive, which will be abolished as of 1 January 2016. The FKAustG aims at governing both the information exchange under the Mutual Assistance Directive and the global OECD standard. The purpose of the duties imposed by law is a certain identification of the actual recipient of the respective capital gains and thus to be in a position to contain international tax fraud and cross-border tax evasion.
The core content of the Act is a common reporting standard on the automatic exchange of information on financial accounts. The FKAustG generally imposes the reporting duty to the financial institutions to submit the required information to the Federal Tax Office (Bundeszentralamt für Steuern (“BZSt”)) for the first time for the 2016 tax year until 31 July 2017 and, in the subsequent years, until 31 July of the next year. The data are exchanged electronically between the BZSt and the competent tax authorities of the involved EU member states or the third countries, respectively.
Financial institutions within the meaning of the FKAustG are depositaries, deposit-taking institutions, investment companies or specialized insurance companies. For each submission, the financial institutions must determine and allocate to the respective account, the tax residence of the account holder of each account they own. They are obliged to collect, save, and process data. Auditable documents must be retained for the purpose of external audits by the BZSt. If these obligations are violated, a fine of up to EUR 50,000 may be determined.
Required information are, among others:
- If account holders are natural persons: name, address, member state(s) of residence, tax ID number(s), date and place of birth, or
- if account holders are legal entities: name, address, tax ID number(s) and for controlling persons that are subject to reporting requirements: name, address, tax ID number(s), date and place of birth;
- account number or equivalent, if no account number is available;
- name and ID number of financial institution, if any;
- account balance or account value.
Special due diligence requirements apply to new accounts: If account holders are natural persons, the financial institution is obliged to obtain a disclosure of personal data which enables the financial institution to determine not only the tax residence(s) of the account holder but also the plausibility of this disclosure. If any parameters change, the financial institution must obtain a new disclosure. Specific verification duties apply to accounts of a balance exceeding USD 1,000,000 and in case of legal entities, USD 250,000, respectively.