2015 Banking Package

The so-called “Banking Package” adopted by the National Council on 7 July 2015 covers the following new acts and amendments to existing acts:

  • Amendment of the Banking Act (Bankwesengesetz, (BWG) and the Financial Crimes Act (Finanzstrafgesetz, FinStrG)
  • Act on the Register of Accounts and the Viewing of Accounts (Kontenregister- und Konteneinschaugesetz, KontRegG)
  • Capital Outflow Reporting Act (Kapitalabfluss-Meldegesetz) (obligation to report capital inflows and outflows)
  • Common Reporting Standard Act (Gemeinsamer Meldestandard-Gesetz, GMSG)
  • Amendment of the EU Administrative Assistance Act (EU-Amtshilfegesetz) and amendment of the Administrative Assistance Implementation Act (Amtshilfe-Durchführungsgesetz)

The elements set forth in section 38, para. 2 BWG, for piercing bank secrecy have been amended and expanded:

  • As was previously the case, bank secrecy may be pierced in criminal trials by public prosecutor’s offices and courts (on the basis of a directive by the public prosecutor’s office with court approval pursuant to section 116 of the Code of Criminal Procedure (Strafprozessordnung, StPO)).
  • Piercing of bank secrecy by financial crime authorities in a financial criminal trial on account of wilful financial offences à to date, a notification by the financial criminal authority was necessary; with the amendment, a mere written request for information by the financial crime authority to the bank is sufficient. Such request for information requires a directive by the chairperson of the trial board (Spruchsenat). The bank is not entitled to any legal remedies against this directive. The accused and the persons authorised to make dispositions under the business relationship can lodge an appeal against this directive with the Federal Financial Court. If the Court rules that the directive is inadmissible, the information provided may not be used.
  • In addition, access to information protected by bank secrecy has been expanded
    • for the Federation’s tax authorities with respect to the reporting obligation and provision of information under the KontRegG,
    • with respect to the reporting obligation under the Capital Outflow Reporting Act,
    • to the piercing of bank secrecy for the purpose of the automatic exchange of information about financial accounts (GMSG).

Establishment of the Register of Accounts by the Federal Ministry of Finance (BMF) and transmission of data by banks

    • Affected is deposit, current-account, and custodial business by natural persons and legal entities/companies
    • Logging by the bank of key account data (personal identification, account/custodial account number(s), date of opening and closing, name of the bank), but not account balances or account transactions, in the Register of Accounts
    • Affects persons, fiduciaries, and economic owners who have representational authority
    • For numbered savings passbooks, the identified customer must be reported as the account holder
    • (Otherwise anonymous) savings accounts and custodial accounts must be reported if the customer’s identity was established within the meaning of section 40 BWG
    • Arrangements for putting the Register of Accounts into operation are addressed by ordinances – initial transmission of data as of 1 March 2015
  • Penalties: wilful violation of the transmission obligation: EUR 200,000; in the case of gross negligence: EUR 100,000

Information from the Register of Accounts

    • Electronic viewing right for criminal courts, public prosecutor’s offices, financial crime authorities, tax authorities (revenue offices, customs offices, BMF), and the Federal Financial Court.
    • No legal remedies for the customer against adoption in the Register of Accounts. Affected persons or legal entities/companies have the right to information about which data concerning them was adopted in the Register of Accounts (query through FinanzOnline). The taxpayer is notified about viewings of the Register of Accounts (through FinanzOnline).
    • In the procedure for assessing personal income tax, corporate income tax, and value-added tax (“normal tax return”), viewing and information are generally impermissible. However, if the tax authority has reservations about the accuracy of the tax return and initiates an investigation (“reservation proviso”), the taxpayer is first to be given an opportunity to comment.


