Tax Secrecy vs Exchange of Tax Information

Access by tax authoroties to new beneficial ownership register

Pursuant to a new EU directive, a beneficial ownership register has been adopted in Austria (see Mandatory registration of beneficial owners Introduced for all Czech entities, page 41). Based on the proposed draft of the Austrian Beneficial Owner Register Act, implementing the new EU Directive and Art 1 of the EU Directive 2016/2258 regarding access for tax authorities to such a register, access in tax matters to the register is provided to:

• criminal prosecutors and criminal courts in criminal tax cases;
• criminal tax authorities and tax courts in administrative criminal tax cases; and
• tax authorities and tax courts for tax matters, but only if this seems appropriate and proportionate in the respective case.Non-compliance with the obligations to report relevant information to the Austrian register authority is subject to criminal tax prosecution according to the Austrian Fiscal Criminal Act (FinStrG).

Access for tax authorities to Austrian bank account information

What is a bank account registry?It is a centralised registry for all bank accounts and deposits (Kontenregister) in Austria, introduced in 2015 and operated by the Austrian Ministry of Finance.

What is the purpose of the registry and who has access?
The purpose is to provide information about existing bank accounts and deposits to criminal prosecutors, financial criminal authorities and tax authorities. Tax authorities generally have access only for the purpose of levying taxes if it is appropriate and proportionate. Access to income tax and VAT is restricted to cases where misinformation is suspected.

What does the registry contain?
(i) The accountholder's name, address, place of residence, and date of birth (in  the case of individuals);(ii)  the account or deposit number;
(iii) the account or deposit opening / closure dates;
(iv) the name of the credit institution or the depositary; and
(v) information about trustors, beneficial owners and persons with authority over the account or deposit.

The account registry does not contain information about account movements and underlying transactions, and the account or deposit balance (sensitive information).

May tax authorities request sensitive information from credit institutions?
Tax authorities may also request sensitive information in qualified circumstances if (i) there are reasonable doubts regarding the correctness of information provided by the taxpayer, (ii) the requested information is expected to alleviate such doubts, and (iii) the request is proportional. A request regarding income tax and VAT is only possible after a formal request for clarification with a taxpayer's opportunity to comment.

What effect do bank secrecy rules have on access to the registry?
Tax authorities have access to the bank account registry and to sensitive information related to bank accounts due to an exemption from the Austrian bank secrecy rules.

How is privacy protected?
Every request for personal data by the authorities must be recorded. Every affected person has the right to information and every request has to be reported to the respective taxpayer. Access to sensitive information is only granted based on a decision by the Federal Tax Court, which may be appealed to a senate at the Federal Tax Court. An Officer for Legal Protection is responsible for safeguarding compliance with the legal procedure.

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This article was written by Mario Perl and Emilia Lhotka