COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL An Action Plan to strengthen the fight against tax fraud and tax evasion
Date: 2012-12-06
Institutions: European Commission
Subjects: European tax cooperation, VAT, exchange of information, intergovernmental cooperation (EU), parent company, tax avoidance, tax evasion, tax inspection, third country

EUROPEAN 
COMMISSION 

Brussels, 6.12.2012  
COM(2012) 722 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

An Action Plan to strengthen the fight against tax fraud and tax evasion 

{SWD(2012) 403 final} 
{SWD(2012) 404 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

An Action Plan to strengthen the fight against tax fraud and tax evasion 

1. 

INTRODUCTION 

On 2nd March 2012, the European Council called on the Council and the Commission 
to  rapidly  develop  concrete  ways  to  improve  the  fight  against  tax  fraud  and  tax 
evasion, including in relation to third countries and to report by June 2012. In April 
the European Parliament adopted a resolution echoing the urgent need for action in 
this area. 

As a first response, on 27 June 2012 the Commission adopted a Communication1 (the 
"June  Communication")  which  outlined  how  tax  compliance  can  be  improved  and 
fraud  and  evasion  reduced,  through  a  better  use  of  existing  instruments  and  the 
adoption  of  pending  Commission  proposals.  It  also  identified  areas  where  further 
legislative  action  or  coordination  would  benefit  the  EU  and  Member  States  and 
demonstrated  the  added  value  of  working  together  against  the  increasing  challenge 
posed by tax fraud and evasion.  

The June Communication announced the preparation, before the end of 2012, of an 
action  plan  setting  out  concrete  steps  to  enhance  administrative  cooperation  and  to 
support the development of the existing good governance policy, the wider issues of 
interaction with tax havens and of tackling aggressive tax planning and other aspects, 
including tax-related crimes. 

The Commission is presenting in this action plan, the initiatives the Commission has 
already taken, new initiatives that can be progressed this year, initiatives planned for 
next year and those requiring a longer timeframe. In sequencing these initiatives, the 
Commission  was  mindful  of  the  need  not  to  overload  Member  States  and  to  take 
account of their capacity to take the necessary actions. 

In  essence,  this  action  plan  contains  practical  actions  which  can  deliver  concrete 
results to all Member States and lend support in particular to those Member States to 
whom Country Specific Recommendations2 on the need to strengthen tax collection 
have been addressed, in the context of the 2012 European Semester exercise.  

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COM (2012) 351 final of 27.06.2012 Communication from the Commission to the European Parliament 
and the Council on concrete ways to reinforce the fight against tax fraud and tax evasion including in 
relation to third countries. 
Country-specific recommendations have been addressed to Bulgaria, Cyprus, Czech Republic, Estonia, 
Hungary,  Italy,  Lithuania,  Malta,  Poland  and  Slovakia.  Note  that  Member  States  currently  benefiting 
from  financial  assistance  under  the  European  Financial  Stability  Facility  (EFSF),  the  European 
Financial  Stabilisation  Mechanism  (EFSM)  or  under  the  provisions  of  Article  143  of  the  Treaty  are 
recommended  to  implement  the  measures  laid  down  in  their  respective  Implementing  Decisions  and 
further specified in their Memorandums of Understanding and possible subsequent supplements. This 
concerns Greece, Ireland, Portugal and Romania. 

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Member  States  and  stakeholders  were  consulted  on  the  contents  of  the  action  plan 
and priorities to be given to each item. The plan takes into account their views. The 
strong  message  from  Member  States  was  that  top  priority  should  be  be  given  to 
actions already under development and to the full implementation and application of 
the newly adopted legislation on administrative cooperation and the fight against tax 
fraud.  Member  States  also  emphasised  the  need  to  adopt  quickly  the  pending 
proposals  in  the  Council  and  to  pay  particular  attention  to  the  fight  against  VAT 
fraud and evasion3 4.  

Future  work  on  these  actions  will  be  guided  by  the  need  to  reduce  costs  and 
complexity  of  tax  systems  for  both  the  taxpayers  and  the  tax  administrations.  For 
taxpayers, decreasing costs and complexity would encourage better tax compliance. 
For  tax  administrations,  the  development  and  full  use  of  automated  tools  and  risk 
management techniques would release human and budgetary resources to concentrate 
on achieving targeted objectives. 

The Commission will also continue to promote the most effective use by all Member 
States  of  practical  IT  tools  for  all  taxes.  It  will  also  promote  a  more  joined-up 
approach  between  direct  and  indirect  taxes  and  between  taxation  and  customs  by 
making  appropriate  use  of  the  FISCALIS  and  CUSTOMS  programmes  to  enhance 
communication  and  promote  a  more  systematic  sharing  of  best  practices  and  tools, 
where appropriate. This can help to improve the efficiency of audits and controls and 
reduce the burden on taxpayers.  

All  the  actions  proposed  to  be  taken  up  by  the  Commission  in  this  document  are 
consistent and compatible with the current Multiannual Financial Framework 2007-
2013 and the new Multiannual Financial Framework 2014-2020. 

2. 

