Introduction of the CRS in the UAE – your UAE bank as a henchman of the European tax offices

 

By 1 January 2018 at the latest, the dream of many financial authorities in most countries of the world will come true: they will automatically and without any action on their part, receive information about their citizens and companies that have bank accounts abroad. It is admirable how few (German-speaking) clients react to this innovation.

How long have you been an expat in the UAE?

When you moved here from your home country, you certainly announced your old home address when you opened your VAE Bank account. This is sufficient to oblige the bank, which opened your account, via the UAE tax authorities, to the tax office in your home country. And not only your name and account number will be made known, but also all transactions on the account.

We have discussed with several UAE banks whether this information will also be disclosed if the account holder can be proven to have moved to the UAE and has a verifiable residence here. The answer was unanimous: as long as information about the home country appears in their (bank) file, they will report it, no matter how long the customer has lived in the UAE.

Maybe some expats won’t care much if data is transferred to the tax office of their home country, because many don’t plan to move back to their home country in the near future or ever again.

However, caution is advisable: if one day a move to one’s home country is nevertheless planned, the tax authorities could be confronted with unpleasant (personal) questions if they receive annual reports on all account movements and transactions as a result of the reporting obligation – even if for the first time there are no direct tax liabilities. When you return home, you are an open book for tax offices. If you have earned well and invested your money, you will have to pay tax on the income, including rents in front of acquired flats, etc., and on the income from your property.

And to make the tax liability dependent not only on the residence but also on the citizenship (as e.g. for US citizens) is not yet dismissed. There are also strong tendencies in the EU to implement this.

What can you do?

  1. When opening a bank account in the UAE, only the “Resident Data” (address, Utility Bill in the UAE) shall be provided, even if the Bank insists on obtaining at least one telephone number in your home country.
  2. for existing accounts, ask the bank to verify that you have no connection with your home country and that the old information is to be deleted. Maybe you are lucky.
  3. If the bank refuses, close the old accounts. But if you open a new account with the same bank, the old data will be transferred.

The next few months will show exactly how the introduction of the CRS in the UAE will proceed and how many “black accounts” will actually be disclosed to the countries of origin of the account holders. In any case, it is advisable to keep abreast of current developments within the UAE and internationally.

Since the banking structure in the UAE is not very customer-friendly at the moment anyway and account openings take up to six months, we recommend moving to other countries. For example, banks in Mauritius can currently be recommended or trust structures in Singapore.

If you have any questions on this subject or need help with other legal problems, please contact office@slglaw.cc or tel: +971 7 236 4530.