Countries Which Will Not Automatically Exchange Account Information
Published 08 January 2015 Last updated 21 November 2016
On 29 October 2014, 51 jurisdictions (countries and territories) signed a multilateral agreement to automatically exchange information on financial accounts for tax purposes. During the following two years 36 jurisdictions have joined the convention. This is the first ever agreement to exchange this type of information automatically. By the end of 2018, when more jurisdictions join the convention, 101 jurisdictions will exchange the information on financial accounts.
Hence, there still will be more than 100 jurisdictions which will not exchange the information automatically. However, the absence of the automatic information exchange between these jurisdictions does not mean, that there can be no information exchange at all: these jurisdictions can still conduct the exchange in other ways: either on request or spontaneously.
Although almost all European countries and offshore financial centers will participate in the information exchange, there are still several European countries and offshore financial centers which will not exchange the information automatically.
Automatic Information Exchange in Brief
The main principles of the information exchange can be summarized as follows:
The information will be exchanged annually according to the global reporting standard.
The information will be exchanged only between the jurisdictions for which the convention of the information exchange is in force and in effect.
Not only banks but also other financial insitutions (for example, brokers and insurance companies) will be reporting the information.
The information will be reported not only on the financial accounts held be individuals, but also on those held by legal entities.
For each of reportable financial accounts, personal details of the account holder, details of the financial institution, account identification details and selected financial information will be reported.
Apart from the automatic exchange, the information may be exchanged in other ways:
On Request. Exchange of information on request describes a situation when a competent authority of one jurisdiction asks for particular information from a competent authority of another jurisdiction. The information request should relate to a specific tax investigation, either criminal or civil. This type of exchange is conducted according to Tax Information Exchange Agreements (TIEAs). The list of TIEAs for each of the European countries is available at Country Profiles.
Spontaneously. Spontaneous exchange of information is the provision of information to a competent authority of one jurisdiction that is forseeably relevant to a competent authority of another jurisdiction and that has not been previously requested.
No Automatic Information Exchange With Jurisdictions Which Didn't Sign The Convention
The financial accounts information will be exchanged only between the countries and the territories for which the convention is in force and in effect. Hence, if a jurisdiction don't sign the convention, this jurisdiction will neither automatically report the account information, nor automatically receive the account information from the jurisdictions which signed the convention.
Consider the following cases:
Both Jurisdiction A and Jurisdiction B signed the convention. These jurisdictions will exchange the information. The Jurisdiction A will report to the Jurisdiction B, the Jurisdiction B will report to the Jurisdiction A.
Jurisdiction C signed the convention, Jurisdiction D didn't sign the convention. There will be no information exchange between the Jurisdiction C and Jurisdiction D. The Jurisdiction C will not report to the Jurisdiction D, and the Jurisdiction C will not report to the Jurisdiction D.
In the case 2 from the list above, there will be no information exchange between the jurisdictions. To illustrate this case, consider an example:
Serbia won't exchange the information, while the United Kingdom will. This means that:
If a tax resident of the United Kingdom has an account in Serbia, his/her account will not be reported to British authorities by the authorities of Serbia.
If a tax resident of Serbia has an account in the United Kingdom, his/her account will not be reported to Serbian authorities by the authorities of the United Kingdom.
It should be noted that absence of the automatic information exchange between a pair of jurisdictions does not mean that there will be no information exchange at all. The information may be exchanged either on request or spontaneously.
European Countries Which Will Not Automatically Exchange Information
Although a lot of European countries made a commitment to start the automatic exchange of information, there are several countries will not exchange the information automatically:
Offshore Financial Centers Which Will Not Automatically Exchange Information
Although the term offshore financial centre is not precisely defined, it usually means a small, low-tax jurisdiction specializing in providing financial services to non-resident legal entities and individuals. Because there is no generally accepted definition of the term, lists of jurisdictions considered as offshore financial centers vary from source to source.
The table below summarizes participation of offshore financial centers as defined by International Monetary Fund (IMF) in the automatic information exchange: