REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on overview and assessment of the statistics and information on the automatic exchanges in the field of direct taxation
Date: 2018-12-17
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: EU Member State, European tax cooperation, administrative cooperation, direct tax, exchange of information, official statistics, tax authorities, tax collection

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.12.2018  COM(2018) 844 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on overview and assessment of the statistics and information on the automatic exchanges in the field of direct taxation  
 
 
1.  INTRODUCTION 

In an increasing globalized world, the differences in taxation systems may affect negatively to 
tax revenue collection, as businesses are able to shift profits across borders and taxpayers can 
earn  income  from  abroad  without  being  taxed,  when  taxpayers  are  not  compliant  in  all 
countries involved. This has led to the development of various cooperation mechanisms among 
tax authorities, referred as ‘administrative cooperation in direct taxation’.  

Within the EU, Council Directive on administrative cooperation in the field of direct taxation 
2011/16/EU (the Directive or DAC) is a key element in cooperation between Member States. It 
supports  Member  States  by  giving  a  new  improved  framework  for  commonly  structured 
working  methods  and  electronic  tools  since  2013,  on  the  basis  of  experiences  in  mutual 
assistance since 1977. 

Access to information on the incomes earned and the assets held abroad by resident taxpayers 
is  of  great  importance  for  tax  authorities.  Accordingly,  the  exchange  of  information  on 
taxpayers  engaged  in  cross-border  activities  is  as  an  essential  component  of  an  effective 
administrative  cooperation  and  is  one  of  the  forms  of  cooperation  covered  in  the  DAC.  The 
exchange  of  information  involves  a  bilateral  information  flow  between  competent  tax 
authorities in two countries and concerns foreseeably relevant data related to a variety of taxes, 
applicable to both natural and legal persons. 

Three  forms  of  information  exchange  are  foreseen  in  the  DAC,  namely:  (i)  the  exchange  of 
information  on  request  (EOIR),  which  refers  to  information  concerning  specific  persons  or 
transactions expressed by the requesting country; (ii) the spontaneous exchange of information 
(SEOI), which refers to the unsystematic flows of information deemed to be of interest for the 
receiving country; and (iii) the automatic exchange of information (AEOI), which refers to the 
exchange of predefined tax data, using predefined formats and at predetermined times, without 
prior request from another country. 

The AEOI is the subject of this report. It differs from the other forms of information exchange 
because of its mandatory nature and broader scope.  

Member States agreed mandatory AEOI to start as of mid-2015 for tax information concerning 
tax  residents  in  other  Member  States,  for  five  categories  of  income  and  capital  (DAC1).  In 
2014,  Member  States  agreed  to  update  the  Directive  to  implement  in  the  EU  the  Common 
Reporting  Standard  developed  by 
the  Organisation  for  Economic  Co-operation  and 
Development  (OECD),  introducing  automatic  exchange  of  financial  account  information 
(DAC2).  In 2015, a  further amendment  introduced AEOI  for tax rulings and advance pricing 
agreements (DAC3). AEOI was further expanded in 2016 and 2017.1 

This  report  is  based  on  Article  8b  (2)  of  the  Directive  which  requires  the  Commission  to 
submit, before 1 January 2019, a report providing an overview and assessment of AEOI under 
DAC1,  DAC2  and  DAC3.  It  describes  the  main  key  findings  about  the  implementation  of 
AEOI,  its  costs  and  benefits,  as  well  as  actions  taken  by  Member  States  to  make  use  of  the 
information received.  

The report has been drafted mainly on the basis of information gathered from Member States’ 
tax authorities via an annual survey and annually collected sets of statistical data.2 It covers the 

1 For more information see webpages of DG TAXUD on administrative cooperation.  
2 Commission implementing regulation (EU) 2018/99 on the format of the yearly assessment and statistical data.  

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period from 2015 until mid-2018 as regards DAC1, and from 2017 until mid-2018 as regards 
DAC2 and DAC3. 