BETTER  USE  OF  EXISTING  INSTRUMENTS  AND  COMMISSION  INITIATIVES  TO  BE 
PROGRESSED  

Tax fraud and tax evasion have an important cross-border dimension. Member States 
can  only  address  this  problem  effectively  if  they  work  together.  Improving 
administrative cooperation between Member States' tax administrations is therefore a 
key objective of the Commission's strategy in this area. A number of important steps 
have already been taken. 

1. 

New framework for administrative cooperation  

On  proposals  by  the  Commission  in  the  past  two  years,  the  Council  has  adopted  a 
new  framework  for  administrative  cooperation5.  This  set  of  new  legislative 

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Council conclusions of December 2011 (doc. 9586/12 - FISC 63 OC 213)  
ECOFIN  Report  to  the  European  Council  on  Tax  issues  of  4.12.2012  (doc.  16327/12  –  FISC  166  – 
ECOFIN  949)  and  Council  Conclusions  on  the  Commission's  Communication  of  13.11.2012  (doc. 
16051/12 – PRESSE 465 – PR CO 60) 
Council  Directive  2010/24/EU  of  16  March  concerning  mutual  assistance  for  the  recovery  of  claims 
relating  to  taxes,  duties  and  other  measures  (OJ  L  84  of  31.3.2010,  P.  1);  Council  Regulation  N° 
904/2010/EU of 7 October 2010 on administrative cooperation and combating fraud in the field of value 
added  tax  (OJ  L  268  of  12.10.2010,  P.  1);  Council  Directive  2011/16/EU  of  15  February  2011  on 
administrative  cooperation  in  the  field  of  taxation  and  repealing  Directive  77/799/EEC  (OJ  L  64  of 

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instruments paves the way for the development of new tools and instruments by the 
Commission  and  Member  States.  The  June  Communication  highlights  that  their 
effective  and  comprehensive  use  by  Member  States  is  still  to  be  attained.  Member 
States  must  ensure  a  full  and  effective  implementation  and  application  of  these 
instruments in particular by engaging in enhanced exchange of information.  

2. 

Closing Savings taxation loopholes  

Adopting  the  amendments  proposed  by  the  Commission  in  regard  to  the  Savings 
Taxation  Directive6  will  permit  the  closing  of  loopholes  in  the  Directive  and  thus 
improve the effectiveness of this instrument. This will help Member States to better 
ensure effective taxation of cross-border savings income. It is now up to the Council 
to  adopt  this  proposal  and  give  a  negotiating  mandate  to  the  Commission  to  seek 
corresponding  changes  to  the  existing  savings  taxation  agreements  with  third 
countries.  The  vast  majority  of  Member  States  have  identified  this  issue  as  a  high 
priority.  The  Commission  therefore  urges  the  Council  to  adopt  these  proposals 
without delay. 

3. 

Draft anti-fraud and tax cooperation agreement 

Similarly,  the  Commission  invites  the  Council  to  sign  and  conclude  the  draft  anti-
fraud  and  tax  cooperation  agreement  between  the  EU  and  its  Member  States  and 
Liechtenstein  which  it  presented  to  the  Council  in  20097  and  to  adopt  the  draft 
mandate  for  opening  similar  negotiations  with  four  other  neighbouring  third 
countries.  This  will  allow  the  Commission  to  negotiate  agreements  that  ensure  that 
the same instruments to fight fraud and high standards of transparency and exchange 
of information are available to all Member States.  

4. 

Quick Reaction Mechanism against VAT fraud 

The  Commission  on  31  July  2012  presented  a  proposal  for  a  Quick  Reaction 
Mechanism  against  VAT  fraud8.  If  adopted,  this  proposal  would  enable  the 
Commission to very quickly authorise a Member State to adopt derogating measures 
of  a  temporary  nature  in  order  to  tackle  cases  of  sudden  and  massive  fraud  with  a 
major financial impact. The Council is urged to swiftly adopt this proposal which it 
has identified as a high priority. 

5. 

Optional application of the VAT reverse charge mechanism 

The Commission presented in 2009 a proposal regarding an optional application of 
the  VAT  reverse  charge  mechanism  in  relation  to  supplies  of  certain  goods  and 
services susceptible to fraud9. Only the part of  that proposal relating to greenhouse 

11.3.2011, P.1); Council Regulation N° 389/2012/EU of 2 May 2012 on administrative cooperation in 
the field of excise duties and repealing Regulation (EC) N° 2073/2004 (OJ L 121 of 8.5.2012, P. 1) 
COM (2008) 727 final of 13.11.2008 
COM (2009) 644 final of 23.11.2009 and COM (2009) 648 final of 23.11.2009 
COM (2012) 428 final of 31.07.2012 
COM (2009) 511 final of 29.09.2009 

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gas  emission  allowances  was  adopted  in  March  201010.  The  adoption  of  the 
remaining part of that proposal would allow all Member States to apply the reverse 
charge mechanism under the same conditions in those sectors where it represents the 
most efficient tool against 'carousel fraud', instead of adopting individual derogations 
to the VAT Directive which could have an adverse impact on the fight against fraud 
in other Member States.  

6. 

