In 2013, the G20 leaders invited the OECD to develop a global standard on automatic exchange of information which consists of a common reporting standard that will require financial institutions and brokers to report information to their own jurisdiction and this information will in turn be passed on to other relevant countries automatically each year. The standard applies to financial accounts and sets out the due diligence which financial institutions will need to apply.
The common reporting standard will result in similar reporting obligations across all countries, meaning that the sharing of tax information between states should be easier to collect as a result of matching domestic and international legal obligations. The plans expressly build upon the US Foreign Account Tax Compliance Act (FATCA) but diverges from FATCA by considering tax residency rather than tax citizenship.
ESBG welcomes the aim for increased transparency and supports the initiatives to develop a global multilateral system for the exchange of information with clear and equal rules for everyone. ESBG works tirelessly towards the development of one system only as we believe that any move away from a global standard towards specific information requirements at an EU-level would not only undermine the global level playing field but also cause a very costly and undue burden on our members and we thus urge the European Institutions to avoid any moves in this direction. The un-level playing field faced by European institutions would also cause extensive additional costs, operationally and from a technology point of view which would severely penalise in particular smaller financial institutions.