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Serbia To Protect Taxpayers' Rights Under FATCA

by Lorys Charalambous,, Cyprus

20 August 2014

Serbia's Information Commissioner has warned that banks must have the full consent of customers before information is passed to US tax authorities under the terms of FATCA, and that it would be illegal for customers to be declined services if they refuse to give consent.

The comments were made by Rodoljub Sabic after the National Bank of Serbia (NBS) said that it would soon be obligatory to pass on financial details, once the Foreign Account Tax Compliance Act (FATCA) was fully in force. Commercial banks are already asking customers for permission to transfer data. FATCA is intended to ensure that the IRS obtains information on accounts held abroad at foreign financial institutions by US taxpayers, and those that refuse to comply face financial penalties in their dealings with the USA.

However, Sabic argued in a statement that for Serbia to adopt FATCA, there would need to be an international treaty between Serbia and the USA, ratified by the National Assembly, in order to align the two countries' legislation. He explained: "No one can implement national legislation of another country at the territory of the Republic of Serbia which is contrary to the legislation of the Republic of Serbia."

Sabic also observed that the USA is not party to the Council of Europe's Convention 108, meaning that the transfer of personal data across borders would still require the Commissioner's consent. He explained that all requests for transfer in such circumstances would have to accord with Article 53 of Serbia's Law on Personal Data Protection.

The Commissioner further emphasized that in cases where bank customers do give consent for data transfer to the USA, the consent is only valid if it is given freely and with a full understanding of the grounds, scope, purpose and consequences of the data processing. Any data processing that fails to meet these standards is illegal and contrary to the Law on Personal Data Protection, he said.

Sabic conceded that denying services to a customer for refusing to give consent does not fall within the competencies of the Commissioner, but he said he believed that this would also constitute a violation of the law. In particular, he suggested that the NBS would have to act in such cases.

TAGS: Foreign Account Tax Compliance Act (FATCA) | FATCA | banking | Serbia | Compliance | Tax

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