EU VAT forum  

Both  business  and  tax  authorities  acknowledge  that  the  current  VAT  system  is 
burdensome  to  manage  and  vulnerable  to  fraud.  With  a  view  to  improving  the 
governance of VAT at EU level, the Commission has decided to create an EU VAT 
forum11.  In  this  dialogue  platform  representatives  of  large,  medium  and  small 
businesses and tax authorities can exchange views on practical cross border aspects 
of  VAT  administration,  as  well  as  identify  and  discuss  best  practices  that  could 
contribute  to  streamlining  the  management  of  the  VAT  system,  aiming  at  reducing 
compliance  costs,  while  at  the  same  time  securing  VAT  revenue.  The  Commission 
invites Member States to participate as widely as possible, for the EU VAT forum to 
attain its objectives. 

3. 

NEW COMMISSION INITIATIVES 

Together  with  this  Action  plan,  the  Commission  is  presenting  a  series  of  new 
initiatives that respond to some of the needs identified in the June Communication. 
These initiatives constitute an immediate response to the identified needs to ensure a 
coherent policy vis-à-vis third countries, to enhance exchange of information and to 
tackle certain fraud trends. 

Recommendation regarding measures intended to encourage third countries 

7. 
to apply minimum standards of good governance in tax matters 

The Commission's analysis of the current situation is that Member States recognise 
the  potential  and  actual  damage  caused  by  jurisdictions  not  complying  with 
minimum  standards  of  good  governance  in  tax  matters,  among  which  jurisdictions 
commonly considered as tax havens. 

All Member States have responded in  a different way to this situation.  Taking into 
account  the  freedoms  awarded  to  them  when  operating  in  the  internal  market, 
businesses may structure arrangements with such jurisdictions via the Member State 
with the weakest response. As a result, the overall protection of Member State's tax 
revenues tends to be only  as effective  as the weakest response of any one Member 
State.  This  does  not  only  erode  Member  States'  tax  bases  but  also  endangers  fair 
competitive  conditions  for  business  and,  ultimately,  distorts  the  operation  of  the 
internal market.  

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Council Directive 2010/23/EU of 16.03.2010 amending Directive 2006/112/EC on the common system 
of value added tax, as regards an optional and temporary application of the reverse charge mechanism 
in relation to supplies of certain services susceptible to fraud ( OJ L 72 of 20.03.2010, P.1) 
Commission Decision (2012/C198/05) of 3 July 2012 on setting up the EU VAT forum 

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With a view to tackling this problem the Commission recommends the adoption by 
Member  States  of  a  set  of  criteria  to  identify  third  countries  not  meeting  minimum 
standards of good governance in tax matters and a ‘toolbox’ of measures in regard to 
third countries according to whether or not they comply with those standards, or are 
committed to comply with them. Those measures comprise the possible blacklisting 
of  non-compliant  jurisdictions  and  the  renegotiation,  suspension  or  conclusion  of 
Double Tax Conventions (DTCs). To avoid promoting business with backlisted third 
countries, the Commission invites Member States to take additional complementary 
actions but in full respect of EU law. 

Furthermore, Member States should consider ad hoc detachments of experts to assist 
tax  administrations  in  third  countries  that  commit  to  complying  with  minimum 
standards but are in need of technical assistance.  

This Recommendation is an important practical first step to align the attitudes taken 
by Member States in regard to jurisdictions not applying minimum standards in the 
area  concerned.  To  assess  the  need  for  possible  further  initiatives,  the  Commission 
will re-evaluate Member States' approach and actions in this area within three years 
after the adoption of the Recommendation. 

8. 

Recommendation on aggressive tax planning 

The Commission considers that there is a need to ensure that the burden of taxation is 
shared  fairly  in  line  with  the  choices  made  by  individual  governments.  Currently, 
some taxpayers may use complex, sometimes artificial, arrangements which have the 
effect of relocating their tax base to other jurisdictions within or outside the Union. 
In doing this, taxpayers take advantage of mismatches in national laws to ensure that 
certain  items  of  income  remain  untaxed  anywhere  or  to  exploit  differences  in  tax 
rates. By paying taxes businesses can have an important positive impact on the rest 
of  society.  Aggressive  tax  planning  could  thus  be  considered  contrary  to  the 
principles of Corporate Social Responsibility12. Therefore, concrete steps are needed 
to address the problem.  

Concrete action by all Member States intended to remedy such problems would also 
improve  the  operation  of  the  internal  market.  In  the  light  of  this,  the  Commission 
recommends that Member States take common effective action in this field. 

Specifically,  Member  States  are  encouraged  to  include  a  clause  in  Double  Tax 
Conventions  (DTCs)  concluded  with  other  EU  Member  States  and  with  third 
countries  to  resolve  a  specifically  identified  type  of  double  non-taxation.  The 
Commission  also  recommends  the  use  of  a  common  general  anti-abuse  rule.  This 
would  help  to  ensure  coherence  and  effectiveness  in  an  area  where  Member  State 
practice varies considerably.  

The  EU  tax  Directives  (Directives  on  Interest  and  Royalties,  Mergers  and  Parent-
Subsidiary)  already  allow  Member  States  to  apply  anti-abuse  safeguards.  While 
respecting the EU law, Member States can use these possibilities to avoid abusive tax 
planning.  

