Second Evaluation of Directive 2011/16/EU on Administrative cooperation in Direct taxation and its amendments
Date: 2024-05-07
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: common tariff policy, fiscal policy



PART-2024-417076V1.docx











CALL FOR EVIDENCE 


FOR AN EVALUATION / FITNESS CHECK 






This document aims to inform the public and stakeholders about the Commission’s work, so they can provide feedback and participate effectively in consultation activities. 


We ask these groups to provide views on the Commission’s understanding of the problem and possible solutions and to share any relevant information that they may have.




 You should finalise this document at the earliest stages of the evaluation process, so that best use can be made of feedback from stakeholders.




 Although you are not required to consult the interservice group on the draft call for evidence, it is good practice to involve DGs with related policy areas from an early stage in the process.






Title of the evaluation




Administrative Cooperation on direct taxation – evaluation






Lead DG – responsible unit 




TAXUD Unit D2 – Direct Tax Policy & Cooperation






Indicative timetable 


(planned start date and completion date)




Q1 2023-Q4 2024






Additional information




-






This document is for information purposes only. It has no bearing on the final decision of the Commission on whether this initiative will be pursued or on its final content. All aspects of the initiative described by the document, including its timing, are subject to change.






A. Political context, purpose and scope of the evaluation






Political context 






Directive 2011/16/EU (Directive on administrative cooperation in the field of direct taxation – DAC) lays down the rules and procedures for close cooperation between Member States’ tax authorities in the direct tax area
                           1
, to enable the correct assessment of taxes in cross-border situations and to combat tax fraud and evasion.


The DAC sets up a common system for cooperation between Member States, allowing them to assist each other through exchange of information (on request, automatically or spontaneously) as well as other forms of cooperation (administrative inquiries, presence in administrative offices and participation in administrative inquiries, simultaneous controls and joint audits).


An evaluation of this system was included in Annex II to the Commission work programme for 2024 and is required by the DAC itself. Article 27(1) of the DAC provides that every 5 years after 1 January 2013, the Commission must submit a report on the application of the DAC to the European Parliament and to the Council. A first evaluation of the DAC was based on a study conducted in 2018 and published in 2019. The present evaluation will be the second one and will cover the years from 2018 to 2022.


Automatic exchange of information (AEOI) is one of the most important cooperation tools. Since 1 January 2015, information has been automatically exchanged on five categories of income and capital (income from employment, pensions, directors’ fees, life insurance products, and ownership of and income from immovable property). In the following years, the DAC has been amended to include financial account information (DAC2); cross-border tax rulings and advance pricing agreements (DAC3); country-by-country reports (DAC4); reportable (i.e. presenting an indication of a potential risk of tax avoidance) cross-border arrangements (DAC6); and income received from platforms (DAC7). Amendments also allowed tax authorities to have access to certain anti money laundering data (DAC5) and, more recently, extended the scope of simultaneous controls to cover joint audits (DAC7). In 2023, the Council adopted DAC8 implementing AEOI on crypto assets, extending the scope of AEOI on rulings, and improving the use of DAC information (DAC1). In the following years, the Directive has been amended to include financial account information (DAC2); cross-border tax rulings and advance pricing agreements (DAC3); country-by-country reports (DAC4); reportable cross-border potentially tax harmful arrangements (DAC6); income received from platforms (DAC7). 






Purpose and scope 






The evaluation will focus on the functioning of the DAC in 2018-2022. Therefore, DAC7 and DAC8 are not covered. By contrast, it does include an evaluation of the hallmarks for the exchange of information on potentially harmful cross-border arrangements introduced by DAC6, which is envisaged in Article 27(2) of the DAC.


The key objectives of the evaluation are to evaluate the DAC and its amendments in line with the better regulation criteria – relevance, effectiveness, efficiency, coherence and EU added value. 


Firstly, the evaluation will assess whether the DAC’s scope and purpose are (still) relevant, and if it addresses challenges that Member States are facing in terms of correct assessment of taxes in cross-border situations and fighting tax avoidance and evasion. There are two large groups of tools: AEOI in its many forms, and a more focused group of tools for a single or a limited group of taxpayers, such as exchange of information on request, spontaneous exchange of information, simultaneous controls and joint audits. Both groups of tools will be evaluated.


