sexta-feira, março 19, 2010

Regularization of Assets Held Abroad (RERT II)

The Proposal contains an exceptional regime aiming at the regularization of assets held abroad (the RERT II).

This tax amnesty programme, which does not require the physical transfer (repatriation) of the capital and assets held by resident individuals to Portugal (please be aware that an amendment was inserted defining that this applies only if those assets are located in EU or EEA, on the contrary if the assets are situated outside EU or EEA this means that is necessary repatriate it to benefit from this amnesty), applies to deposits, securities and other financial instruments, including investment fund units and life insurance policies held abroad (except those held in countries or territories deemed non-cooperative by the Financial Action Task Force – presently none).

An eligible taxpayer who intends to take advantage of the scheme should file a confidential statement until 16 December 2010 with respect to the eligible investments with the Portuguese Central Bank or any other Portuguese-based bank using a special form, together with documentation attesting the ownership, deposit and registration of such investments.

The eligible taxpayer is required to pay a tax equal to 5% of the value of the relevant investments as disclosed in the confidential statement.

Finally, an eligible taxpayer who regularizes foreign investments creates a protective shield (up to the value reported in the statement) from all tax obligations and as well infringements committed up to 31 December 2009 (unless measures against such infringements have already been initiated by the tax authorities).

Criminal sanctions not having a fiscal nature (including, for example, money laundering sanctions) remain applicable with respect to the regularized capital and assets.

In a certain way this regime is similar to those applicable in Italy and United Kingdom.

In Italy, the voluntary disclosure regime establishes the following rule: the taxpayers who repatriate or regularize their undeclared foreign assets within February 28, 2010 pay a 6 percent flat tax on the fair market value of the repatriated or regularized assets.

Moreover taxpayers who repatriate or regularize their undeclared foreign assets within March 31, 2010 pay a flat 7 percent tax.

These rates of 6% and 7% were a result of the fact that on December 17, 2009 the Italian Government passed a decree which extended the deadlines for the Italian voluntary disclosure program.

Before December 17, 2009, the Italian tax amnesty established a 5% flat tax on the fair market value of the undeclared assets.

It was reported that the Italian tax administration suggested that more than 35 percent of Italian investments in Switzerland are being repatriated under the amnesty.

In connection with the unreported foreign assets disclosure program, new penalties have been enacted for failure to report foreign investments. The new penalties are equal to minimum of 200 to a maximum of 400 percent of the unpaid tax on unreported foreign investments and 50 percent of the fair market value of the unreported foreign assets.

In relation to the United Kingdom, the HMRC’s Offshore Tax Amnesty or ‘New Disclosure Opportunity’ (NDO) started at 1st of September 2009 and it will be applicable until the 12nd of March 2010.

Whilst the first tax amnesty that HMRC ran only focused on five main high-street banks in the UK with offshore subsidiaries, this NDO is targeting UK residents who have offshore accounts operated by approximately 250 banks and other financial institutions which also have an onshore presence in the UK.

The NDO basically means that instead of penalties of up to 100% of the tax owed most people who make a disclosure by the deadline will pay a penalty of just 10% along with the missed tax and interest.

In some cases, such as where HMRC has already sent an individual a letter about their tax affairs, a penalty of up to 20% may be charged.

If the tax owed is less than £1,000 then penalties may be waived although interest will be charged in all cases, and tax owed will have to be paid in full.

Penalties for an incorrect or incomplete disclosure are likely to be at least 30% and could be higher.

Finally, the disclosure can be a personal disclosure or a disclosure on behalf of another taxpayer for example a company, trust, deceased person.

Miguel Primaz
Tax Lawyer
February 19, 2010

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