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Communication on a renewed EU strategy 2011-14 for Corporate Social Responsibility – COM (2011) 
681 final of 25.10.2011 

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Furthermore,  the  Commission  is  willing  to  contribute  to  work  in  international  tax 
fora such as the OECD to address the complexities of taxing electronic commerce by 
developing appropriate international standards. 

9. 

Creation of a Platform for Tax Good Governance  

The Commission plans to establish a Platform for Tax Good Governance composed 
of experts from Member States and stakeholders representatives to provide assistance 
in preparing its report on the application of the two Recommendations, and in its on-
going work on aggressive tax planning and good governance in tax matters. 

10. 

Improvements in the area of harmful business taxation and related areas 

In  line  with  what  is  set  out  above  and  as  indicated  already  in  the  Annual  Growth 
Survey 201213, the Commission further points out the urgent need for a new impetus 
to  be  given  to  the  work  that  is  currently  discussed  in  the  context  of  the  Code  of 
Conduct for business taxation14 (Code).  

Over  the  past  years,  making progress  and achieving tangible results in the Code of 
Conduct Group charged with the assessment of tax measures that may fall within the 
scope of the Code15 has become increasingly difficult. This relates in part to the fact 
that more and more complex issues are being addressed but also to a need to refine 
and  sharpen  the  expected  results,  the  timetable  for  such  results  and  the  means  of 
monitoring their implementation.  

The Commission therefore calls on Member States to consider actions to improve the 
effectiveness  in  achieving  the  Code's  original  goals,  for  example  by  more  rapidly 
taking topics to Council level when political decisions are urgently needed. The Code 
of Conduct Group currently also discusses the issue of mismatches where solutions 
are  rapidly  needed.  If  such  solutions  to  remove  mismatches  are  not  agreed  and 
implemented  in  line  with  clear  deadlines,  the  Commission  stands  ready  where 
appropriate to make proposals for legislative action instead.  

In addition, in cases where existing Directives are found to provide opportunities for 
aggressive  tax  planning  or  prevent  appropriate  solutions  by  allowing  double  non-
taxation,  the  Commission  will  act16.  Work  should  also  intensify  on  special  tax 
regimes  for  expatriates  and  for  wealthy  individuals,  which  are  harmful  for  the 
operation of the internal market and reduce overall tax revenues.  

For  its  part,  the  Commission  will  continue  to  assist  Member  States  in  ensuring  the 
effective  promotion  of  the  Code  of  conduct  for  business  taxation  in  selected  third 
countries  and  to  promote  fair  tax  competition  globally  by  negotiating  good 
governance  provisions  in  relevant  agreements  with  third  countries  and  by  assisting 

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Annex  to  the Annual  Growth  Survey  2012  "Growth-friendly  tax  policies  in  member  states  and  better 
tax coordination in the EU", COM (2011) 815 final, VOL. 5/5 – Annex IV, par. 3.1 
OJ C 2, 6.1.1998, p. 2. 
OJ C 99, 1.4.1999, p. 1. 
In this context, reference is made to point 4.1.1.  

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developing  countries  in  line  with  the  Commission's  standing  policy  on  tax  and 
development17. 

11.  "TIN on EUROPA" portal 

The  Commission  also  presents  today  a  new  practical  instrument  to  improve 
administrative cooperation in the area of direct taxation.  

Proper  identification  of  taxpayers  is  essential  to  effective  exchange  of  information 
between MS' tax administrations. Today the Commission officially launches the new 
application  "TIN  on  EUROPA".  This  application  provides  samples  of  official 
identity  documents  containing  national  TINs  (tax  identification  numbers).  It  thus 
allows any third party, and in particular financial institutions, to quickly, easily and 
correctly  identify  and  record  TINs  in  cross-border  relations.  In  addition,  an  on-line 
checking  system  similar  to  VIES  (VAT  information  exchange  system)  makes  it 
possible  to  check  whether  the  structure  or  the  algorithm  of  a  given  TIN  is  correct. 
This  new  application  could  be  a  first  step  towards  a  more  consistent  approach  to 
TINs  at  EU  level  (see  chapter  4.2.1  below)  and  will  contribute  to  a  more  effective 
automatic exchange of information. 

12.  Standard forms for exchange of information in the field of taxation  

Directive  2011/16/EU  adopted  on  15  February  2011  provides  for  the  adoption  of 
standard  forms  for  exchange  of  information  on  request,  spontaneous  exchange  of 
information,  notification  and  feedback.  Today,  the  Commission  has  adopted  an 
implementing  regulation  providing  for  such  standard  forms  that  will  enhance  the 
effectiveness  and  efficiency  of  exchange  of  information.  The  Commission  has  also 
developed  an  IT  application  for  these  standard  forms  in  all  EU  languages  that  has 
already been put at the disposal of the Member States and that will be deployed as of 
1 January 2013. 

13.  A Euro denaturant for completely and partly denatured alcohol  

The  modifications  that  will  be  adopted  in  December  in  the  area  of  denaturants18 
encompass  a  common  EU  formulation  for  the  complete  denaturing  of  alcohol 
(CDA). The main objective is to reduce opportunities for fraud. It is also intended to 
simplify  and  harmonise  administrative  burdens  for  licit  movements,  reduce 
manufacturing costs and improve market access for producers of denatured alcohol 
(EU and global). It will be explored whether the same approach, with similar results, 
could be envisaged in regard to partly denatured alcohol (PDA). 

