Law No. 4/2020 “On Automatic Exchange Of Financial Accounts Information”

Ligj Nr. 4/2020 Për Shkëmbimin Automatik Të Informacionit Të Llogarive Financiare

Share this post

Posted by: admin Comments: 0 2

Following the ratification of the Convention on Mutual Administrative Assistance on Tax Matters and the adoption of the Multilateral Agreement on the Automatic Exchange of Financial Accounts Information, the Albanian Parliament adopted the law no. 4/2020 “On Automatic Exchange of Financial Accounts Information” which provides an obligation for Financial Institutions to report annually to the Albanian tax authorities information on Reportable Accounts (individuals or economic units, resident in another Jurisdiction).

Principal provisions regarding Law no. 4/2020

Purpose: The law aim is the automatic exchange of financial account information, in order to combat tax evasion, avoid tax fraud and the deposit of money abroad. Financial institutions collect and report financial information to the tax authorities regarding account holders who are residents in other states in order to prevent fiscal evasion and fraud.

To whom it is addressed: The information that will be exchanged is not only about individuals, but also about companies and NFEs (non-financial entities) which have beneficiary resident in other countries. There is an exception for clients who are not defined as “reportable persons”. These are financial institutions, government entities, international organizations, central banks, corporations whose shares are regularly traded in one or more stock markets.

What is reportable information: The information exchanged includes balances of financial accounts at the end of the year, capital gains (including interest, dividends, rights and income from the sale of financial assets), reported to governments by financial institutions, including trusts and foundations.

Specifically: The reporting of financial accounts includes data on the account holder as well as data on the account to be reported to the tax authority like:

For individuals:

  • Name
  • Address
  • Residence jurisdiction (s)
  • Tax identification number (s)
  • Date and place of birth
  • Account number (s) deposits, bank account etc
  • Account balances or values ​​until the end of the year or date of closure of the account
  • The total gross amount of income, dividends or other revenue generated in relation to the assets held in the account, as well as the total gross income from the sale or repurchase of financial assets, in each case paid or credited to the account during the year or other reporting periods

In the case of companies, the person responsible declares:

  • Name
  • Address
  • Residence jurisdiction (s)
  • Tax identification number (s)
  • Date and place of birth

Account holders are required to submit a Self-Declaration near the financial institutions in order to clearly define their tax residence (s) and their tax identification number (s).

Penalties: Article 12 of the law, provides penalties as follows:

c) failure to provide the information required by the holder of a bank account or other responsible person, contrary to the requirements of the law and forthcoming sublegal acts, unless this information relates to a third party and it is proven that the omission was not intentional, is punished with a 1 000 000 (one million) ALL fine;

ç) the false declaration by the holder of a bank account or other responsible person, contrary to the requirements of the law and forthcoming sublegal acts, is punished with a 1 500 000 (one million five hundred thousand) ALL fine.

How is automatic data exchange done? Financial institutions collect information on resident clients for tax purposes abroad and send it once a year to the tax authorities. The latter automatically shares the data obtained with the competent authorities of the countries that are member of the Convention, in compliance with the Convention provisions.

What happens to the data being exchanged? Account holder data can only be used for tax purposes, and in any case data protection is guaranteed.

To what extent does automatic data exchange affect you? All persons who are fiscal residents in a country in which the automatic exchange of information on financial accounts is in force and who have a bank account in Albania, are included in the field of application of this law.

For further information about the countries that are part of the Automatic Exchange of Information, please follow the link.

Leave a Reply

Your email address will not be published. Required fields are marked *