Non-declaration of income from foreign bank accounts – an overview about consequences and possible remedies by WTS A voluntary disclosure report on non-disclosed foreign capital income often includes international addressees. WTS has prepared a comprehensive analysis in order to give an overview of this complex issue. More and more banks are encouraging their customers' tax honesty. As a result, German attorneys and tax consultants are intensively engaged with the preparation of subsequent tax returns for capital income from foreign bank accounts. In this regard the attention is shifting more and more to cases concerning not only Germany as a dishonest taxpayer's residence. On the one hand an individual may have been a resident of several countries within the course of the assessment period in question (i.e. assessment has not been timebarred yet). On the other hand some bank assets are inherited by entire family clans with individual family members living in different countries. In such cases one must consider the different countries' legal framework conditions. Therefore and due to the fact that by now many foreign banks are encouraging their customers' tax honesty our WTS network has prepared the following list. It is showing the tax and criminal law consequences of tax evasion regarding foreign capital income in 28 countries and also giving an overview of possible remedies and their consequences.

Dr. Tom Offerhaus

Peter Schulz

WTS Germany

WTS Germany

Head of Competence Center Private Clients

Partner Of Counsel

T +49 (0) 89 28646-148

T +49 (0) 89 28646-195

[email protected]

[email protected]

countries

tax + criminal consequences

voluntary disclosure proceedings

provided service

contact persons

Austria

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recapture taxation criminal proceedings

voluntary disclosure → full criminal immunity

preparation and submission of voluntary disclosures

Horst Bergmann: [email protected]

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7 years prescription for tax evasion tax increases between 10% and up to 200% fines & imprisonment 5 years Prosecution for money laundering without any 7 years prescription Denunciation rules upon banks and alike under 3° EU money laundering directive

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Belgium

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China

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www.wts.de

recapture taxation fine (not less than 50% of and not more than five times the amount of taxes unpaid or underpaid) imprisonment (when the tax payer has the intention and has taken certain measures to escape tax payable)

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voluntary disclosure proceeding still possible until 31/12/2013 to be filed with a special VD-unit. Fines of 15% additional tax for 7 year period, 35% flat tax rate for fiscally prescribed capital. as from 01/01/2014 the VDunit ceases to accept new files full tax and criminal prosecution to be expected as from 2014

Any criminal who voluntarily surrenders may be given a lighter or mitigated punishment. The ones whose crimes are relatively minor may be exempted from punishment.

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tax advice and active assistance in connection with voluntary disclosures to be filed by 31/12/2013 criminal and anti-money laundering advice in coordination with team of specialized lawyers

assistance with taxpayer's audit and investigation, revision negotiation of settlement period cooperation with specialized lawyers

Gerd D Goyvaerts: gerdd.goyvaerts@tiberghien. com

Hongxiang Ma: hongxiang.ma@worldtaxser vice.cn

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Denmark

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Estonia

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Germany

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www.wts.de

increase in income » corresponding to tax evaded income fine (depending on evaded tax » and subjective element one time, two times or half time the amount of the evasion) » resp. imprisonment ≤8 years

limitation: evasion <500,000 DKK 5 years, >500,000 DKK 10 years criminal immunity if gross negligence or intentional + evaded tax ≤100,000 DKK settlement/(un-)conditional imprisonment depending on evaded tax

interest income from EEA countries' banks exempt from personal income tax interest charge 0.06% p.d. fine/imprisonment ≤5 years

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no voluntary disclosure limitation 5 years voluntary disclosure = mitigating circumstance within fixing the fine

reassessment + interest charge 0.4% p.m. + penalty 40% or 80% + (for non disclosure of foreign account) 1,500/10,000 € or 5% if account balance >50,000 € fine 500,000-1,000,000 € /imprisonment 5 - 7 years

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decrease of penalties/fines depending on quality as passive taxpayer (gift, inheritance) or active taxpayer: penalty 15% or 30%, fine 1.5% or 3% limitation: income tax 2006, wealth tax 2007, fine 2009

amendment of tax notices for past 10 years tax due + interest charge of 6% p.a. on evaded tax fine/imprisonment ≤5 years (serious cases: ≤10 years)

