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Financial Account Information Exchange (AEOI) Regulation in Taiwan

Overview

The Financial Account Information Exchange (AEOI) regulation aims to facilitate the automatic exchange of financial account information between jurisdictions. This article outlines key terms and conditions used in the context of AEOI in Taiwan.

Reportable Accounts

  • Definition: Accounts held by Reportable Persons or Passive NFEs with Controlling Persons who are Reportable Persons.
  • Identification: Identified through due diligence procedures.

Reportable Person

  • Definition: A resident regulated by tax laws in a Reportable Jurisdiction (a country/jurisdiction that has a tax information exchange treaty/agreement with Taiwan).
  • Inclusions:
    • Estates of decedents that were residents of a Reportable Jurisdiction.
  • Exceptions:
    • Corporations regularly traded on an established securities market.
    • Governmental Entities.
    • International Organizations.
    • Central Banks.
    • Financial Institutions.

Reportable Jurisdiction

  • Definition: A country/jurisdiction that has a tax information exchange treaty/agreement with Taiwan for automatic exchange of financial account information.

Foreign Accounts

  • Held or Jointly Held by:
    • Foreign Residents.
    • Passive NFEs with Controlling Persons who are Foreign Residents.
  • Foreign Resident: Defined similarly to a Reportable Person but includes foreign jurisdictions.

Controlling Persons

  • Definition: Natural persons exercising control over an Entity (determined in the order of: directly owning >25% of shares/capital, exercising control through other means, holding senior managing official positions).
  • Inclusions for Trusts and Similar Legal Arrangements:
    • Settlors.
    • Trustees.
    • Protectors.
    • Beneficiaries.

Active NFE

  • Definition: A Non-Financial Entity (NFE) meeting certain conditions:
    • Less than 50% of gross income from passive activities.
    • Less than 50% of assets produce or are held for non-active business income.
    • Stock regularly traded on an established securities market, etc.

Regulation Goals

The regulation aims to identify Reportable Accounts and their holders while excluding certain entities and individuals that do not meet the criteria for being considered Reportable Persons. The goal is to facilitate automatic exchange of financial account information between jurisdictions.