Automatic exchange of financial information has been activated

The Russian Federation’s participation in the system of automatic exchange of tax information (the Common Reporting Standard), as part of the de-offshorisation process initiated the country’s leadership a few years ago, is one of the most significant recent legal events.

The automatic exchange of information about bank accounts is intended to provide transparency of international accounts held by the country’s tax residents and accordingly assist the tax authorities identify any overseas income.

On 21 December 2017, on the website of the Organisation for Economic Cooperation and Development details were published about the activation by the Russian Federation of the automatic exchange of tax information.  On 28 January 2018 it was confirmed that 73 jurisdictions are ready to take part in the exchange of information with Russia, including Cyprus, British Virgin Islands, Switzerland, Luxembourg, the Netherlands, France, Spain, Germany, Jersey, Guernsey, the Seychelles, Singapore, Latvia, Estonia and Bulgaria. A number of countries also indicated that they would begin sending reports a year later in 2019, including, Switzerland.  Russia has agreed to send information to 56 countries with information to be sent by the Federal Tax Service of Russia starting from 30 September 2018.

Accordingly the activation of the exchange of information means that financial institutions from 73 jurisdictions will send annually to government departments details of bank accounts held by Russian tax residents or entities connected to them; this information can in turn to be transferred to the Russian Federal Tax Service.