It  must  be  noted  that  at  the  time  of  preparing  this  report,  the  Commission  is  conducting  a 
comprehensive  evaluation  of  DAC3covering,  in  addition  to  AEOI,  also  all  other  forms  of 
administrative cooperation.  

3 Roadmap of the evaluation: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-1068597_en  

2 

 
 
 
 
 
                                                           
2.  DAC1 

DAC1 requires Member States to automatically exchange information that is available on five 
categories  of  income  and  capital:  income  from  employment,  director’s  fees,  life  insurance 
products, pensions, and ownership of and income from immovable property.4  

This  information  has  to  be  sent  at  least  once  a  year  to  the  Member  State  of  taxpayer’s 
residence. The first exchanges of this data took place in June 2015, regarding the taxable period 
2014. Using a  step-by-step approach, Member States were expected to send information for at 
least three income or capital categories out the five described in Article 8(1) of the Directive by 
2017. 

This  report  covers  information  from  Member  States  concerning  the  following  years:  2015, 
2016 and 2017. 

2.1 Main features in DAC1 information exchanges 

Up  until  June  2017,  Member  States  exchanged  information  concerning  nearly  16  million 
taxpayers,  related  to  incomes  and  capital  amounting  to  over  EUR  120  billion.  Most 
information concerned income from employment and pensions, which represent over 80 % of 
the taxpayers and 95 % of the total value. 

Number of Taxpayers (million) 

Value of Information Exchanged (€ million) 

* Partial 
Figure 1. Evolution of DAC1 Exchanges by Message Year 

* Partial 

The  volume  of  information  exchanged  has  grown  over  time,  with  a  twofold  increase 
between  2015  and  2016.  Data  on  information  exchanges  concerning  the  first  half  of  2017 
suggests that the increasing trend continued. This is also confirmed by amount reports, which 
can  be  extracted  from  the  secured  exchange  channel  that  Member  States  use  for  bilateral 
exchanges: there is a positive trend also in 2017 in the exchanged data amounts.  

4In this report, the following acronyms are used for DAC1 AEOI: employment income (EI); pensions (PEN); life 
insurance products (LIP); income or ownership of immovable property (IP); directors’ fees (DF).  

3 

 
 
 
 
 
 
 
 
 
                                                           
Sending Countries 

Receiving Countries 

Number of Taxpayers (million) 

Figure 2. Top 10 of Sending and Receiving Countries – Files sent in 2016 

The exchange patterns are mostly consistent with intra-EU migration patterns. Emigration 
countries  are  net  receivers  of  information.  In  particular,  Poland  receives  information  on  14 
times  more  taxpayers  (equalling  19  times  the  amount)  than  it  sends  information  about.  The 
opposite applies in net immigration countries, such as Luxembourg which sends information on 
five times as many taxpayers as it receives information on, and on over thirty times the value. 
Other net receivers include Spain and Portugal, whilst Germany and Denmark are net senders.  

Not  surprisingly,  large  EU  countries  such  as  France,  Germany,  Italy,  and  the  UK  are 
among  both  the  top  senders  and  the  top  receivers,  even  though  the  profile  is  somehow 
different in terms of income categories. For instance, in terms of taxpayers concerned, France 
and  Germany  are  by  far  the  largest  senders  for  employment  and  pension  income,  while  a 
substantial share of the information they receive concerns immovable property. The situation is 
exactly  the  opposite  for  Italy,  Spain  and  Portugal:  a  large  share  of  the  information  they  send 
concern immovable property, while they receive information concerning mostly pensions. 

An  overview  of  bilateral  interactions  shows  a  high  degree  of  concentration,  with  different 
patterns  depending  on  whether  the  number  of  taxpayers  or  the  value  of  the  information 
exchanged are considered. In terms of number of taxpayers, France and Germany are the 
main sending countries. The bulk of exchanges take place along two axes, the one connecting 
Germany and France with Spain and Portugal, and the one linking Germany and Italy, with two 
additional significant flows between France and Italy and the Netherlands and Poland.  

