NEW LAWS AND REGULATIONS
Automatic information exchange
On 29th of October 2014, 51 countries - including ALL 28 EU member states - signed a multilateral agreement activating the automatic exchange of tax information. Since then almost 100 countries have signed this agreement worldwide. The agreement, which aims to combat tax evasion through increased transparency, applies to all financial institutions in the country that has signed the agreement. Note that Luxembourg is a signatory.
The information will be passed to the tax authorities in the country where the financial institution is located. From there it will be sent to the tax authorities of the country of residence of each account holder. In the case of insurances the information will include the identity of the policyholder, the value of the policy at 31 December, its currency and its performance over the past year. Other information about the policyholder will also be exchanged such as full name, address including the country, tax identification number, place and date of birth.
The reporting financial institutions include banks, investment funds and insurance companies. This means that life insurance products held as of January 1, 2016 will be reported.
The compliance procedure does not entail any obligation to repatriate funds which are in compliance, nor to surrender existing life insurance policies. Clients can continue in a perfectly legal manner to benefit from the usual tax exemptions.
The obligation to report a foreign life insurance policy is already an obligation for taxpayers in Belgium, France and Sweden. We would strongly recommend that if you have not previously complied with the tax obligation to report policies (in the boxes that figure on your tax declaration forms) then you should seek help from your usual tax adviser. Surrendering the policy will not resolve the problem.
If you have two addresses it is the tax residence which determines whether and where it should be reported.
On 29th of October 2014, 51 countries - including ALL 28 EU member states - signed a multilateral agreement activating the automatic exchange of tax information. Since then almost 100 countries have signed this agreement worldwide. The agreement, which aims to combat tax evasion through increased transparency, applies to all financial institutions in the country that has signed the agreement. Note that Luxembourg is a signatory.
The information will be passed to the tax authorities in the country where the financial institution is located. From there it will be sent to the tax authorities of the country of residence of each account holder. In the case of insurances the information will include the identity of the policyholder, the value of the policy at 31 December, its currency and its performance over the past year. Other information about the policyholder will also be exchanged such as full name, address including the country, tax identification number, place and date of birth.
The reporting financial institutions include banks, investment funds and insurance companies. This means that life insurance products held as of January 1, 2016 will be reported.
The compliance procedure does not entail any obligation to repatriate funds which are in compliance, nor to surrender existing life insurance policies. Clients can continue in a perfectly legal manner to benefit from the usual tax exemptions.
The obligation to report a foreign life insurance policy is already an obligation for taxpayers in Belgium, France and Sweden. We would strongly recommend that if you have not previously complied with the tax obligation to report policies (in the boxes that figure on your tax declaration forms) then you should seek help from your usual tax adviser. Surrendering the policy will not resolve the problem.
If you have two addresses it is the tax residence which determines whether and where it should be reported.