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Spain gets tough on hidden offshore accounts
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By David Eade
The Spanish Government has fixed a minimum fine of 10,000 euros for taxpayers who do not disclose their overseas bank accounts. There is also a fine of 5,000 euros for each one that has been discovered and has not been advised to the authorities.
This is one of the measures that have been introduced in the Spanish government’s battle to fight tax fraud announced by the vice president and spokesperson for the government, Soraya Sáenz de Santamaría.
The law establishes the obligation to communicate bank accounts, assets or income earned outside of Spain by those who own them, benefit from them or have authority over them. It includes all foreign bank accounts, investments and life insurance policies.
Now many of Spain’s major companies operate off-shore bank accounts as I reported here some months ago but these are known to the authorities. Some are based in British jurisdictions but none in Gibraltar. The fact that these Spanish conglomerates bank off-shore and hence pay no tax is a bitter enough pill for Madrid to swallow: if that bank was in Gibraltar then you could image the furore.
Yet Spaniards and Spanish companies do hold accounts in Gibraltar but it is the hidden ones that the government and tax agency want to know about. I first asked James Tipping who heads our Finance Centre about Gibraltar’s status as an off-shore banking base. Just one word of advice don’t mention Gibraltar and offshore at the same time within James’s hearing.
James said: “I cannot emphasise enough that Gibraltar is now an onshore and internationally cooperative jurisdiction in all aspects. For example Gibraltar has signed 20 tax information exchange agreements (TIEAs) and 18 are in force. Gibraltar is already exchanging information on request under these agreements. The full list is available on www.eoi-tax.org. Gibraltar is on the G 20 white list.”
But Gibraltar hasn’t signed a TIEA with Spain has it?
James explained: “It is true that Gibraltar has not signed a TIEA with Spain but not through a lack of trying on our part. Gibraltar exchanges automatically info with Spain under the savings directive i.e. we supply the name of the taxpayer resident in Spain that receives interest in Gibraltar - to the Spanish tax authorities. From memory, this is done quarterly.”
What about the Gibraltar and Spanish tax agencies: are they on talking terms?
“Gibraltar’s Income Tax Department also responds to requests from the Spanish tax authority under the Mutual Assistance Directive. The Income Tax Commissioner had sweeping powers granted to him under the Income Tax Act 2010 and therefore he can respond fully to requests under the Mutual Assistance Directive. There is also an update to the Mutual Assistance Directive adopted in February 2011 - to be transposed by January 2013 - which will make the Mutual Assistance Directive the equivalent of a TIEA. Furthermore, the Gibraltar’s financial intelligence unit spontaneously sends information to SEPBLAC (the Spanish financial intelligence unit) on anti money laundering disclosures they receive - including tax evasion. Tax evasion is a criminal offence in Gibraltar with a maximum prison term of 7 years. No institution in Gibraltar will accept undeclared funds. If they do, they are committing a very serious criminal offence. Gibraltar is OECD compliant on exchange of information and transparency. Gibraltar in October 2011 passed its Phase 1 review allowing Gibraltar to move to a Phase 2 review scheduled for 2014.”
That’s the view from the Financial Centre but what about Main Street where Jyske and other banks have their doors wide open for those with money to waltz in. All Gibraltar’s banks have very strict procedures for opening accounts and monitoring the funds that passes through them but I asked Jyske’s CEO Christian Bjorlow how private is a person’s banking information?
He told me: “On the other hand we have according to the EU Saving Directive the obligation to exchange information in respect of interest earned on accounts or bonds to Spain. This only applies to any private customer that we have recorded as resident in Spain. We as a Bank provide information not directly to Spain but we forward this information to Gibraltar which again informs Spain and other EU countries that have agreed to the directive. To Spain there will always be exchange of information, but to the UK the customer can choose either the exchange of information or the withholding tax.”
Intriguingly Christian added: “The EU saving directive applies only to individuals and not to any company, meaning that for the time being there isn’t any revelation of information either to Spain or the UK on any corporate accounts.”
As one of the favourite tax dodges has been for Spaniards and non-Spaniards to purchase properties and other assets in off-shore companies this would seem a loophole waiting to be exploited or closed.
28-06-12
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