The new EU exit/entry system (EES) could lead to investigations into the personal finances of clients who travel abroad.
The new EES border controls came into operation on 12 October, and the system is being rolled out progressively over six months.
The EES stores personal data from non-EU nationals, along with entry/exit details, each time they cross a Schengen border. But on top of just tracking people who overstay their visas, it can also trace people not paying the right taxes.
David Morley, head of wealth structuring at Blevins Franks, a firm which advisers British expats, explained: “Tax authorities will be able to determine if anyone has been living ‘under the radar’ and open an investigation to claim back taxes.
He said that key exemptions from further scrutiny apply, including for residence card holders. Property ownership alone, however, does not provide an exemption. UK resident nationals owning a holiday home in a Schengen country are fully subject to EES registration and the 90-day limit.
“Failing to comply with the tax and/or visa rules can lead to serious consequences, which for taxation range from tax investigations, backdated liabilities, interest and penalties. For immigration, denial of entry or, at the extreme, deportation,” Morley added.
“If a client does not have a current residence permit, and/or has not correctly declared themselves for tax, on their behalf you should seek assistance immediately from someone properly authorised in their country of residence to regularise their status and avoid escalating consequences.”