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COM (2010) 163 final of 21.04.2010 
Commission  Regulation  (EC)  No  3199/93  of  22  November  1993  on  the  mutual  recognition  of 
procedures for the complete denaturing of alcohol for the purposes of exemption from excise duty (OJ 
L 288 of 23.11.1993, P. 12) 

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4. 

FUTURE INITIATIVES AND ACTIONS TO BE DEVELOPED  

4.1. 

Actions to be undertaken in the short term (in 2013) 

4.1.1.  Tackle mismatches and strengthen anti abuse provisions 

14.  A revision of the parent subsidiary directive (2011/96/EU)19 

The  area  of  mismatches,  which  deals  with  issues  such  as  hybrid  loans  and  hybrid 
entities, and differences in the qualification of such structures between jurisdictions, 
is  an  area  of  particular  importance.  Detailed  discussions  with  Member  States  have 
shown  that  in  a  specific  case  an  agreed  solution  cannot  be  achieved  without  a 
legislative  amendment  of  the  Parent-Subsidiary  Directive.  The  objective  will  be  to 
ensure  that  the  application  of  the  directive  does  not  inadvertently  prevent  effective 
action against double non-taxation in the area of hybrid loan structures.  

15.  A review of anti-abuse provision in EU legislation 

The  Commission  will  also  review  the  anti-abuse  provisions  of  the  Directives  on 
Interest and Royalties, Mergers and Parent-Subsidiary, with a view to implement the 
principles underlying its Recommendation on aggressive tax planning. 

4.1.2.  Promote EU standards, instruments and tools 

16.  Promote the standard of automatic exchange of information in international 
fora and the EU IT tools 

The  Commission  will  continue  to  strongly  promote  the  automatic  exchange  of 
information  as  the  future  European  and  international  standard  of  transparency  and 
exchange of information in tax matters.  

It  is  also  essential  that  the  EU  IT  tools  developed  by  the  Commission  with  the 
Member States are promoted in international fora20 and in particular in the OECD to 
ensure widespread application of such tools and to avoid duplication. Member States 
should be able to use a single set of tools and instruments both within the EU and in 
their relations with third countries. 

To  this  end,  the  Commission  is  working  closely  with  the  OECD  on  the  on-going 
development  of  IT  formats  to  be  used  for  the  automatic  exchange  of  information 
under Directive 2011/16/EU on administrative cooperation in the field of taxation21. 
The objective is to take into account, from the beginning, the suggestions of non EU 
countries with a view to having the IT formats fully endorsed and applied outside the 
EU. 

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Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in 
the case of parent companies and subsidiaries of different Member States, OJ L 345, 29.12.2011, p. 8 
The EU participates actively in other international forums such as the Organisation for Economic and 
Co-operation Development (OECD), the International Organisation for Tax Administration (IOTA), the 
Inter  American  Centre  of  Tax  Administrations  (CIAT),  the  International  Tax  Dialogue  (ITD),  the 
International Tax Compact (ITC), and the African Tax Administration Forum (ATAF) 
Council  Directive  2011/16/EU  of  15  February  2011  on  administrative  cooperation  in  the  field  of 
taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1). 

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Moreover, the Commission will ask the OECD to endorse its recently developed e-
Forms for exchange of information on request, spontaneous exchange of information 
and feedback in the field of direct taxation, and will continue its cooperation with the 
OECD with regard to the e-Forms developed in the context of the recovery of claims.  

4.1.3.  Enhance tax compliance 

17.  A European taxpayer's code 

In  order  to  improve  tax  compliance,  the  Commission  will  compile  good 
administrative  practices  in  Member  States  to  develop  a  taxpayers'  code  setting  out 
best  practices  for  enhancing  cooperation,  trust  and  confidence  between  tax 
administrations  and  taxpayers,  for  ensuring  greater  transparency  on  the  rights  and 
obligations of taxpayers and encouraging a service-oriented approach. 

The Commission will launch a public consultation on this at the beginning of 2013. 
By  improving  relations  between  taxpayers  and  tax  administrations,  enhancing 
transparency  of  tax  rules,  reducing  the  risk  of  mistakes  with  potentially  severe 
consequences  for  taxpayers  and  encouraging  tax  compliance,  encouraging  Member 
States'  administrations  to  apply  a  taxpayers'  code  will  help  to  contribute  to  more 
effective tax collection. 

4.1.4.  Enhance tax governance 

18.  Reinforced cooperation with other law enforcement bodies 

Stronger  cooperation,  making  full  use  of  EU  agencies'  support,  should  also  be 
promoted with other law enforcement bodies, in particular the authorities responsible 
for  anti-money  laundering,  justice  and  social  security.  Inter-agency  cooperation  is 
essential  to  ensure  an  efficient  fight  against  tax  fraud,  tax  evasion  and  tax  related 
crimes.  Europol  can  play  an  important  role  in  enhancing  information  exchange  by 
contributing to the identification and dismantling of criminal networks/groups. 

