During its meeting of March 13, 2018, the EU Economic and Financial Affairs (ECOFIN) Council reached a political agreement on a draft Council Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements. The Directive will require intermediaries such as tax advisors, accountants and lawyers that design and/or promote tax planning schemes to report schemes that are considered potentially aggressive. The draft directive is aimed at preventing aggressive tax planning by enabling increased scrutiny of the activities of tax intermediaries.
The EU-member states will be required to automatically exchange the information they receive through a centralised database. This will enable new risks of tax avoidance to be determined earlier and measures to be taken to block harmful arrangements.
Member states will be obliged to impose penalties on intermediaries that do not comply with the transparency measures.
According to a press release issued by the ECOFIN Council in this respect, the draft directive establishes 'hallmarks' to identify the types of schemes to be reported to the tax authorities. The requirement to report a scheme won't imply that it is harmful, only that it may be of interest to tax authorities for further scrutiny. Whilst many schemes have entirely legitimate purposes, the aim is to identify those that do not.
Next steps
According to the press release issued, the Council will adopt the directive without further discussion once the text has been finalised in all official languages.
Member States will have until December 31, 2019 to transpose it into national laws and regulations.
The new reporting requirements will apply from July 1, 2020. Member states will be obliged to exchange information every three months, within one month from the end of the quarter in which the information was filed. The first automatic exchange of information will thus be completed by October 31, 2020.
Click here to be forwarded to the draft Council Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.
Click here to be forwarded to a Q&A on the new tax transparency rules for intermediaries as published by the European Commission in June 2017.
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