Banking secrecy in the world and EU

Bank secrecy is increasingly under discussion in the Western world. Many countries have given in. They are prepared to weaken, abolish or have officially abolished banking secrecy (Switzerland, for example). EU countries are no longer allowed to hide behind their banking secrecy as soon as the tax authorities of another EU member state request information. Countries are increasingly exchanging data automatically. Which country and area still has banking secrecy in 2020?

Bank secrecy, in which country does it still exist?

  • Black money and its consequences for the economy
  • Banking secrecy in the world
  • Black savings: the tax authorities’ hunt is on
  • The hunt for dirty money in a foreign account
  • Economy and black money, what are the consequences?
  • Which well-known countries abolished bank secrecy
  • Which countries still have banking secrecy?
  • What is the voluntary disclosure scheme?
  • Conclusion on banking secrecy and the European Union

Black money and its consequences for the economy

It is generally known that black money determines a large part of the world economy. Some see black money as the lubricant in the economy. It is estimated that the economy in the Netherlands, the domestic product, is more than 10 billion euros larger due to this shadow economy. The tax authorities miss out on some VAT and income tax, but earn from the extra expenditure made with black money. But this concerns money that is not in a bank account, but is paid out and spent in cash.

Banking secrecy in the world

Banking secrecy in many countries and the high tax rates in our country have led many to put their money in a foreign savings account. Preferably in a country with strong banking secrecy. Private individuals do that, but certainly also all kinds of companies. A tax structure abroad is regularly chosen, so that the money is still covered by banking secrecy. Banking secrecy means that no account holder information is exchanged with the country in which the person concerned lives or is established.

Black savings: the tax authorities’ hunt is on

The hunt for black savings is intensifying. Banking secrecy is becoming an ironclad certainty in fewer and fewer countries. Even rock-solid Switzerland has officially lifted banking secrecy. There does not yet appear to be a complete automatic exchange of data. The Tax Authorities must submit a substantiated request for data exchange. Fishing, that is, randomly requesting data and hoping that you catch something, is not an option.

The hunt for dirty money in a foreign account

The hunt for dirty money is part of a series of actions taken by governments that simultaneously threaten privacy. Under the guise of combating terrorism, more and more measures are being taken that further restrict our freedom. We must provide our fingerprints when applying for a passport. If you want to travel to the US, you will be asked to do everything. Now Western governments are increasingly imposing their tax ethics on other foreign powers. The West, where tax rates are often very high, thus rejects the lower rates in other countries.

Economy and black money, what are the consequences?

With this, the government hopes that money will flow back to its own country and that the tax authorities can issue a hefty fine. The question, however, is how many private individuals and companies will move their money elsewhere as a result, meaning that the government will on balance miss the net. In Dubai, for example, banking secrecy still applies and tax rates for foreigners are zero. Some famous football players have long found this way out and they will not be the only ones. So moving to a country with bank secrecy works.

Which well-known countries abolished bank secrecy

Countries such as Switzerland, Liechtenstein, Andorra, San Marino and Monaco were known for their banking secrecy, but have abolished banking secrecy under pressure from the OECD. There will be no more banking secrecy within the EU in 2020.

Which countries still have banking secrecy?

If you are looking for an area where banking secrecy still exists, you can, for example, go to the British Virgin Islands, the Cayman Islands, Hong Kong and Singapore, Seychelles and Mauritius, Guernsey and Jersey, Isle of Man or Dubai.

What is the voluntary disclosure scheme?

The voluntary disclosure scheme is also a thing of the past when it comes to dirty money in a foreign account. You are of course allowed to file a declaration, i.e. report yourself to the Tax Authorities before the Tax Authorities have you in their sights, but declaration is no longer free. If you voluntarily surrender and cooperate well with the tax authorities, the fine may remain relatively limited, but a fine will follow. In addition, the tax authorities will draw up an additional tax assessment for the past 12 years. The tax authorities may go back 12 years to still impose a tax assessment on black money (assuming, of course, that the black money has been in your possession for that long).

Conclusion on banking secrecy and the European Union

People who are more open-minded are better off seeking new advice about possible constructions abroad. There are still plenty of them, but due to all the agreements made with the tax authorities, the view of this becomes somewhat diffuse. Be that as it may, the world is clearly changing and calls for additional measures. This explains why offshore banking outside the EU has also become a major industry.