The situation is different when the euro amounts of information exchanged is considered. 
The three largest flows, accounting for more than EUR 9 billion, originate from Luxembourg 
towards  Belgium,  France  and  Germany.  This  is  supplemented  by  a  significant  flow  from 
France to Portugal, which is the one to have a clear link with the exchange of information in 
terms of number of taxpayers. 

4 

 
 
 
 
 
 
 
 
 
Figure 3. Main Bilateral Flows/Value of Information Exchanged/Year 2016 

Availability of information 

On the basis of DAC1, Member States only have to share the information they have available 
in  their  national  tax  databases.  No  additional  data  collection  compared  to  what  tax 
administrations collect for internal tax purposes is required.  

In 2017 eight  Member  States had information available for all five categories of income 
and  capital  covered  in DAC1,  and  another  nine  had  information  available  for  all  categories 
except  for  life  insurance  products.  Only  one  country,  Cyprus,  had  information  available  for 
only  one  category  of  income  (pensions).  The  remaining  ten  could  exchange  information  on 
three  income  categories.  This  availability  has  evolved  only  marginally  in  the  three  years 
surveyed.  Only  Czech  Republic,  Estonia,  Finland  and  Italy  have  increased  the  number  of 
income categories since 2015.  

Figure 4. Number of categories of DAC1 for which information is available 2015 - 2017 

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For tax administrations, to work for having new information available for AEOI can be time-
consuming  and  costly.  For  example,  Ireland  reported  that  gathering  information  on  life 
insurance products would require significant resources and time for the necessary laws and IT 
systems to be in place. Malta pointed out that collecting additional information would impose a 
significant burden on economic operators. 

Some  evidence  however  suggests  that  increasing  the  availability  of  information  does  not 
always  require  the  collection  of  additional  information.  Availability  can  be  expanded  by 
improving  the  accessibility  of  existing  information.  In  2015,  Czech  Republic  reordered  its 
national  tax  databases  to  provide  information  on  income  from  property  and  in  2016  Finland 
was  able  to  start  sending  property  income  information  by  integrating  different  existing 
databases.  

Availability of identification elements - Taxpayer Identification Number (TIN) 

The  inclusion  of  identification  elements  in  the  data  sent  is  essential  for  Member  States  to  be 
able to associate the information they receive with national taxpayers databases. The name of 
the  taxpayer  and  the  TIN  issued  by  the  receiving  country  are  regarded  as  the  most  useful 
identification  elements  in  case  of  automatic  matching.  The  systematic  inclusion  of 
information of the TIN of the taxpayer would allow to bypass several problems connected 
to 
such  as  misspelling  or 
translation/transliterations, as well as homonymies. 

identification, 

the  use  of 

the  name 

the 

for 

However,  only  two  countries,  Ireland  and  Lithuania,  actually  included  in  the  information 
exchanged the TIN issued by the recipient country, for all taxpayers concerned. Estonia did so 
for nearly 60% of the taxpayers.  

In no less than 15 cases, the information sent did not include the TIN of the recipient country 
for any of the taxpayers on which information was shared. Since these cases include the largest 
senders,  overall  only  2  %  of  the  taxpayers  on  which  information  was  exchanged  were 
associated  with  a  TIN  issued  by  the  recipient  country.  Therefore,  the  identification  of 
taxpayers  is  in  practice  based  on  information  about  their  birth  date  and  name  in  free  or 
structured format. 

Figure 5. Share of taxpayers/parties for which the TIN of the recipient country was included by 
sending Member State (all message years, weighted average) 

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Time gap between tax year of the income and sending date 

Member States have the obligation to share DAC1 information within six months following the 
end  of  the  tax  year  of  the  Member  State  during  which  the  information  became  available.  In 
practice there could be a delay of up to eighteen months from the end of the tax year.  

