Tax Information Exchange Agreements (TIEAs) - And How They May Affect You

Understanding exactly what Tax Information Exchange Agreements (TIEAs) are, and how they may affect someone who is either thinking of discretely depositing their money in an offshore bank account, or for someone who may have already of done so, has now become a must. With a clear understanding of TIEAs, costly mistakes can easily be avoided by choosing the best destination where to deposit money.
TIEAs, are government treaties that allow one country the right to request banking information from another, about residents who they believe may owe taxes. A request can be either based solely on suspicion, or violation of tax laws. Government to government requests for such information have now become much more common, forcing banks to break their previously strict privacy laws under the threat of being closed down if they do not comply.
A recent example of this is where the USA, together with various other European countries, led a large-scale investigation into thousands of foreign bank account holders who were suspected of evading taxes by depositing their money in countries like Switzerland, and Lichtenstein. As a result, many banks which are based in such countries which have TIEAs with other countries, now no longer offer the same amount of privacy to their customers that they previously did.
It it can be demonstrated that taxes have been unpaid on purpose, there is a strong likely hood of some kind of court action being taken against those involved. However, if it can be demonstrated that taxes were unintentionally not paid, then it is more likely that an agreement will be made requiring the taxes to be paid up to date. Agreements usually come hand in hand with a fine, and are based on a percentage of what was owed. Long prison sentences have been handed out in severe tax evasion cases, although they are rarely heard of where agreements were made.
Now, TIEAs have become a serious problem for many wealthy people, leading some to look for alternative ways to discretely deposit their money. Options usually include obtaining a second passport, setting up a complicated offshore trust company, or even leaving the country of origin all together. This would be to find shelter in one of the few remaining countries that still have no TIEAs. Some wealthy people have either lost everything, or are still residing in one of the many prisons around the world that are obliged to look after them, simply for hiding their money away.