Article 1 Subject matter
1. This Directive lays down the rules and procedures under which the Member States shall cooperate with each other with a view to exchanging information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Member States concerning the taxes referred to in Article 2. 2. This Directive also lays down provisions for the exchange of information referred to in paragraph 1 by electronic means, as well as rules and procedures under which the Member States and the Commission are to cooperate on matters concerning coordination and evaluation. 3. This Directive shall not affect the application in the Member States of the rules on mutual assistance in criminal matters. It shall also be without prejudice to the fulfilment of any obligations of the Member States in relation to wider administrative cooperation ensuing from other legal instruments, including bilateral or multilateral agreements.
Article 2 Scope
1. This Directive shall apply to all taxes of any kind levied by, or on behalf of, a Member State or the Member State’s territorial or administrative subdivisions, including the local authorities. 2. Notwithstanding paragraph 1, this Directive shall not apply to value added tax and customs duties, or to excise duties covered by other Union legislation on administrative cooperation between Member States. This Directive shall also not apply to compulsory social security contributions payable to the Member State or a subdivision of the Member State or to social security institutions established under public law. 3. In no case shall the taxes referred to in paragraph 1 be construed as including: (a) fees, such as for certificates and other documents issued by public authorities; or (b) dues of a contractual nature, such as consideration for public utilities. 4. This Directive shall apply to the taxes referred to in paragraph 1 levied within the territory to which the Treaties apply by virtue of Article 52 of the Treaty on the European Union.
Article 3 Definitions
For the purposes of this Directive the following definitions shall apply: 1. ‘competent authority’ of a Member State means the authority which has been designated as such by that Member State. When acting pursuant to this Directive, the central liaison office, a liaison department or a competent official shall also be deemed to be competent authorities by delegation according to Article 4; 2. ‘central liaison office’ means the office which has been designated as such with principal responsibility for contacts with other Member States in the field of administrative cooperation; 3. ‘liaison department’ means any office other than the central liaison office which has been designated as such to directly exchange information pursuant to this Directive; 4. ‘competent official’ means any official who is authorised to directly exchange information pursuant to this Directive; 5. ‘requesting authority’ means the central liaison office, a liaison department or any competent official of a Member State who makes a request for assistance on behalf of the competent authority; 6. ‘requested authority’ means the central liaison office, a liaison department or any competent official of a Member State who receives a request for assistance on behalf of the competent authority; 7. ‘administrative enquiry’ means all controls, checks and other action taken by Member States in the performance of their duties with a view to ensuring the proper application of tax legislation; 8. ‘exchange of information on request’ means the exchange of information based on a request made by the requesting Member State to the requested Member State in a specific case; 9. ‘automatic exchange’ means the systematic communication of predefined information to another Member State, without prior request, at pre-established regular intervals. In the context of Article 8, available information refers to information in the tax files of the Member State communicating the information, which is retrievable in accordance with the procedures for gathering and processing information in that Member State; 10. ‘spontaneous exchange’ means the non-systematic communication, at any moment and without prior request, of information to another Member State; 11. ‘person’ means: (a) a natural person; (b) a legal person; (c) where the legislation in force so provides, an association of persons recognised as having the capacity to perform legal acts but lacking the status of a legal person; or (d) any other legal arrangement of whatever nature and form, regardless of whether it has legal personality, owning or managing assets, which, including income derived therefrom, are subject to any of the taxes covered by this Directive; 12. ‘by electronic means’ means using electronic equipment for the processing, including digital compression, and storage of data, and employing wires, radio transmission, optical technologies or other electromagnetic means; 13. ‘CCN network’ means the common platform based on the common communication network (CCN), developed by the Union for all transmissions by electronic means between competent authorities in the area of customs and taxation.