Overall,  since  the  start  of  DAC1  exchanges,  tax  information  was  sent  on  average  twelve 
months  after  the  end  of  the  tax  year  they  refer  to,  but  there  are  significant  differences 
between Member States.  

The  time  required  has  reduced  over  time,  and  there  are  no  major  differences  between  the 
different  income  categories.    The  proportion  of  exchanges  sent  within  six  months  increased 
from 31 % for data regarding tax year 2014, to 45 % for those concerning tax year 2015. 

No  correlation  was  found  between  the  time  taken  to  exchange  information  and  the  type  of 
income  and  capital,  the  number  of  files  sent,  the  number  of  taxpayers  or  the  overall  value 
concerned.  Furthermore,  while  ten  Member  States  send  all  messages  at  the  same  time,  the 
others tend to send the messages over several months. 

Treatment and use of the received information  

The first effort for using the received data is to open the file and start processing it. Member 
States tend to open the files within one year of receipt.  In 2017, depending on the type of 
income, 23 Member States reported opening the files received during the year of reception. As 
of 2017, only three Member States (Bulgaria, Malta, and Slovakia) appear not to have worked 
with the files received neither during the year they received them, nor in the following years. 

Normally, the first  step is  to  match the information received to  an identified taxpayer record. 
Information about an unidentified taxpayer is not as easily usable. Matching allows linking the 
information received from other countries with the relevant taxpayers’ files. 

The  share  of  taxpayers  data  automatically  exchanged  under  DAC1  which  was  identified  and 
successfully  matched  with  national  databases  varies  depending  on  the  types  of  income  and 
capital. In the case of Member States for which matching results were available for 2017, the 
matching rates averaged at about 90 % for income from employment and pensions, were in the 
75 % - 80 % range for directors' fees and ownership of and income from immovable property 
and  averaged  a  modest  59  %  for  life  insurance  products.  Almost  90  %  of  matching  is  done 
automatically or semi-automatically. The share of manual matching has declined overtime. 

Risk  assessment  and  personal  income  tax  assessment5  are  the  most  common  uses  of  the 
information reported in all three years. The overall trend seems to be an increased and more 
intensive  use  of  the  information  received.  There  are  no  major  differences  in  the  use  made  of 
information under the various income categories, with the exception of life insurance products, 
which are systematically less used than the other income types. 

5 DAC1 information, independently of the income type, is mostly used in the area of personal income tax. Other 
areas for which DAC1 information is relatively more commonly used include company tax and recovery purposes. 

7 

 
 
 
 
 
 
 
 
                                                           
Figure 6. Use of DAC1 information 

3.  DAC2 

Under  the  DAC2  Member  States  are  required  to  automatically  exchange  financial  account 
information,  i.e.  end-of-year  account  balance  on  a  reportable  account,  as  well  as  dividends, 
interests, gross proceeds and other investment income paid to that account during a year.  This 
information is provided to Member States' tax authorities by financial institutions, which have 
to perform certain due diligence procedures aimed at identifying reportable financial accounts 
and then report the required information. The  DAC2 implements within the EU the Common 
Reporting Standard (CRS) developed by OECD and broadly applied at international level.   

The information is sent annually within nine months following the end of the calendar year or 
other  appropriate  reporting  period  to  which  the  information  relates.  The  first  exchanges  took 
place in September 2017. 

The  information  available  for  this  report  refers  to  the  half  year  period  from  mid-September 
2017  through  March  2018.  Therefore,  no  real  trends  in  the  information  flows  can  be 
identified, nor can any reliable analysis be made on the possible use of the data. Finally, 
Austria began to fully apply DAC2 only in 2018. 

