Since FATCA, there have been various initiatives by a growing number of countries and organizations to share information in order to improve international tax compliance.
The Common Reporting Standard, otherwise known as the CRS, is the global standard for automatic exchange of financial information as developed and initiated by the OECD. More than a hundred jurisdictions have already agreed on implementing this global standard for the automatic exchange of information between tax authorities. Included among these are many countries which have citizens living in Israel such as the U.S., the UK, Switzerland, Belgium, Canada, Chile, Mexico, Argentina, South Africa and France. As a result of this agreement, banking information will now flow from and to these countries.
Israel declared on October 27th, 2014, its intention to join the CRS by the end of 2018, as part of Israel’s commitment to meet international standards regarding tax enforcement.
In February 2019, the Israeli Income Tax Regulations came into effect enabling the automatic exchange of information regarding financial information in accordance with the CRS standard.
Consequently, Israeli financial institutions will have to identify and file information concerning foreign (non-Israeli resident) account holders, which includes balances, deposits and income received in bank accounts.
According to the CRS regulations (as approved by the Knesset Finance Committee):
Israeli financial institutions would be required to send letters to their relevant account holders regarding the expected transfer of their financial information.
Financial institutions that have found that they do not have reportable accounts in a certain year would be required to file a "nil" report for that year, stating that they do not have any reportable accounts.
Israeli financial institutions would be required to complete the 2017 reporting by 23 June 23, 2019, and the 2018 reporting by September 8, 2019.
The State of Israel will exchange this information with foreign tax authorities through the Israeli Tax Authority, and in return will receive information on bank accounts of Israeli residents in all the jurisdictions that have implemented the CRS (approximately 100 different countries, including known tax havens such as Switzerland, Cayman Islands, and Macau). Israel is expected to exchange, as well as receive information on bank accounts for 2017 and 2018 as early as September 2019.
The content of this article is intended to provide a general guide to the subject matter and is not a substitute for legal consultation. Specific legal advice should be sought in accordance with the particular circumstances.