Israel will Exchange Information on Bank Accounts

Bank Accounts| exchange information| Tax Authority 

Dr. Avi Nov, Adv. 

January 2015 

Israeli banks will exchange information on accounts held by foreign residents from EU countries, according to officials in the Ministry of finance. This new policy follows the practice already implemented by the Israeli banks regarding accounts held by US persons. The information that will be exchanged includes balances, deposits and income received on Israeli bank accounts.

See also: Israel and U.S. Sign FATCA Agreement 

Many banks in Israel already require EU residents to sign a declaration that all the money held by them had been reported to the tax authorities in their home country and that they had paid everything that was due accordingly. See also: Israeli Banks and Foreign Residents 

Automatic exchange of information

The Israeli Ministry of Finance announced recently the intention to start the implementation of the automatic exchange of financial account information by the end of 2018. 

The Israel government has not yet signed the OECD’s Multilateral Competent Authority Agreement that will activate automatic exchange of information based on the Convention on Mutual Administrative Assistance in Tax Matters (1988). It seems that the implementation of the Multilateral Competent Authority Agreement in Israel will not be fast as expected by the OECD. 

It should be stressed that 51 jurisdictions have signed already the Multilateral Competent Authority Agreement, which will activate automatic exchange of financial account information based on article 6 of the Convention on Mutual Administrative Assistance in Tax Matters. 

Tax Reporting for Foreign Residents

The Bank of Israel sent recently to local banks a draft order amending the existing Know Your Costumers requirements for foreign residents. The draft order sets up new instructions as follows:

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Foreign resident clients of Israeli banks would have to:

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present information about the source of their wealth and income;

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declare on a specific form that taxes legally required abroad have been paid; and also

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give up banking secrecy with respect to the overseas tax authorities.

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In addition, Israeli Banks would be requested to:

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identify foreign resident who qualify as "high-risk"; and

Furthermore, the draft order provides that foreign resident customers who fail to comply with the mentioned requirements will be deprived of the right to open an account in the Israeli banks and regarding existing accounts, they may be frozen.


Dr. Avi Nov Law Offices, Israeli & international tax law 
*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion

 

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