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payment of resulting tax + additional charge of 5% if evaded tax ≥50,000 € for one criminal act (e.g. one false income return) → full criminal immunity

tax and criminal advice in connection with voluntary disclosures and inquiries from Danish tax authorities

Nicolai B. Sørensen: [email protected]

tax/criminal advice

Kaido Loor: [email protected]

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tax advice in connection with voluntary disclosures criminal advice in coordination with specialized lawyer

preparation of tax liability calculations preparation/submission of applications/discussion with tax authorities

Marylène Bonny-Grandil: marylene.bonnygrandil@wts f.fr

Tom Offerhaus: [email protected] Peter Schulz: [email protected]

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Hungary

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penalty 200% of unpaid tax + interest charge 6.8% imprisonment ≤10 years

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Ireland

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Israel

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Italy

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www.wts.de

» currently no tax amnesty limitation for tax assessment = limitation for crime penalty: self revision interest charge (currently 3.4%)

surcharge 10% + interest charge penalty for under-declaration ≥100%, for fraud ≥200% of tax liability fine/imprisonment name + address published in quarterly list of tax defaulters

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tax due + interest charge if source of fund not proved: tax rate 10% - 50% fine ≤200%/imprisonment ≤7 years

payment of resulting tax → full criminal immunity

penalty 30%-240% of tax due depending on offence imprisonment 1–3 years if tax unpaid >50,000 € + fictitious items 10% of stated tax or

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no specific voluntary disclosure rules submission of voluntary disclosure → possibility of penalty mitigation, nonpublication, non-prosecution no limitation

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voluntary disclosure programme in preparation limitation 4 years

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advice on criminal aspects legal services: associated law firm

tax services: liability calculation, settlement proposals etc. instruction of external legal advisers for civil/criminal proceedings

preparation and submission of applications/discussion with tax authorities advice on criminal aspects tax services criminal + legal services (cooperation partner)

Marcus Hornig: [email protected] Tamás Gyányi: [email protected]

Andrew Gelling: andrew.gelling@agellingtax. com

Nir Horenstein: [email protected]

Valentina Stecca: valentina.stecca@taxworks. it

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>2,000,000 € Japan

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Mauritius

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amendment for last 5 years, » for last 7 years in case of tax evasion penalty tax between 5% to 40% of additional tax interest tax between around 4% to 14.6% p.a. of additional tax statements for reporting overseas assets introduced for the assets owned as of December 31, 2013. in case of tax evasion fine and imprisonment up to 10 years possible

reduced penalty taxes in case of voluntary disclosure

penalty 5 % of evaded tax + interest charge 1% per month assessing penalty ≤50% of evaded tax fine ≤50,000 MUR /imprisonment ≤2 years

voluntary disclosure » programme 2012 and 2013 for a period of six months each → no voluntary proceedings in 2014, » however, consideration on a case by case basis at the discretion of the tax authorities can be expected payment of resulting tax → full criminal immunity

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www.wts.de

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tax services legal services: network of lawyers

Karl Rath: [email protected] Shigeru Yamanaka: [email protected]

preparation and submission of applications/liaising with tax authorities tax litigation cases: engagement of legal counsels

Mohammad Akshar Maherally: [email protected]

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The Netherlands

fine ≤300%/imprisonment ≤6 years

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until 1 July 2014: criminal immunity limitation 5 years (domestic), 12 years (foreign) after 1 July 2014: only reduced fines

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Norway

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Portugal

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reassessment of wealth and income tax up to the last 10 years penalty up to 60 % or criminal proceedings interest charge varying from 2.5 % to 7.0 % per year

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tax due + interest charges fines /criminal procedures: imprisonment ≤5 years

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The Philippines www.wts.de

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tax due + interest charge of 20% p.a.

