Exchange of financial information with Morocco and Turkey
What is CRS?
The exchange of taxpayers’ information between countries based on the Common Reporting Standard (CRS) is a global standard on the automatic exchange of financial data. The CRS is aimed at increasing tax transparency globally. It relates to data such as bank accounts, interest or dividend income, capital gains on investments, life insurance policies and so on.
If you are a Belgian tax resident with assets located in a country that has implemented CRS, we need to stress the importance of complying with your Belgian filing and reporting requirements!
While CRS was already introduced in 2014, the exchange of information has not been implemented in every country simultaneously. It is a process that takes many years, but is now progressively becoming a reality for many jurisdictions.
Morocco & Turkey
Recent developments show that Morocco and Turkey are now also complying with the global CRS standard. While the process is apparently delayed in Morocco due to technical and legislative reasons, it is expected that it will soon exchange financial data with EU countries, including Belgium. The start date of the CRS exchange will be set at September 2021 or September 2022. This is still unclear at the moment.
Turkey, on the other hand, is actively exchanging information as we speak. Turkey has shared financial data for 2019, 2020 and 2021 with the Belgian authorities. We have recently indeed seen a significant increase in Belgian taxpayers with a Turkish bank account that are subject to a tax audit. If you are the beneficiary of a bank account in Turkey who earned interest or dividend income or Turkish pension or rental income, which has not been (entirely) reported, you may soon receive a request for information in the mail.
In case you did not report your bank accounts or earnings (incl. in Turkey and Morocco), to the Belgian authorities, (severe) tax and financial consequences may be the result. This was recently confirmed by the Belgian authorities. When rectifying undeclared foreign income, the tax authorities may impose a 50% tax increase by default. While such non-compliance is automatically labelled as tax fraud, the authorities also mentioned that the actual fine and/or tax increase, will be determined on a case-by-case basis.
If the Belgian authorities receive a CRS notification from abroad that concerns you, you will be able to see it on your online tax file (MyMinFin). If you correctly reported everything in previous years, you may rest assured that this exchange of information will have no further implications for you.
If you do you receive an enquiry from the Belgian authorities, it will most likely be a long list of questions asking you about your different foreign assets, including real estate, different types of accounts, life insurance policies and so on. An additional complexity is that the authorities will often extend the investigation period up to 7 years. It can be a real challenge to simply collect the requested information for that many years, especially as they normally give you only 1 month to reply.
In case you would like our advice on your legal rights or need assistance with a recent enquiry from the Belgian tax authorities, do not hesitate to get in touch.