Secondly, the evaluation will examine whether the DAC is effective in providing the desired outcomes and impact. In particular, it will assess whether the information exchange is usable in terms of completeness, quality and timeliness, and whether it is possible to match the information received with specific taxpayers in the receiving Member State. It is also important to examine whether the DAC has any deterrent effect and to assess the impact of the DAC on the objective of safeguarding Member States’ tax revenue and the functioning of the single market.  


Thirdly, the evaluation will look at the efficiency of the exchange of information and other tools of cooperation under the DAC umbrella in cost-benefit terms. In line with the Commission’s ongoing action to rationalise and simplify reporting requirements for companies and administrations, a special focus will be given to this aspect to inform potential proposals to reduce the reporting burden for the stakeholders involved. 


Furthermore, especially given the many amendments to the DAC, it is necessary to evaluate its internal coherence as well as its consistency with other relevant EU initiatives. 


Lastly, the EU added value will be assessed, especially in comparison to other available means of exchange of information that exist at international level.






B. Better regulation






Consultation strategy 






As part of the study commissioned by the Commission, many targeted consultations will take place, notably in the form of interviews with various types of stakeholders (e.g. tax authorities, financial institutions, large companies, online platforms, tax advisers and accountants or non-governmental organisations) from various geographical locations. 


The Commission will also launch a public consultation, which will supplement the targeted consultations of the above‑mentioned study. The aim of the public consultation is to reach a wider and more diverse audience, in particular the general public. 


It will be published on the ‘Have your say’ web page in all official languages of the EU. It will run for 12 weeks from May to July 2024. It will be promoted via the Commission’s normal communication channels, such as X, Facebook and LinkedIn.






Why are we consulting? 






The purpose of the consultation is to collect views from all stakeholders on the impact of the DACs.


A public consultation enables the general public to express their views and taxpayers to provide first-hand experience with the impacts of exchange of information under the DAC. Together with the targeted consultation, the results of the public consultation will provide a full picture of the use of information exchanged under the DAC. The Commission will duly consider these in its evaluation report. 






Target audience






The stakeholders are: (i) the tax administrations of all Member States, which are the direct users of the instruments provided by the DAC; (ii) taxpayers carrying out or managing cross-border operations in the single market; and (iii) entities that need to report under the DAC, e.g. investment entities, multinational companies, financial institutions, tax intermediaries and cross-border workers. Non-governmental organisations and academia may also provide valuable insight.






Data collection and methodology






The methodology will be in line with that of the 2019 evaluation to ensure the comparability of results. The main steps to be taken are to: (i) analyse the implementation of the DAC and its amendments; (ii) analyse data on AEOI and on other administrative cooperation tools; and (iii) analyse Member States’ replies to the yearly questionnaires sent by the Commission to national tax administrations on the functioning of the DAC and on the assessment of AEOI. This will be supplemented by targeted consultations with tax authorities and stakeholders as well as open public consultations.


The evaluation will be based on the findings of an external study on the DAC, the results of the public consultation, data provided by Member States and any relevant input from third parties. Data from Member States includes their replies to the yearly questionnaires as well as their replies to specific questionnaires (e.g. a survey on the relevance of Annex IV, which was added by DAC6). 


Where necessary, the evaluation will gather new, additional evidence/data from stakeholders, in particular Member States’ tax authorities, to provide a fair picture of the functioning of the DAC mainly in areas where cooperation could still be improved. While doing so, it will try to identify the reasons behind the identified problems and their effect on stakeholders, primarily Member States. 


Additional information will also be gathered from the general public through a public consultation.


The evaluation will follow and fulfil all the Commission’s better regulation requirements.










(1)
 The scope of the DAC encompasses all taxes of any kind with the exception of value added tax, customs duties, excise duties and compulsory social contributions because these are already covered by other EU legislation on administrative cooperation.