In the context of the preparation of its legislative proposal for a review of the Third 
Anti-Money Laundering Directive (AMLD), to be presented shortly, the Commission 
is  considering  to  explicitly  mention  tax  crimes  as  predicate  offences  to  money 
laundering,  in  line  with  the  2012  recommendations  of  the  Financial  Action  Task 
Force-FATF. This will facilitate the cooperation between tax authorities and judicial 
and  financial  supervisory  authorities  in  order  to  tackle  serious  infringements  of  tax 
law.  The  enhancement  of  the  AML  customer  due  diligence  procedures  as  well  as 
increased  transparency  of  beneficial  ownership  information  collected  for  AML 
purposes within the framework of the review of the AMLD could also facilitate the 
use  of  relevant  data  for  taxation  purposes,  e.g.  to  improve  the  effectiveness  of  the 
treatment of offshore investment structures under the EU Savings Taxation Directive. 
In addition, co-operation could be further facilitated by an EU-wide harmonisation of 
the money laundering offence, its definition and related sanctions. In this regard, the 
Commission  plans  to  propose,  beyond  the  review  of  the  Third  AMLD,  a  specific 
Directive on combating money laundering in 2013.  

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4.1.5.  Enhance administrative cooperation 

19.  Promote  the  use  of  simultaneous  controls  and  the  presence  of  foreign 
officials for audits 

In  the  short  term,  to  facilitate  tax  audits  and  pave  the  way  for  possible  future  joint 
audits, it is essential that Member States make the widest possible use of the existing 
legal  provisions  to  organise  simultaneous  controls  and  facilitate  the  presence  of 
foreign  officials  in  the  offices  of  tax  administrations  and  during  administrative 
enquiries. The analysis carried out within the framework of EUROFISC should help 
in reinforcing the use of these tools.  

Member States should ensure that their domestic legislations do not impede the full 
application  of  these  tools,  especially  when  it  concerns  the  presence  of  foreign 
officials in the tax offices or at the premises of the taxpayer.  

4.1.6.  Action regarding third countries 

20.  Obtain  an  authorisation  from  Council  to  start  negotiations  with  third 
countries  for  bilateral  agreements  on  administrative  cooperation  in  the  field  of 
VAT 

As  fraudsters  often  exploit  the  absence  of  effective  cooperation  between  tax 
administrations  by  carrying  out  fictitious  transactions  involving  third  countries, 
several  Member  States  have  pointed  to  the  need  to  have  tools  of  administrative 
cooperation  similar  to  those  already  in  force  within  the  EU  also  available  for  use 
with third countries. 

Therefore, the Commission considers that such an authorisation to negotiate bilateral 
agreements  with  third  countries  aiming  at  an  effective  and  binding  framework  for 
administrative  cooperation  in  the  field  of  VAT  is  absolutely  required.  The 
Commission could present a proposal for such an authorisation by 2013. 

4.2. 

Actions to be undertaken in the medium term (by 2014) 

4.2.1.  Enhance exchange of information 

21.  Develop computerised format for automatic exchange of information 

The Commission is developing new formats for automatic exchange of information 
on income from employment, directors' fees, life insurance products, pensions and on 
ownership  of  and  income  from  immovable  property,  pursuant  to  Directive 
2011/16/EU22. 

Furthermore, the Commission will propose practical solutions for income types other 
than  those  specified  in  the  Directive,  to  be  used  by  Member  States  on  a  voluntary 
basis  to  draw  even  greater  benefits  from  the  mechanisms  provided  for  by  the 
Directive. 

22 

Article 8(1) of Council Directive 2011/16/EU  

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22.  Use of an EU Tax Identification Number (TIN) 

TINs  are  considered  as  providing  the  best  means  of  identifying  taxpayers  under 
automatic exchange of information. The national TINs are however built according 
to  national  rules  which  differ  considerably  and  make  it  difficult  for  third  parties 
(financial  institutions,  employers,  other)  to  correctly  identify  and  register  foreign 
TINs  and  for  the  tax  authorities  to  report  back  this  information  to  the  other  tax 
jurisdictions.  

The creation of an EU TIN might constitute the best solution to overcome the current 
difficulties  faced  by  Member  States  in  properly  identifying  all  their  taxpayers 
(natural  and  non-natural  persons)  engaged  in  cross  border  operations.  Whether  this 
could be a unique EU number or the addition of an EU identifier to existing national 
TINs is an issue which should be further explored, as should be explored links with 
the other existing EU registration and identification systems.  

Although the concept of an EU TIN is simple, its implementation is a complex issue 
which  calls  for  a  step-by-step  approach.  A  public  consultation  will  be  launched  by 
March  2013.  The  presentation  of  a  subsequent  legislative  proposal  requires  further 
in-depth  studies  and  the  strong  support  of  the  Member  States.  As  a  first  step,  a 
possibility would be to further develop the "TIN on EUROPA" portal, by making it 
possible  to  check  the  validity  of  national  TINs  by  linking  this  application  with 
Member States' databases. 

23.  Rationalise IT instruments 

The  Commission  is  launching  a  process  to  rationalise  the  IT  instruments  across 
Europe  with  a  view  to  ensuring  more  effective  and  cost-efficient  systems.  It  will 
notably  consider  the  scope  for  developing  a  central  IT  solution  for  the  electronic 
tools supporting administrative cooperation, aimed at reducing IT costs for Member 
States and allowing for faster and more efficient information exchange.  

