Preventing tax evasion abroad by private individuals
To tackle tax evasion and undeclared savings, the Dutch Tax and Customs Administration (Belastingdienst) is going to exchange information automatically with more and more countries. It obtains this information from financial institutions.
The information concerns individuals or businesses that may be required to pay tax abroad. The countries in question subsequently investigate whether tax actually has to be paid. This may have consequences for you.
Exchanging information with the US
Dutch financial institutions have been investigating their clients’ details since 1 July 2014. In accordance with the FATCA-decree, they started supplying information to the Dutch tax authorities since 1 January 2015.
The Dutch tax authorities started supplying information to the US tax authorities (IRS) from the end of September 2015. This included information from 2014, but not from previous years. Conversely, the IRS supplies information to the Dutch tax authorities.
Financial information will be exchanged on the basis of the Foreign Account Tax Compliance Act (FATCA) and the FATCA agreement between the Netherlands and the United States. The exchange of information will not begin until both houses of the Dutch parliament have given their approval. A bill has been submitted to that end.
FATCA means simpler process and better legal protection
The FATCA agreement makes it easier for Dutch financial institutions to share information. They no longer have to conclude agreements with the IRS separately. And in principle they no longer face the risk of paying 30% withholding tax on US income sources.
The agreement also provides better legal protection for clients of financial institutions. This is because the institutions no longer need to supply information directly to the IRS. This will now be arranged through the Dutch Tax and Customs Administration. Both the Dutch and US tax authorities maintain high standards of data protection.
Global information exchange
The Netherlands is also going to exchange financial information worldwide in accordance with the Common Reporting Standard (CRS). Under the CRS agreement, the Dutch tax authorities will share information from financial institutions with tax authorities in other member countries.
About 50 countries have signed the declaration. They will begin sharing information by the end of September 2017. This will include financial information from 2016, but not previous years. Foreign financial institutions will supply information to the Dutch tax authorities via foreign tax authorities. From September 2018, the group of countries that shares information will be expanded with many other countries. With these countries, the Netherlands will share information automatically as well.
The sharing of information will not begin until both houses of the Dutch parliament have given their approval. The State Secretary for Finance Eric Wiebes has submitted the initiative bill to he House of Representatives on 11 September 2015.
Financial data supplied by the Dutch tax authorities
The financial data that the Dutch Tax and Customs Administration will share with the IRS include:
- income from dividends and interest;
- bank account balances;
- insurance contract values;
- proceeds from the sale of financial products.
Not automatically a tax assessment
The exchange of information on a particular business or private individual does not necessarily mean that they will have to pay tax abroad. The foreign tax authorities must first evaluate the information. The Dutch tax authorities are not involved in the tax assessments or payment requests of foreign tax authorities, and vice versa. If the Dutch tax authorities receive information about you from abroad, they will evaluate it before deciding whether to issue a tax assessment.