Request for information from banks (account viewing)

    • Affects all data from the business relationship.
    • The request for information can be made in the course of an official investigation. Prerequisites:
      1. legitimate doubts about the accuracy of the details provided by the taxpayer,
      2. if it can be expected that the information is capable of resolving the doubts, and
      3. it can be expected that the interference with the bank customer’s protected confidentiality interests associated with the providing of information is not disproportionate to the purpose of the investigative measure.


Legal remedies

    • The request for information must be signed by the head of the tax authority.
    • Persons who are not account holders must be given the opportunity to comment.
    • The Federal Financial Court rules through individual judges by means of an order on the approval of an account viewing.
    • A legal remedy (appeal) may be lodged against the order of the Federal Financial Court.
    • If the Federal Financial Court rules that the account viewing was improperly approved, then with respect to the evidence gleaned from such account viewing, a prohibition of use applies in the tax proceedings in which the information was requested.
    • In addition, establishment of a legal-remedies officer to safeguard the legal remedies in tax proceedings.

Obligation to report capital outflows

  • Required to be reported are capital outflows of amounts of at least EUR 50,000 from accounts or custodial accounts of natural persons. Exempt are capital outflows from business accounts of companies and from escrow accounts of attorneys, notaries, tax advisors, or auditors.


„Capital outflow“:

    • Disbursement and bank transfer of demand deposits, term deposits, and savings deposits,
    • Disbursement and bank transfer in connection with the provision of payment services (or in connection with the sale of Austrian Federal bonds),
    • Transfer of ownership of securities by means of gifting in Austria, and
    • Relocation of securities in foreign custodial accounts.
  • Conversion of an existing account to a business account, as well as bank transfer from a private account to a business account, constitute capital outflows.
  • The reporting obligation applies irrespective of whether the capital outflow is made in a single step or in several steps that are manifestly connected.
    • Pursuant to section 40, para. 1, no. 2 BWG, the “manifest” connection should be estimable.
  • The report must contain
    • First name, last name, date of birth, address, and country of residence, and
    • Account number or custodial account number and the relevant amount.
  • The report must be submitted by the last day of the month following the capital outflow. The reporting obligation for the period 1 January 2016 to 31 December 2016 must be met on or before 31 January 2017.
  • The reporting obligation must be met for the first time for the period 1 March 2015 to 31 December 2015, with the report having to be submitted on or before 31 October 2016.
  • Penalties: wilful violation of the reporting obligation: EUR 200,000; in the case of gross negligence: EUR 100,000.


Obligation to report capital outflows

  • Covers outflows from Switzerland and Liechtenstein over EUR 50,000 to accounts and custodial accounts of natural person and Liechtenstein foundations or foundation-like establishments (Anstalten).
    • Capital outflows from Switzerland for the period 1 July 2011 to 31 December 2012
    • Capital outflows from Liechtenstein for the period 1 January 2012 to 31 December 2013
  • Filing of reports on or before 31 December 2016
  • If a capital outflow of at least EUR 50,000 to an account or custodial account occurred during the reporting period, all other outflows that occurred during the reporting period must also be included in the report.
  •  The report must contain
    • First name, last name, date of birth, address, and country of residence, and
    • Account number or custodial account number and the relevant amount.

Subsequent taxation of capital outflows required to be reported

  • Holders of accounts or custodial accounts into which were booked capital outflows that are required to be reported can give the bank subject to a reporting obligation irrevocable written notice by 31 March 2016 to undertake the subsequent taxation of these assets by means of a one-time payment in final settlement.
  • The requisite amount of money must be made available to pay for it.
  • The one-time payment amounts to 38% of the assets required to be reported.
  • To be withheld and remitted by the bank subject to a reporting obligation on or before 30 September 2016 -> if the one-time payment is made,
  • the reporting obligation does not apply to the underlying inflow.