Amendment rationale: CONTEXT OF THE PROPOSAL 1. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the European Union and worldwide. Billions of euros are being lost. By reducing fraud and evasion Member States could increase tax revenues which would also provide them with added scope to restructure their tax systems in a way that better promotes growth as outlined in the 2013 Annual Growth Survey. In addition, given the order of magnitude of the challenge, stepping up the fight against tax fraud and evasion is not only an issue of revenue, but also of fairness. Particularly in these difficult economic times, honest taxpayers should not suffer additional tax increases to compensate for revenue losses incurred due to tax fraudsters and evaders. 2. For years, the European Union (EU) has been working actively on these problems, in particular by adopting specific legal instruments to implement automatic exchange of information ("AEOI") within the Union. The EU Savings Directive (the "EUSD") ensures AEOI on interest income and a proposal to enlarge its scope is under discussion in the Council. The Directive on Administrative Cooperation (the "DAC") ensures that, from 2015, Member States will exchange information automatically upon availability on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property. 3. Member States have now expressed a clear wish to go beyond current levels of cooperation. The European Council of 2 March 2012 invited the Council and the Commission to develop rapidly concrete ways to improve the fight against tax fraud. On 6 December 2012, the Commission presented an Action plan to strengthen the fight against tax fraud and tax evasion[1]. The Action Plan highlights the need to promote AEOI as the European and international standard of transparency and exchange of information in tax matters. On 14 May 2013, the ECOFIN Council adopted conclusions welcoming the work by the Commission on developing measures to combat tax fraud, tax evasion and aggressive tax planning and recognising the useful role the Commission Action Plan can play in this regard[2]. 4. The European Council on 22 May 2013 went even further, requesting the extension of AEOI at EU and global levels with a view to fighting against tax fraud, tax evasion and aggressive tax planning. On that occasion, the Commission committed itself to proposing amendments to the DAC in June 2013 in order to expand the scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 5. The objective of the present proposal is, therefore, to expand the scope of AEOI in the EU beyond that provided for in existing EU automatic information exchange arrangements. It would bring the following other items within the scope of the AEOI: dividends, capital gains, other financial income and account balances. The provision for a review and expansion of the DAC in 2017 would remain. However, in line with the objective of enhancing AEOI the removal of the condition of availability would now be considered at that time in respect of all five existing categories together so that the DAC would cover the full range of income. Furthermore, the categories to be considered for inclusion at that time would be amended in the light of the present proposal (see below). Extending the scope of the AEOI would also contribute to ensuring equality of treatment between different types of assets and to avoiding undesirable reallocation of portfolios. 6. The Commission proposes to remove the reference in Article 8(3) of the Directive to a threshold below which a Member State may not wish to receive information from other Member States. Discussions have revealed that such a threshold is not practical for the Member States that are required to report. However, a Member State could continue to opt not to receive any information on a particular category of income. 7. An EU initiative is needed both from an internal market perspective and in terms of efficiency and effectiveness: – An EU initiative ensures a coherent, consistent and comprehensive EU-wide approach to AEOI in the internal market. It would mean a single reporting approach across Member States which would lead to costs savings both for tax administrations and economic operators (see also point 11 below). – An EU legal instrument would also ensure certainty for tax administrations and economic operators within the EU. – An EU legal instrument would contribute to the development of the international standard of AEOI. – An EU legal instrument based on the DAC would involve the use of the IT arrangements already in place or under development to facilitate information reporting under the EUSD and the DAC. Under those Directives, EU Member States share information in specific formats using a specific communication channel (the CCN/CSI system). These formats could easily be extended so as to be usable also for the additional items now proposed for inclusion. As Member States have invested considerable time and money in developing these formats, there would be economies of scale if Member States also exchanged information on the new items using these formats. – Furthermore, the Council already committed itself, in Article 8(5) of the DAC, to consider in due course whether automatic information exchange should be extended, on the basis of an EU-wide legal instrument, to cover other categories of income such as dividends and capital gains. The present proposal is, therefore, merely accelerating work in line with this commitment. 8. The agreements that many governments have concluded or will conclude with the US as regards the US Foreign Account Tax Compliance Act (FATCA)[3] have given further impetus to AEOI as a way of combating tax fraud and evasion. 9. On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced plans for a pilot action on AEOI using the FATCA model agreed with the US as a basis. These Member States also called on Europe to take a lead in promoting AEOI in the world and expressed the wish to discuss how progress could be made within the EU on improving tax information exchange between all Member States. 