In a press release of 18 March 2015, the European Commission (“EC”) announced its Tax Transparency Package, including a proposal to broaden the scope of the EU Council Directive (2011/16/EU) on Administrative Cooperation in the field of taxation (known as the “DAC”).
Mandatory exchange of information
The EC has released its proposed modification to the DAC by providing a system for mandatory automatic exchange of cross-border tax rulings and APAs. The previous system, foreseeing in a spontaneous exchange of information on rulings and APAs, has not resulted in the desired outcome.
Tax authorities would now have to share a pre-defined set of information on all of their advance cross-border tax rulings and APA’s automatically with all other 27 tax authorities and the EC, on a quarterly basis, following a standard format. The EC provides a broad interpretation of the concepts of tax rulings and APAs. In addition, the provision would apply to all tax Rulings and APAs concluded during the last ten years.
In its proposal, the EC has clearly recognised privacy concerns and has stated that the information communicated shall be kept confidential in accordance with the provisions applicable to authorities of the European Union.
Other elements of the transparency package
The EC also issued a Communication outlining other legislative and non-legislative elements of the Tax Transparency Package to be rolled out over the next few months, such as e.g. the assessment of new transparency requirements for multinationals and a review of the Code of Conduct on Business Taxation. Finally, the transparency package also includes a proposal to repeal the EU Savings Directive.
Impact for taxpayers
A pre-defined set of information on taxpayer’s tax rulings and APA’s (e.g. name of taxpayer and group, description of the issue addressed in the tax ruling, identification of the member states most likely to be affected, etc.) will be shared with the other member states and the EC automatically in the future.
The Commission calls on Member States to agree on the proposal by the end of 2015, so that it can enter into force on 1 January 2016. However, note that the Member States will still need to reach unanimity in Council.
Additional information with regard to the transparency package can be found here.