Reporting interest to home tax authorities

Hi all

Been reading the forum quite a while now and have found the information very useful, and entertaining as well...
My first post, so hope there are some financial experts out there who can shed a bit of light on this.

Read an article in Focus regarding a new EU directive which comes into force tomorrow. Any Interest earned in bank accounts abroad will now be reported to the "home" authorities for tax purposes.

The article concentrated on German citizens (presumably living in Germany) with bank accounts abroad, and how the German tax authorities will now get information on the amount of interest the account earns. This information will be used to tax the interest earned, and should also help them to track down illegal money abroad.

However, there was no mention of foreign citizens living in Germany. I'm curious as to whether "home" authorities (I think "Behoerden des Heimatslandes" was the phrase used) refers to country of citizenship or country of residence?
Anyone know anything about this?

I'm not even sure if I earn interest on my Girokonto, but in principle I don't particularly like the idea of this information being sent to the Irish tax authorities, seeing as I am a German resident, and paying taxes here. Still, I'm beginning to learn that some pretty unusual things can happen to your tax treatment when you move jurisdictions.

it applies to all EU citizens who live somewhere in the EU.

E.g. I'm a brit with a UK (and a German) bank account. I live and work in Germany. The UK banks should, according to this directive, report and interest earned on my UK bank account to the tax authorities in germany. This is the case if you receive gross interest in UK. If I am taxed in the UK on the interest then may be able to avoid paying the tax in Germany (double taxation agreements).

It doesn't apply to
a. non EU citizens residing in the EU
b. EU citizens residing outside the EU

and it also only applies to certain types of investment (e.g. interest on a bank account is included but profits from share dealing are not)

the info won't be sent. If you live in Germany and have a German bank account the Germans have no reason to send the info to Ireland

Thanks for the info.
I checked this with my bank as well and they say the same thing

"unter Heimatland wird hier steuerlich der dauerhafte Wohnsitz verstanden,
an dem Ihr Lebensmittelpunkt liegt und Sie national Ihre Steuererklärung
abgeben."

I'm assuming "dauerhafter Wohnsitz" refers to what we call "residence" for tax purposes (or perhaps "ordinarly residence").

Don't forget now that money laundering regulations require the banks to be pretty damned certain who you are and where you live. The new rules are quite simple. If you don't live in the country you have the bank account, then the bank will report gross interest earned to the authorities in your country of residence. You need to earn quite a lot of interest (€1200 for a single person, double that for a married couple) in Germany before it is subject to tax.

The only possible loopholes may be UK banks where it's more difficult for you to prove your residence as there are no requirements to register your abode. If you have, say a few authoritive letters being sent c/o parents for example that might be enough to persuade a UK bank you actually live there, and thereby avoid the risk of your interest being reported to an other country. Probably a moot point anyway as UK banks deduct tax from interest for all/most UK residents in any case. You can't be double-taxed.

I believe certain offshore accounts (e.g. Channel Islands) are still not currently required to report this interest. This may change, however...

YL6

And you knew I would be in with my tuppence worth:


http://www.lowtax.com/lowtax/html/jje2tax.html

Thanks for that. This probably explains the massive drop of junk mail in my (paper) mailbox from offshore institutions in CI, and the increase in those from UAE...

I know this is a bit late for this thread, but does anyone know if ISA interest is reported or not?
I have a cash part and a stocks and shares part. I would think the stocks and shares gain will not be reported (but what about dividends?) but I would think that the interest on the cash part would be.

Any clue?

thanks.