Important: To make taxation more transparent and equitable, the first automatic exchange of information on financial accounts under the OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard begins on 30 September 2017 between 49 states and territories.
The basis for the annual exchange of information on financial accounts is the Common Reporting Standard (CRS) adopted by the OECD and the G20 in 2014.
More than 100 states and territories have now committed to implementing the Common Reporting Standard. Together with 49 additional states and territories, Germany is participating in the automatic reporting procedure from the outset. Further states and territories are expected to join on 30 September 2018.
Finance Minister Schäuble has described the automatic exchange of information on financial accounts as a milestone, arguing that it will effectively combat international tax evasion.
Other experts, however, such as Markus Meinzer of the Tax Justice Network, take a more critical view. Like many others, he is concerned that the automatic exchange of information could be circumvented through so-called “residence certificates.” Such “shadow financial centres” would attract particularly high-net-worth individuals in particular. The idea is that such individuals could register as resident in other states in order to avoid the data exchange.
Thomas Eigenthaler, head of the German tax union (Steuergewerkschaft), by contrast, assumes that the data reaching Germany via the exchange of information will include information previously unknown to the tax authorities. However, the data is unlikely to reach the local tax offices before 2019, since the Federal Central Tax Office (Bundeszentralamt für Steuern), where the international data is initially collected, will first review and compile the data itself before forwarding it to the local tax offices.
It therefore remains to be seen what the international exchange of data will actually produce, and when.
Frequently asked questions
Frequently asked questions
What is the automatic exchange of financial account information under CRS?
The Common Reporting Standard (CRS) is a common reporting standard adopted by the OECD and G20 in 2014. On this basis, participating states automatically exchange information on financial accounts on an annual basis in order to combat international tax evasion. To date, more than 100 states and territories have committed to implementing the standard.
When did the first automatic exchange of information on financial accounts start in Germany?
The first automatic exchange of information on financial accounts under the OECD reporting standard began on 30.09.2017. Germany participated from the outset, together with 49 other states and territories. Additional countries were scheduled to join as of 30.09.2018.
When will the exchanged financial account data reach the German tax offices?
The international data is initially collected and reviewed by the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt). Forwarding to the local tax offices is not expected before 2019. Only then will the tax offices be able to use the data specifically for assessments and audits.
Which workarounds in CRS information exchange are being criticised?
Critics such as the Netzwerk Steuergerechtigkeit (Tax Justice Network) fear that the exchange is being circumvented through so-called residency certificates. Very wealthy individuals could register as residents in shadow financial centres to avoid data exchange with their actual country of residence. This would create a gap in the transparency system.
What is the significance of CRS data exchange in combating tax evasion?
The automatic exchange of information is considered a milestone in the fight against international tax evasion, as financial account data is systematically shared between countries for the first time. It is to be expected that this will also reveal accounts and income previously unknown to the German tax authorities. However, how effective the exchange actually is depends on consistent implementation and the closing of loopholes.