Israeli Banks Gird for European Anti-Tax Evasion Measures


Word of coming aggressive action by some European countries against tax evaders has prompted Israeli banks to gird themselves for new regulation, Globes reports.

The banks in Israel are taking a more suspicious attitude toward customers from France, Germany and the UK, where tough new rules would require Israeli banks to comply.

For example, the banks are investigating why some customers refuse to receive mail from them, indicating that they want no evidence of holding bank accounts in Israel. As a precaution, some banks have already reduced cooperation with European customers.

Legislation to thwart tax evasion has already been enacted in the U.S., set to come into effect in June 2014. The U.S. Foreign Account Tax Compliance Act (FATCA) requires financial institutions worldwide to report on accounts and assets that they manage for U.S. citizens in order to collect taxes even if they are not residing in the U.S.

This law requires banks worldwide to identify all their customers that have U.S. citizenship, sign them up on the appropriate forms, and pass them on to the U.S. authorities, and where necessary deduct 30% tax at the source.

The accompanying result of FATCA is the outflow of capital from Israeli banks. Globes estimated three months ago that U.S. customers had withdrawn close to $5 billion from Israeli banks. Some has been used to buy real estate, while other sums have been moved to banks overseas.

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