Main features in DAC2 information exchanges 

Member  States  exchanged  information  concerning  a  total  of  some  8.7  million  accounts, 
and financial income  about end-of-year account balances amounting to EUR 2,919 billion 
in  total.  However,  so  far  the  exchanges  have  concerned  only  the  existing  ‘high  value 
accounts’6 and the ‘new accounts’ opened in the last months of 2016. The number of accounts 
is therefore expected to increase once the full reporting scope of DAC2 is implemented.  

The  other  financial  information  exchanged  appears  to  refer  primarily  to  gross  proceeds 
which  account  for  EUR  3,466  billion.7  In  contrast,  dividends  are  valued  at  EUR  21.2  billion, 
interest at EUR 19.0 billion, and other payments at EUR 61.8 billion. 

6 The term “High Value Account” refers to an account opened before 1.1.2016 with an aggregate balance or value 
that  exceeds,  as  of  31  December  2015, or  31  December  of  any  subsequent  year,  an  amount  that  corresponds  to 
USD 1 000 000.  
7 It is worth noting that this value is strongly influenced by statistical data about gross proceeds information sent 
from the UK to France for a value over EUR 1,254 billion, and from France to the UK for a value of 1,320 billion.  

8 

 
 
 
 
 
 
 
 
                                                           
Sending Countries 

Receiving Countries 

Number of Accounts (million) 

Overall Amount (€ billion) 

Figure 7. Top 10 Senders and Receivers of DAC2 Information 

The  network  of  bilateral  exchanges  is  centered  on  Luxembourg  and,  to  a  much  smaller 
extent, Ireland. Outgoing flows of financial information are dominated by Luxembourg, with 
17  %  of  the  accounts  and  nearly  80  %  of  the  amounts  reported.  Ireland  is  also  an  important 
sending  country, coming fourth  in  the ranking in terms  of both  number of accounts  and total 
amount reported.  

Regarding  incoming  information,  there  are  differences  depending  upon  the  variable 
taken into consideration. In terms of number of accounts, the ranking broadly reflects the size 
of Member States’ economies, with Germany, Italy, France and the UK accounting for half of 
the  total.  In  contrast,  when  looking  at  the  value  reported,  the  ranking  is  led  by  Belgium, 
Sweden and the UK, which cumulatively account for 63 % of the total value.  

9 

 
 
 
 
 
 
 
 
 
 
Figure  8.  Main  Bilateral  Flows  –  Number  of  Accounts  (left)  and  Value  of  Information 
Exchanged (right)  

Availability and timeliness of information 

The availability of information and question of timeliness is not relevant for DAC2 as there is 
no  ‘availability  clause’  nor  potentially  long  timeline  for  exchanging  the  information  received 
by tax authorities from their financial institutions.  In the case of DAC2, there are much more 
TINs included in the data than with DAC1. Overall, some 70 % of the accounts whose holders 
are  natural  persons  are  associated  with  at  least  one  TIN  of  account  holders,  and  73  %  of  the 
accounts  whose  holders  are  legal  persons,  are  associated  with  an  organization  identification 
number. This relates to the liabilities of a financial institution or bank to know their clients.  

Treatment and use of the received information  

During  the  first  year  of  DAC2  exchanges,  only  three  states,  Bulgaria,  Slovakia  and  Malta, 
reported  not  having  opened  the  files  received.  Italy  and  Sweden,  reported  having  made  an 
initial selection on the files received using a combination of threshold and other criteria, while 
all other Member States have worked directly with the whole dataset. 

Information  on  matching  rates  and  methods  (fully  or  partially  automatic  or  manual)  is 
available only for some Member States. Most Member States use automated matching. Only 
a few rely on less efficient manual procedures. In terms of results, seven Member States were 
able  to  successfully  match  80  %  or  more  of  the  information  received,  whereas  another  two 
successfully  matched  75  %  of  the  data.  Results  are  lower  for  other  Member  States.  Estonia 
reports the lowest overall matching rate (37 %).  

Risk assessment is  reported as the  most common use of DAC2 information,  followed by 
tax assessment.  Numerous Member States  also  reported using the information for awareness 
campaigns and for notification to taxpayer to generate disclosure.  

