At the end of last year I wrote an article on how 2009 would go down in financial history as being a very taxing year, and the trend continued in 2010. Following on from the global economic crisis
At the end of last year I wrote an article on how 2009 would go down in financial history as being a very taxing year, and the trend continued in 2010. Following on from the global economic crisis, governments have been intent on reducing their huge budget deficits through spending cuts and tax increases. Focus has continued on cracking down on tax evasion to recoup the billions lost through unpaid tax. Tax ?amnesties? to encourage tax evaders to come forward and disclose their unsettled tax liabilities for reduced penalties were extended in Italy, France, Malta and the UK.
Here is a review of the key tax measures during the first half of 2010:
The period for notification of the intention to disclose under the UK?s New Disclosure Opportunity closes on 4th January. Approximately 10,000 tax offenders came forward. Another UK disclosure facility, the Tax Health Plan was announced, aimed at medical professionals.
From 1st January Spanish tax on all savings income including capital gains increases from 18% to 19% on the first ?6,000 and to 21% on the excess.
Germany agrees to pay ?2.5 million to purchase stolen data containing around 1,500 names of suspected tax evaders holding undeclared bank accounts in Switzerland. The data is expected to reap ?400 million for the German tax authorities. Germany offers to share relevant information with other tax authorities. The UK expresses interest.
The European Parliament makes clear its intentions to step up pressure to banking secrecy. It deems that the Organisation for Economic Co-operation and Development?s (OECD) standards are ?unsatisfactory? and adopts a non-binding resolution aimed at actively encouraging improvements to make automatic and multilateral exchange of information a global standard.
In Alistair Darling?s last Budget speech the UK Chancellor of the Exchequer says that he will find ?57 billion over the next four years to reduce the deficit by half, ?19 billion to be raised from tax and ?9 billion in spending cuts.
Penalties for deliberate and concealed tax evasion are doubled to 200% of the unpaid tax for those who fail to declare income earned in countries which do not share tax records with the UK.
The German government makes known its intention to purchase stolen bank client data. It is believed to contain the names of around 1,700 suspected tax evaders.
Germany approves a tax information exchange agreement (TIEA) with Liechtenstein which provides that information will be exchanged on request. Tax information can be exchanged not only in cases of tax evasion, but also as part of standard assessment procedures, without the need for the state concerned to present suspicion of a tax crime.
HSBC private bank Switzerland is investigated by the country?s banking regulators following theft of data containing information on 15,000 private clients of the bank.
The UK 2010-2011 tax year begins and marks a new 50% tax rate for those earning over ?150,000 a year. Personal tax allowances are frozen along with the inheritance tax nil-rate band.
From 1st April 2010 taxpayers who deliberately evade UK tax of more than ?25,000 will have their details made public on HM Revenue & Customs? website.
Liechtenstein approves 11 TIEAs compliant with the OECD standards on tax information exchange.
Italy confirms that it has obtained a list stolen from HSBC in Switzerland in 2008 containing information on 7,000 accounts held by Italians totalling around ?5.6 billion.
At the end of the month, Spain?s prime minister, Jos?Luis Rodr?uez Zapatero, warns of an imminent tax increase, dubbed a ?millionaire tax?, which would affect taxpayers with a ?high economic capacity?.
The UK Emergency Budget delivered by new coalition government sees capital gains tax increase from 18% to 28% for higher rate band taxpayers and a VAT rise of 2.5% to 20% from 4th January 2011.
As part of its pension reforms France announces a series of tax hikes effective from 2011. Tax increases are targeted at the wealthy particularly those with investment income, stock options and assets to sell.
The Swiss parliament agrees to hand over to the US tax authorities names and details of 4,450 UBS bank account holders belonging to US clients.
The Spanish government announces that it has received details of around 3,000 bank accounts owned by Spanish taxpayers stolen from HSBC private bank in Switzerland.
The Isle of Man endorses the commitment made in June 2009 to move fully to automatic exchange of information under Savings Tax Directive from 1st July 2011. The withholding tax option will be withdrawn ? thus effectively ending banking secrecy for EU residents.
Italy announces that previously undeclared assets repatriated or regularised from abroad by Italian residents during the latest Italian tax amnesty totalled ?104.5 billion.
The German government says it will purchase a stolen data disc containing the names and details of over 20,000 Germans alleged to have evaded taxes in Switzerland.
Tax liabilities can be legitimately reduced with effective tax planning. For reassurance that you are paying as little tax as possible and information on the arrangements available to you in your country of residence, contact an experienced tax and wealth management firm like Blevins Franks.
By Bill Blevins, Managing Director, Blevins Franks
13th December 2010