Austrian Tax Reform: End of bank secrecy

1. June 2015 | Reading Time: 3 Min

1. The project ‘ End of Bank secrecy’ in Austria

The bill comprises the following major measures:

  • Extending the bank secrecy exemption provisions
  • Establishing an account register
  • Introducing a reporting requirement for banks for major money movements
  • Extending the automatic exchange of information in fiscal matters

The Ministry of Finance anticipates additional revenue from tax and social insurance contributions amounting to EUR 700 million from the above measures in 2016 alone.

2. Bank secrecy continues to crumble …

The proposed amendment of section 38 of the Banking Act (BWG) now introduces a substantial curtailment of bank secrecy for both domestic and foreign bank customers.  Under the bill, parts of the provision are to enter into force as of 1 March 2015.

In future, Austrian banks also have to provide information in the following cases:

  • In the “normal fiscal procedure” if a written request for information is made by the fiscal authorities (from 1 March 2015);
  • On the same conditions in financial criminal proceedings brought by the administrative authorities;
  • In judicial criminal proceedings on the instructions of the public prosecutor’s office if only account register information is involved.  Otherwise with court approval;
  • In the context of data transfer pursuant to the Account Register Act (from 1 March 2015)
  • In the context of the reporting requirement pursuant to the Capital Outflow Reporting Act
  • For purposes of automatic information exchange pursuant to the Common Reporting Standards Act (GMSG).

3. The proposed accounts register

The Accounts Register Bill provides for the Federal Ministry of Finance maintaining a register of all bank accounts and securities accounts in Austria.  The banks are required to report the following data electronically:

  • Personal identifier (natural persons) or identification number (legal entities) or authorised agents, trustors or beneficial owners;
  • Account / securities account number;
  • Date the account was opened or closed;
  • Designation of the bank where the account or securities account is held.

The first data transfer must be made as of 1 March 2015.

Information from the register must be provided to the following institutions:

  • All federal fiscal authorities, and the Federal Fiscal Court (BFG) if it is expedient and appropriate in the interests of tax collection;
  • The public prosecution offices and the criminal courts for purposes of criminal prosecution;
  • The fiscal prosecution authority and the Federal Fiscal Court (BFG) as well for tax offences.

4. The Capital Outflow Reporting Act

Pursuant to the Austria-Switzerland and Austria-Liechtenstein tax treaties, the Austrian tax authorities faced a situation where significant capital outflows from Switzerland or Liechtenstein were effected before the treaties entered into force, thus evading tax (known as “dodgers”).

In order to avert a similar trend, the Bill requires banks to report:

  • capital outflows (all payments and transfers)
  • of at least EUR 50,000
  • for the periods from 1 March 2015.

In order to avoid circumvention, numerous individual transactions within a narrow timeframe are likewise subject to the reporting requirement if there is an evident link.  But there is no reporting requirement in connection with business accounts.

5. Automatic information exchange under the Common Reporting Standard Act (GMSG)

The Common Reporting Standard Act (GMSG) governs the banks’ reporting and due diligence obligations with regard to persons not resident in Austria, whereby Austria transposes Directive 2014/107/EU and the intergovernmental convention of 29.10.2014 (common reporting standard) into national law, and/or amends existing legislation.

6. Bank secrecy in brief

The planned measures constitute a massive power to invade the privacy of all citizens, even if the Federal Ministry plays this down somewhat, at least for those in employment.

It remains to be seen whether the fiscal authorities will use the powers conferred on them in a restrained and judicious manner in accordance with the legal provisions, or whether the “naked citizen” increasingly becomes a reality under the pressure to meet budget targets.

If you have questions about the new planned end of the bank secrecy in Austria, do not hesitate to contact our tax experts: TPA Partners in Austria

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