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preparation and submission of voluntary disclosures discussions and negotiations with the Dutch tax authorities cooperation with specialized lawyers to the extent necessary

Jan Boekel: [email protected]

reassessment of wealth and income tax up to the last 10 years interest charge varying from 2.5 % to 7.0 % per year no penalty criminal immunity

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preparation and submission of applications/liaising with tax authorities tax litigation cases criminal + legal services

voluntary disclosure until 20 December: payment of taxes due with no interest, fines and costs. criminal procedures: in certain cases, it may be possible to request the dispense of the criminal procedure

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tax services criminal + legal services

Carla Matos: [email protected]

no voluntary disclosure proceedings

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filing/amending returns assistance in tax

Benedicta Du-Baladad: dick.du-

Arne Hjertholm: [email protected]

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Romania

Russia

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South Africa

interest charge 0.06% p.d. statement regarding incomes from every country not submitted: fine 500-1000 RON penalty ≤100% of income from foreign accounts if not remitted to Russian account penalty ≤40% of undeclared tax + interest charge imprisonment ≤3 years

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limitation generally 3 years/ 10 years if fraudulent or wilful non-filing of return

no voluntary disclosure proceedings limitation 5 years

first tax evasion and payment of evaded tax + interest charge + penalties → full criminal immunity

income from foreign bank account criminal immunity after with source in Singapore » payment of 5% of tax » penalty depending on underpaid if negligence or subjective element 100%omission 200% or ≤400% of tax unpaid » payment of 200% of tax » fine/imprisonment ≤7 years underpaid if wilful intent »

» www.wts.de

criminal liability

understatement penalty: percentage of tax unpaid depending on the category of reason administrative penalties

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no-name application exclusion of voluntary disclosure may be overcome by a discretion full criminal immunity

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assessments tax litigation

tax services legal services: network of lawyers

[email protected] Fulvio Dawilan: [email protected]. ph Diana Giza: [email protected]

administrative, tax and criminal advice

Raisa Karaseva: [email protected]

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assistance for taxpayer's audit and investigation, revision negotiation of settlement period

Steven Luk: [email protected]

preparation and submission of voluntary disclosures Criminal lawyer arranged

Ahmed Jooma: [email protected]

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Sweden

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fine/imprisonment ≤5 years

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no limitation

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increase in income corresponding to tax evaded income penalty ≤40% of undeclared tax + interest charges or fine/imprisonment ≤6 years

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voluntary disclosure → payment of evaded tax + interest costs full tax penalty immunity full criminal immunity

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voluntary disclosure is possible if it is made before any tax investigation or tax audit. tax loss penalty is not applied late payment interest charge by 1,40% per month.

preparation and submission Burçak Arhun: of voluntary disclosures [email protected]

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Turkey

UK

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late payment interest charge by 1.40% per month. » tax loss penalty - 100% of the tax liability » irregularity fine in case no income tax declaration is made for respective year.

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www.wts.de

interest charge penalty 30%-60% of tax liability 2011/12 onwards: penalty 150%-200% imprisonment 2-3 years

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preparation and submission of voluntary disclosures tax and criminal advice in connection with voluntary disclosures and inquiries from Swedish tax authorities

Fredrik Sandefeldt: fredrik.sandefeldt@svalner. se Michel Weimer: [email protected]

Liechtenstein Disclosure Facility preparation and submission Andrew McKenna: of voluntary disclosures [email protected] until 2016: amson.co.uk » settlement limited to 99/00 » decrease in penalty: 10%20%, resp. 30% » full criminal immunity, if offence is only tax linked

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Publisher WTS Alliance | P.O. Box 19201 3001 BE Rotterdam | The Netherlands [email protected] | www.wts-alliance.com

About WTS WTS is a global network of selected consulting firms represented in about 100 countries worldwide. Within our service portfolio we are focused on tax, legal and consulting. In order to avoid any conflict of interest, we deliberately refrain from conducting annual audits. Our clients include multinational groups, national and international medium-sized companies, non-profit organizations and private clients.

Disclaimer The above information is intended to provide general guidance with respect to the subject matter. This general guidance should not be relied on as a basis for undertaking any transaction or business decision, but rather the advice of a qualified tax consultant should be obtained based on a taxpayer’s individual circumstances. Although our articles are carefully reviewed, we accept no responsibility in the event of any inaccuracy or omission. For further information please refer to the authors.

www.wts.de

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