A number of UK overseas territories and crown dependencies have agreed to exchange information on tax matters with the UK and other major European countries. Anguilla, Bermuda, the British Virgin Islands (BVI), Montserrat and the Turks and Caicos Islands have entered into agreements to share information as an extension of the G5 agreement between the UK, France, Germany, Spain and Italy. This means that tax information such as bank account details will be shared on a multilateral basis. The information shared should include names, dates of birth, addresses, account numbers and details of payments made through the accounts.
The agreement is based on the Model Intergovernmental Agreement to Improve International Tax Compliance and to Implement FATCA. This agreement was initially developed between the G5 European countries and the US, which requires greater information exchange under the Foreign Account Tax Compliance Act (FATCA) rules. This aims to counter evasion of tax by US residents using foreign accounts and requires US taxpayers to report income earned in certain types of foreign account. The FATCA rules include provisions for withholding tax on certain income and reporting requirements for foreign financial institutions.
The agreement by the territories to exchange tax information will be significant if implemented in practice as envisaged. An important point made by commentators is that the information exchanged must extend to bank accounts of companies and trusts if it the agreement is to be effective. Many funds retained in tax haven locations are often held by individuals through complex structures involving corporate entities or trusts.