4.2.2.  Tackle trends and schemes of tax fraud and tax evasion 

24.  Guidelines for tracing money flows 

Taking into consideration the experience of some Member States in this area and the 
already  existing  Financial  Intelligence  Units  (FIU),  the  Commission  will  develop  a 
common  methodology  and  guidelines  to  improve  access  to  information  on  money 
flows  by  tax  administrations,  e.g.  via  credit  cards  and  EU/offshore  bank  accounts, 
making it easier to trace significant transactions.  

A first step has already been achieved with an in-depth sharing of experiences in the 
FISCALIS workshop that took place on this subject in October 2012.  

25.  Enhance  risk  management  techniques  and  in  particular  compliance  risk 
management 

The Risk Management Platform established in 2007 in the context of the FISCALIS 
programme  is  developing  a  strategic  plan  to  compliance  risk  management  (CRM). 
The main objective of the strategic plan is to ensure that all Member States achieve a 
higher level of compliance by taxpayers, to make the treatment of cross border risks 

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and the fight against fraud easier and to stimulate and enhance co-operation between 
the Member States. For a successful implementation of the strategic plan, it will be 
necessary to obtain a commitment of all Member States. 

Structured exchanges of information between tax and customs administrations on the 
strategies  to  identify  non-compliance  could  improve  the  knowledge  of  both 
authorities and ensure coordinated risk assessments and would be integrated into the 
work on the strategic plan. 

26.  Extend EUROFISC to direct taxation 

EUROFISC foresees a rapid exchange of information on cases of fraud in the VAT 
area. This relatively new system could be extended to serve a similar function in the 
area  of  direct  taxation,  in  particular  with  a  view  to  detecting  and  quickly 
disseminating information on recurrent fraud schemes and trends and aggressive tax 
planning. 

To this end, the Commission will gather and assess the first results of EUROFISC for 
VAT and will then pursue its work on extending EUROFISC and its Early Warning 
System to the direct tax area. 

4.2.3.  Enhance tax compliance 

27.  Create a one-stop-shop approach in all Member States  

One-stop-shops  should  be  established  in  each  Member  State  to  deliver  all  types  of 
tax  information  to  taxpayers,  including  non-residents,  thus  facilitating  cross  border 
operations by eliminating tax obstacles and therefore, ensuring better tax compliance. 
A  first  step  has  already  been  taken  with  the  organisation,  in  December  2012,  of  a 
FISCALIS  workshop  on  this  subject,  as  a  follow-up  to  the  public  consultation  on 
direct  tax  obstacles  in  cross  border  situations  that  has  already  taken  place  in  2012. 
The Commission will issue a common methodology and guidelines in this domain.  

28.  Develop motivational incentives including voluntary disclosure programmes 

The Commission will examine the possibility of developing common methodologies 
and  guidelines  to  enhance  educational  measures,  including  the  generalisation  of 
prefilled tax returns, the creation of personalised internet pages and the possibility for 
Member States to make widely known their administrative cooperation mechanisms, 
with a view to raising taxpayers' awareness on the powers of tax administrations to 
obtain information from other countries. 

The  Commission  will  also  examine  the  possibility  of  developing  motivational 
incentives  by  encouraging, 
through  common  methodologies  and  guidelines, 
voluntary  disclosure  programmes,  the  correction  of  errors  by  taxpayers  on  line 
(especially  if  personalised  internet  pages  are  created)  and  the  improvement  of 
relationships between taxpayers and tax administrations. 

29.  Develop a tax web portal 

The  Commission  will  improve  and,  where  possible,  extend  the  existing  "Tax  on 
EUROPA"  web  portal,  in  order  to  improve  access  to  reliable  tax  information  in 

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cross-border  situations.  The  tax  web  portal  could  be  built  along  the  lines  of  the  e-
Justice network, accessible on EUROPA. 

This  project  is  ambitious  and  should  be  realised  through  a  step-by-step  approach, 
with priority being given to VAT. The first step will therefore consist of developing 
the VAT part of the tax web portal that will contain the rules on invoicing applicable 
in  the  Member  States.  It  is  intended  to  open  the  web  portal  to  Member  States  that 
want  to  publish  other  information  (such  as  tax  rates).  A  next  step  will  consist  of 
integrating other tax aspects and in particular direct taxation.  

30.  Propose an alignment of administrative and criminal sanctions  

The Commission will study the opportunity and feasibility to align the definition of 
certain types of tax offences, including administrative and criminal sanctions for all 
types  of  taxes.  The  Commission  has  recently  proposed  criminal  law  rules23  to 
strengthen  the  fight  against  fraud  affecting  EU  financial  interests  and  believes  that 
this  issue  merits  further  consideration  in  the  context  of  the  wider  reflections  on 
establishing an EU criminal policy. It will be important to ensure that any action in 
this  area  is  fully  integrated  with  similar  actions  in  other  areas  of  EU  law,  in 
accordance with the principles set out in the Commission Communication "Towards 
an  EU  Criminal  Policy:  Ensuring  the  effective  implementation  of  EU  policies 
through criminal law" of 20 September 201124.  

