Tax havens are now sharing information about persons benefiting from them

Over the past three years, Poland has been hard at work expanding its network of bilateral treaties regulating exchange of tax information. What are the factors driving this trend?

Countries and territories named on the grey list of the OECD (a sort of name-and-shame instrument directed at jurisdictions which do not comply with international standards for exchange of tax-related information) may be struck from this list provided that they have executed at least twelve bilateral treaties concerning such exchange. This has proved to be an effective incentive for a spike in newly executed treaties, also ones involving Poland. Treaties between Poland on the one hand and, respectively, Andorra, Gibraltar, the Isle of Man, Jersey, Guernsey, and San Marino on the other are already in force. Eight more – with the Commonwealth of Dominica, Grenada, Belize, Bermuda, the Bahamas, the British Virgin Islands, the Caymans, and Liberia – are now awaiting ratification.

Two treaties executed by Poland in 2013 – with Bermuda and with the Bahamas – warrant a closer look. These instruments provide legal grounds for mutual disclosure of information concerning, for example, tax assessments and collection, tax arrears and their enforcement, and investigations and prosecutions relating to tax-related offences.

The treaty with Bermuda (for purposes of which Poland’s counterparty was acting with authorisation from the government of the United Kingdom of Great Britain and Northern Ireland) provides for exchange of information only upon request, meaning that neither of the parties may proffer information of its own accord and that no information passes back and forth on an automatic basis. In the case of Poland, the treaty refers to personal income taxes and to corporate income taxes, and in the case of Bermuda – to any and all direct taxes, whatever their type or formal designation. The same basic characteristics – information on request only, PIT and CIT for Poland, all taxes for the other party – arise in the case of the treaty with the Bahamas.

The scope of information covered by both these treaties is quite broad, encompassing data about the legal and beneficial owners (along the entire ownership chain) of companies, partnerships, trusts, foundations, and other entities sourced from banks, from other financial institutions, and from other parties acting as plenipotentiaries or trustees.