Goal and legal framework of the AEOI
The Automatic Exchange of financial account Information in tax matters (AEOI) is an OECD initiative aiming at fighting offshore tax evasion. The AEOI is implemented through the signature of a multilateral Competent Authority Agreement (mCAA) between participating countries. In the European Union, the AEOI is implemented through the new Directive on Administrative Cooperation (DAC 2) which makes the exchange of information mandatory for all European Union member states.
Any Jurisdiction can participate to the AEOI on a voluntary basis. As of end of October 2015, around 100 Jurisdictions have joined the AEOI, including all European Union countries. When joining the AEOI, jurisdictions announced the date of entry into force of the AEOI in their Jurisdiction and the date of their first reporting:
- In around 60 countries (European Union countries, Norway, Korea …), the AEOI will enter into force on January 1st, 2016 for a first reporting in 2017.
- In around 40 other countries (Canada, Australia, China, Russia, Switzerland, Hong Kong, Singapore…), the AEOI will enter into force on January 1st, 2017 for a first reporting in 2018.
This framework applies to all accounts maintained in an AEOI Participating Jurisdiction. The AEOI requires Financial Institutions to identify account holders to establish in which jurisdiction(s) they are tax resident. If they are tax resident in any foreign AEOI jurisdiction, they will be reported to the Tax Authority of the country where the account is maintained that will transmit this reporting to the Tax Authority of the account holder’s residence country.
Compliance of BNP Paribas with AEOI obligations
Compliance with the AEOI will be enforced by each Participating country under its local legislation.
BNP Paribas is committed to fighting tax evasion and will naturally be compliant with the AEOI in all AEOI Participating countries where the Group is present, in line with the local regulatory timeframe.
Consequences of the AEOI for Clients
Existing clients: in AEOI Participating Jurisdictions, BNP Paribas will contact its existing clients (individuals and entities) when their file contains an address or other indicia indicating they may be Tax resident in any other AEOI Participating country. BNP Paribas will also contact patrimonial entities whose Controlling Persons must be identified to determine whether they are Tax Resident in a participating country.
New clients: in AEOI Participating Jurisdictions, BNP Paribas will collect a self-certification during the on-boarding process allowing to identify account holders who are Tax Resident in another AEOI Participating Jurisdiction. Patrimonial entities will also have to declare the Tax Residence of their Controlling Persons.
If a client holds an account in a AEOI country while being Tax Resident in another AEOI Participating Jurisdiction, BNP Paribas is required to report the following information:
- Account balances
- Revenue from Financial Assets
- Gross proceeds from sales of Financial assets
This Reporting Requirement applies to Depository Accounts, Custodial Accounts, Cash Value Insurance Contracts, Annuity Contracts and equity and debt interests in Financial Institutions (such as stakes in mutual funds).
For more information (list of Participating Jurisdictions…), please refer to the OECD portal: http://www.oecd.org/tax/automatic-exchange/