31.  Develop an EU Standard Audit File for Tax (SAF-T) 

The  use  of  an  EU  standard  audit  file  for  tax  (SAF-T),  along  the  lines  of  what  is 
already  in  force  or  under  development  in  certain  Member  States,  would  both 
facilitate voluntary compliance from taxable persons and facilitate tax audits. 

A pilot project is currently under development in the specific context of the mini One 
Stop  Shop  for  telecommunications,  broadcasting  and  electronic  services.  Its  further 
development should be envisaged. 

4.3. 

Actions to be undertaken in the longer term (beyond 2014) 

There are also a number of possible actions listed in the June Communication which, 
according to the Council, should not be taken forward as a priority at this stage. The 
Commission  however  believes  that  it  would  be  worth  reconsidering  them  at  a  later 
stage once the implementation of the other, more urgent, elements of this action plan 
is more advanced. These actions include:  

32.  A methodology for joint audits by dedicated teams of trained auditors  

This issue should be reviewed once more experience has been gained with the use of 
existing legal instruments such as simultaneous audits. On that basis, a methodology 
and  guidelines  for  joint  audits  could  be  developed.  If  appropriate  and  based  on  an 

23 

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Proposal for a Directive of the European Parliament and of the Council on the fight against fraud to the 
Union's financial interests by means of criminal law – COM (2012) 363/2 of 11.07.2012. 
COM (2011) 573 final of 20.09.2011 

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impact assessment, the Commission could also propose a single legal basis for joint 
audits, involving various types of taxes. 

33.  Develop mutual direct access to national databases  

Given  the  existing  provisions  in  the  VAT  area  with  respect  to  VIES25,  the 
Commission  will  analyse  the  feasibility  of  facilitating  direct  access  to  national 
databases  in  the  realm  of  direct  taxation.  However,  it  is  necessary  first  to  draw 
experience from the application of mutual direct access in the field of VAT. 

34.  Elaborate  a  single  legal  instrument  for  administrative  cooperation  for  all 
taxes 

Because there are some commonalities in the context of administrative cooperation 
between  the  various  tax  domains,  the  Commission  will  study  the  feasibility,  from 
legal  and  practical  points  of  view,  of  having  a  single  legal  instrument  for 
administrative  cooperation  for  all  taxes,  instead  of  four  different  instruments,  as 
currently  exist.  This  exercise  will  be  conducted  after  a  certain  time  has  elapsed,  to 
take into consideration that all existing legal bases for administrative cooperation in 
the field of direct and indirect taxation as well as for recovery of taxes were recently 
repealed and replaced by new legislative initiatives26. 

5. 

CONCLUSION 

Tax fraud and tax evasion is a multi-facetted problem which requires a coordinated 
and  multi-pronged  response.  Aggressive  tax  planning  is  also  a  problem  which 
requires urgent attention. These are global challenges which no single Member State 
can face alone.  

This action plan identifies a series of specific measures which can be developed now 
and  in  years  to  come.  It  also  represents  a  general  contribution  to  the  wider 
international debate27 on taxation and is aimed at assisting the G20 and the G8 in its 
on-going work in this field28 The Commission believes that the combination of these 
actions can provide a comprehensive and effective response to the various challenges 
posed by tax fraud and evasion and can thus contribute to increasing the fairness of 
Member States' tax systems, to securing much needed tax revenues and ultimately to 
improve the proper functioning of the internal market.  

25 
26 

27 

28 

Council Regulation N° 904/2010/EU 
Council  Directive  2010/24/EU  of  16  March  concerning  mutual  assistance  for  the  recovery  of  claims 
relating  to  taxes,  duties  and  other  measures  (OJ  L  84  of  31.3.2010,  P.  1);  Council  Regulation  N° 
904/2010/EU of 7 October 2010 on administrative cooperation and combating fraud in the field of value 
added  tax  (OJ  L  268  of  12.10.2010,  P.  1);  Council  Directive  2011/16/EU  of  15  February  2011  on 
administrative  cooperation  in  the  field  of  taxation  and  repealing  Directive  77/799/EEC  (OJ  L  64  of 
11.3.2011, P.1); Council Regulation N° 389/2012/EU of 2 May 2012 on administrative cooperation in 
the field of excise duties and repealing Regulation (EC) N° 2073/2004 (OJ L 121 of 8.5.2012, P. 1) 
See  e.g.  Joint  statement  by  the  UK  and  Germany  of  05.11.2012  calling  for  international  action  to 
strengthen tax standards, http://www.hm-treasury.gov.uk/chx_statement_051112.htm 
See  G20  Leaders  Declaration  of  19  June  2012,  Los  Cabos.  "We  reiterate  the  need  to  prevent  base 
erosion  and  profit  shifting  and  we  will  follow  with  attention  the  on-going  work  of  the  OECD  in  this 
area” 

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In  order  to  ensure  that  the  actions  described  in  this  action  plan  will  be  duly 
implemented,  the  Commission  will  put  in  place  appropriate  monitoring  and 
scoreboards,  which  includes  in  particular  regular  exchanges  of  views  in  relevant 
committees and working groups on the basis of detailed questionnaires. 

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