As the first exchanges took place in September 2017, DAC2 information has not been used 
as  much  as  DAC1  information  in  2017.  Nine  states  reported  not  using  the  information 
received via DAC2. Of them five, Bulgaria, Germany, Luxembourg, Malta, and Slovakia, also 

10 

 
 
 
 
 
 
 
did  not  use  the  information  received  under  DAC1  in  the  same  year.  Italy,  a  scarce  user  of 
DAC1 information, reported using DAC2 data, even if only for awareness campaigns. 

4.  DAC3 

DAC3  AEOI  requires  sharing  information  on  advance  cross-border  tax  rulings  (ATR)  and 
advance pricing arrangements (APA) issued to a person or group of persons, other than natural 
persons. The sharing is  carried out  via entry into a central  database accessible to  all Member 
States.  

DAC3  resulted  in  a  major  increase  in  the  transparency  of  information  on  advance  tax 
rulings  and  advance  pricing  arrangements.  Almost  18,000  rulings  were  recorded  in  the 
central directory in 2017 compared to hardly any being spontaneously exchanged in the years 
up to 2015. However, it is too early to report on how this additional information has been used. 

5.  COSTS AND BENEFITS 

The costs incurred by Member States are mainly related to the development and maintenance of 
the IT systems which are used to exchange information automatically. Most of the costs occur 
at the time when the IT systems are developed, while recurring costs are much lower.  
On the basis of the available data, the overall implementation costs of AEOI provisions appear 
to be approximately EUR 112 million for the period 2012-2017. Costs varied depending on the 
system as reported in the sections below.  

DAC1 
The total costs incurred by Member States for implementing AEOI under DAC1 were EUR 69 
million. The costs show major differences between Member States and between years. This can 
be explained by the differences in  sophistication in  the  IT systems  used  for AEOI and in the 
procurement  methods  (e.g.  outsourcing  vs  in-house  development).  The  costs  might  be  higher 
also  for  the  reason  that  solutions  for  the  use  of  information  (e.g.  matching  tools)  have  been 
included in the development work from the start. 

Figure 9. DAC1 Costs up to 2017 (22 Member States) (EUR million) 

11 

 
 
 
 
 
 
DAC2 
The  total  costs  incurred  by  Member  States  for  implementing  AEOI  under  DAC2  were  EUR 
45.4  million.  As  DAC2  provisions  are  based  on  the  OECD’s  Common  Reporting  Standard 
(CRS),  the  IT  systems  used  for  collection  of  data  under  DAC2  and  CRS,  as  well  as  for  the 
exchanges  are  largely  comparable.  Therefore,  it  is  difficult  to  distinguish  DAC2  from  CRS 
costs  and  costs  reported  by  Member  States  may  overestimate  the  costs  attributable  to  DAC2 
only.  

Figure 10. DAC2 Costs up to 2017 (21 Member States) (EUR million) 

As in the case of DAC1, there are significant differences in DAC2 costs among Member States.  

In  addition  to  the Member States, in  the case of  DAC2 also  financial institutions had to  bear 
costs  to  adapt  their  IT  systems.  While  a  precise  figure  of  these  costs  is  not  available,  on  the 
basis  of  available  evidence  costs  borne  by  financial  institutions  appear  higher  than  those 
incurred by Member States. One-off costs estimates for financial institutions in Austria, France, 
Germany,  Luxembourg  and  UK  given  by  stakeholders  total  around  EUR  340  million  while 
yearly costs are estimated at EUR 120 million. 

No  quantitative  estimates  are  available  for  the  administrative  burden  incurred  by  taxpayers 
having  to  comply  with  DAC2  reporting  obligations.  For  DAC2,  the  actual  reporting  bodies 
towards  tax  authorities  are  not  the  taxpayers  but  the  financial  institutions  maintaining  the 
reportable accounts.  

