In the framework of the ongoing debate on the Austrian banking secret it sometimes goes unnoted that the other EU countries, with the exception of Belgium and Luxembourg, are already closely following the European directive on taxation of savings income in the form of interest payment and therefore observe their obligation to report the interest payments. This means that interest payments to natural persons with residence in the EU are automatically reported to the respective tax offices.
In contrast to capital gains obtained in Austria, which are automatically liable to withholding tax, capital gains realized by a person residing in Austria, derived from the possession of accounts or stock deposits held abroad, have to be included in the individual tax return and subjected to a special tax rate of 25% even if they have already been subject to withdrawal tax abroad. The same holds true for profits derived from speculations.
Those who have not yet included capital gains in their tax return must be aware that following the introduction of the directive on interests this circumstance might not be hidden from the Austrian tax administration.
As a result of the obligation to report interest payments, the local tax office will be able to determine easily if the interest income realized abroad is included in the tax return. The Austrian authorities can ask the European counterparts further information in case of doubts. Even though the European directive refers only to interest payments, the Austrian authorities usually control also dividend payments, gains deriving from investment funds or profits on realisation.
The subsequent taxation of  capital gains obtained abroad and non declared does not only have to be paid for the year to which the report of interest payments by a foreign authority refers, but for all taxation years not yet concluded and therefore for up to 10 years.
Not including capital gains received abroad in the tax return entails normally also penal sanctions.  Fines of up to the double amount of the owed amount may be imposed. In theory it is also possible to impose a prison sentence of 2-3 years. Punishment can be avoided by a self indictment.