  • The tax office responsible for assessing corporate income tax is to be notified about the making of the one-time payment within one month of the expiry of this period.
  • The bank must issue to the holder of the account or the custodial account certification about the making of the one-time payment.
  • Once the one-time payment is fully credited to the bank’s tax-remittance account, all tax-law claims concerning the relevant inflows are generally considered satisfied, with immunity from prosecution with respect to the associated financial offences.
  • Exceptions:
    • if there is a predicate offence for money laundering, or
    • the tax or financial crime authorities have specific evidence in this respect and the taxpayer is aware of this, or
    • tax investigations are being undertaken by the tax or financial crime authorities or actions in prosecution thereof have already commenced.
  • If the holder of the account or custodial account lacks the sufficient amount of money, the bank must set a four-week deadline for them and demand that they provide the sufficient amount of money by 29 September 2016. If the bank is unable to withhold the one-time payment in full due to lack of liquid assets, the bank must meet its reporting obligation on or before 31 December 2016.

Covers the automatic, electronic reporting of data required to be reported to the revenue authority, which forwards such data to the relevant foreign financial authorities.

  • Affected are both natural persons and legal entities/companies
  • Data required to be reported are
    • Name of the investor
    • Address
    • Country/countries of residence
    • Tax identification number(s)
    • Date and place of birth (for natural persons)
    • Account number(s)/custodial account number(s) – deposit, current-account, and custodial business
    • Account balances/values as at year-end
    • Income and sales proceeds
  • The GMSG distinguishes duties of care
    • for “existing accounts” of natural persons
      sections 10-28 GMSG
    • for “new accounts” of natural persons
      sections 29-32 GMSG
    • for “existing accounts” of legal entities
      sections 33-42 GMSG
    • for “new accounts” of legal entities
      sections 43-46 GMSG
  • Distinction in existing accounts/new accounts -> cut-off date 30 September 2016/1 October 2016
  • Deadlines/dates
    • Annual report by the bank by 30 June of each year with respect to account data for the previous calendar year -> Forwarding to the BMF on or before 30 September to the responsible authorities in the participating countries.
    • For new accounts of natural persons and legal entities between 1 October 2016 and 31 December 2016 -> initial reporting obligation to BMF by 30 June 2017
    • For new accounts of natural persons and legal entities after 1 January 2017 -> reporting obligation to BMF by 30 June 2018
    • Existing accounts of natural persons with a high value (more than USD 1,000,000) as at 30 September 2016 must be identified by 31 December 2017 and reported for the first time by 30 June 2018 (concerning account data from 2017).
    • Existing accounts of natural persons with a low value (up to USD 1,000,000) as at 30 September 2016 must be identified by 31 December 2018 and reported for the first time by 30 June 2019 (concerning account data from 2018).
    • Existing accounts of legal entities with a high value (more than USD 250,000) as at 30 September 2016 must be identified by 31 December 2018 and reported for the first time by 30 June 2019 (concerning account data from 2018).
    • Existing accounts of legal entities with a low value (up to USD 250,000) are not required to be reported (value threshold).


Amendment of the EU Administrative Assistance Act (EU-Amtshilfegesetz) and amendment of the Administrative Assistance Implementation Act (Amtshilfe-Durchführungsgesetz)

The implementation of Directive 2014/107/EU as regards mandatory automatic exchange of information in the field of taxation also requires corresponding amendments to the EU Administrative Assistance Act (EU-Amtshilfegesetz, EU-AHG) and the Administrative Assistance Implementation Act (Amtshilfe-Durchführungsgesetz, ADG).

 

Version: July 2015

Disclaimer

Our official languages for communications are German and English. This document is intended as additional information for our investors and is based on the state of knowledge of the persons charged with creating it as was extant on the publication date. Our analyses and conclusions are of a general nature and do not take into account the individual requirements of our investors with respect to yield, tax matters, or risk tolerance. Please be aware that in addition to the described opportunities, an investment in securities also entails risks. Complete information (base prospectus, terms and conditions, WAG 2007 customer information) about the products of Erste Group Bank AG is available at the issuer’s office at Graben 21, in 1010 Vienna during normal business hours. No liability for printing mistakes and errors.
Version: July 2015