DAC3 
The total costs incurred by Member States for implementing AEOI under DAC3 were EUR 2.1 
million.  The  significantly  lower  amount  compared  with  DAC1  or  DAC2  is  due  to  the 
following:  

  DAC3 information is not exchanged on a bilateral basis, but the relevant information is 

uploaded in a Central Directory managed by the Commission; 
the number of ‘pieces of information’ to be shared is much smaller than in the case of 
DAC1 and DAC2; 
less complex systems and procedures needed to be put in place by Member States. 

 

 

Despite lower costs there remain significant differences between Member States.  

12 

 
 
 
 
 
 
 
 
 
Figure 11. DAC3 Costs up to 2017 (16 Member States) (EUR) 

Benefits of AEOI between competent tax authorities 

The key benefit of AEOI lies in providing tax administrations with information which is useful 
to counter cross-border tax fraud, evasion and avoidance. There is a high risk to non-intentional 
and intentional non-compliance of income or assets, which are not nationally reported by third 
parties, such as employers and banks. As the foreign-source income and assets are reported in 
country of residence only by the taxpayer, it could be presumed to be a risk area in respect of 
compliance8.  

However, when it comes to quantify the benefits of AEOI in terms of additional tax revenues, 
the Member States have repeatedly explained how difficult it is to define the direct monetary 
benefit of tax data received from abroad, which is at its best only part of the information used 
for assessing additional taxes, or may not lead to any additional tax revenues at all. It can be 
said that tax correctness is already a valuable benefit to reach via mandatory AEOI, but that 
does  not  necessarily  mean  additional  tax  revenues.  Additionally,  as  part  of  the  whole  set  of 
information  concerning  certain  taxpayer,  the  data  coming  automatically  from  abroad  has  its 
role to provide the full profile of a risky or a compliant taxpayer.  Finally, another important 
benefit  is  certainly  the  deterrent  effect  for  taxpayers  due  to  the  expected  increasing  use  of 
information exchanged. 

Using  information  received  by  other  Member  States  via  automatic  exchanges,  some  Member 
States have been able to identify under-reporting of income by some taxpayers.  

As  regards  the  benefits  in  terms  of  increased  tax  compliance,  five  Member  States  (Belgium, 
Estonia,  Finland,  Poland  and  Slovenia)  have  been  able  to  calculate  the  monetary  benefits 
resulting from the use of DAC1 information.  

8See  the  report  on  Tax  Gap  to  the  Committee  on  Finance  and  U.S.  Senate  prepared  by  the  United  States 
Government Accountability Office (GAO). 

13 

 
 
 
 
 
 
 
                                                           
Table 12: Incremental Tax Revenue from DAC1-related Actions (EUR ‘000) 

For  Estonia,  Poland  and  Slovenia  data  are  available  for  more  than  one  year.  It  emerges  that 
benefits  increase  overtime.  This  may  be  explained  by  tax  authorities  progressively  making  a 
better  use  of  the  information  exchanged.  For  Belgium,  Poland  and  Slovenia,  which  provided 
information  per  category  of  DAC1  information,  practically  all  benefits  derive  from  the 
compliance use of DAC1 information on employment income and pensions, i.e. controlling if 
the taxpayers have been reporting these  foreign  income.  In the  case of  Belgium and Finland, 
benefits  are described as an increase in  the tax base. Actual additional revenues collected are 
not  known  but  they  are  likely  a  fraction  of  overall  increase  of  the  tax  base.  For  Belgium, 
Estonia, Finland and Slovenia benefits  reported are higher than reported costs9. For example, 
Belgium  has  reported  DAC1  costs  of  EUR  9,100,000  and  additional  (unreported)  income  of 
EUR 289,470,000 in tax base. If the tax imposed on these additional income would be 10 % it 
would  mean  EUR  28,947,000  in  added  tax  revenues.  In  the  case  of  DAC2  and  DAC3,  no 
information is available on benefits from the compliance use of information received due to the 
short time between this report and the first DAC2 and DAC3 exchanges in 2017.  

Moving to the question of benefits in terms of deterrence, estimates show that the CRS (which 
has  been  implemented  in  the  EU  via  the  DAC2)  has  had  a  significant  deterrent  effect. 
According to the Global Forum, the CSR led to voluntary disclosures and investigations which 
brought  close  to  EUR  85  billion  in  additional  tax  revenue10.  But,  this  figure  covers  the  full 
scope  of  CRS  and  not  only  intra-EU  exchanges  under  DAC2.  Despite  the  difficulties  of 
distinguishing between DAC2 and CRS benefits (and costs) it should be noted that even a very 
small share of that amount, for example EUR 1 billion would far outweigh the reported costs 
for tax authorities.  

9 Costs for Poland are not available.  
10  Global Forum March 2018 Progress report to Ministers of Finance, p. 13.  
http://www.oecd.org/tax/transparency/about-the-global-forum/g20/  

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6.  CONCLUSIONS AND WAY FORWARD 

Three key conclusions emerge from this report.  

First, Member States have recognised that the tax information received via AEOI can be used 
in  different  ways.  The  tax  authorities  mainly  use  the  information  for  risk  assessment  and 
personal income tax assessment. However, several Member States still make very limited if any 
use of the information they receive.  

Second, AEOI has required significant development investments by Member States, and even if 
the  recurring  costs  are  lower,  there  are  annual  costs  to  maintain  the  exchange  activities.  As 
regards  the  benefits  of  AEOI,  it  appears  that  the  main  benefits  lie  in  the  increased  tax 
compliance and in the deterrent effect for taxpayers. However, it is very difficult to quantify the 
benefits of AEOI in terms of additional tax revenues.  

Third, often Member States send information which do not include all necessary identification 
elements which would permit an automated matching of this information with the one available 
nationally. As a way forward, two main areas of improvement are identified:  

Improve quality of information   

Member States would improve EU-wide compliance and ensure a level playing field for both 
nationally and cross-border active taxpayers, if AEOI is used more effectively. Using mass of 
information effectively requires two main actions:  

•  Member States should review the quality of the information they collect before they send it.  

•  Member States receiving the information  should give timely and constructive feedback to 
those  sending  it,  so  that  AEOI  quality  can  raise  overtime.  Member  States  should  provide 
feedback also to the entities (e.g. financial institutions) which supply information for AEOI.  

Make better use of data received via AEOI  

Full use of the AEOI information  requires strategic focus at  the level  of Member States,  and 
agreeing on some common key indicators for benefits and assessment methods:  

•  Member  States  should  develop  a  common  methodology  to  estimate  the  benefits  of  AEOI 

reliably and comprehensively.  

•  Member States should ensure AEOI information is  part of the tax risk management cycle 
and that it is used more for awareness campaign to improve voluntary compliance as well 
as for audits, combining all AEOI flows together as well as information obtained nationally 
and  received  via  other  means  of  administrative  cooperation  (e.g.  simultaneous  controls, 
presences  in  other  tax  administrations  during  enquiries  and  through  exchange  of 
information on request and spontaneously).  

•  Member  States  should  share  knowledge  of  best  practices  for  full  and  efficient  use  of  the 

data, for example by using advanced analytics techniques, such as data mining.  

The  EU  Fiscalis  programme  for  tax  cooperation11  can  provide  support  for  both  improving 
AEOI data quality and making sure information exchanged is used efficiently and effectively to 
create a fairer tax system for the benefit of Europe and its citizens. 

11 Proposal of 8 June 2018 for a Regulation establishing the 'Fiscalis' programme  for cooperation in the  field of 
taxation as part of the Multiannual Financial Framework (MFF) for the years 2021-2027:  
https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1529053629679&uri=CELEX:52018PC0443  

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