10. Article 19 of the DAC states that a Member State that provides wider cooperation to a third country may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State. The fact that Member States have concluded or will conclude agreements with the US as regards FATCA means that they provide for a wider cooperation within the meaning of that provision. 11. Expanded AEOI on the basis of an EU-wide legislative instrument would remove the need and incentive for Member States to invoke Article 19 of the DAC, with a view to concluding bilateral or multilateral agreements that may be considered appropriate on the same subject in the absence of relevant Union legislation. The scenario of various agreements concluded under that provision would, in fact, present a number of disadvantages, compared to a solution brought about by EU action: – The level playing field between the Member States might be put at risk if Member States agreed to cooperate on increased AEOI in different ways. This could lead to distortions and artificial flows of capital within the internal market. – If the agreements between Member States were not identical, this could also create difficulties for economic operators that are active in several Member States as they could then face different compliance requirements in different Member States. – It might also mean that Member States would not be able to utilise the IT reporting systems that have been developed within the EU (see above). 12. Timely adoption and implementation are crucial so as to reap the benefits as quickly as possible. In order to ensure consistency with the deadline for the application of AEOI to the categories of income and capital already covered by the DAC, the time limits proposed for transposition and application of the new rules are 31 December 2014 and 1 January 2015, respectively.
Revised version (Article 3 Definitions):
For the purposes of this Directive the following definitions shall apply: 1. ‘competent authority’ of a Member State means the authority which has been designated as such by that Member State. When acting pursuant to this Directive, the central liaison office, a liaison department or a competent official shall also be deemed to be competent authorities by delegation according to Article 4; 2. ‘central liaison office’ means the office which has been designated as such with principal responsibility for contacts with other Member States in the field of administrative cooperation; 3. ‘liaison department’ means any office other than the central liaison office which has been designated as such to directly exchange information pursuant to this Directive; 4. ‘competent official’ means any official who is authorised to directly exchange information pursuant to this Directive; 5. ‘requesting authority’ means the central liaison office, a liaison department or any competent official of a Member State who makes a request for assistance on behalf of the competent authority; 6. ‘requested authority’ means the central liaison office, a liaison department or any competent official of a Member State who receives a request for assistance on behalf of the competent authority; 7. ‘administrative enquiry’ means all controls, checks and other action taken by Member States in the performance of their duties with a view to ensuring the proper application of tax legislation; 8. ‘exchange of information on request’ means the exchange of information based on a request made by the requesting Member State to the requested Member State in a specific case; 9. ‘automatic exchange’ means the systematic communication of predefined information on residents in other Member States to the relevant Member State of residence, without prior request, at pre-established regular intervals. In the context of Article 8, available information refers to information in the tax files of the Member State communicating the information, which is retrievable in accordance with the procedures for gathering and processing information in that Member State. In the context of Article 8(3a), Article 8(7a), Article 21(2) and Article 25(2) and (3) any capitalised term shall have the meaning that it has under the corresponding definitions set out in Annex I; 10. ‘spontaneous exchange’ means the non-systematic communication, at any moment and without prior request, of information to another Member State; 11. ‘person’ means: (a) a natural person; (b) a legal person; (c) where the legislation in force so provides, an association of persons recognised as having the capacity to perform legal acts but lacking the status of a legal person; or (d) any other legal arrangement of whatever nature and form, regardless of whether it has legal personality, owning or managing assets, which, including income derived therefrom, are subject to any of the taxes covered by this Directive; 11. ‘person’ means: (a) a natural person; (b) a legal person; (c) where the legislation in force so provides, an association of persons recognised as having the capacity to perform legal acts but lacking the status of a legal person; or (d) any other legal arrangement of whatever nature and form, regardless of whether it has legal personality, owning or managing assets, which, including income derived therefrom, are subject to any of the taxes covered by this Directive; 12. ‘by electronic means’ means using electronic equipment for the processing, including digital compression, and storage of data, and employing wires, radio transmission, optical technologies or other electromagnetic means; 13. ‘CCN network’ means the common platform based on the common communication network (CCN), developed by the Union for all transmissions by electronic means between competent authorities in the area of customs and taxation.
Article 4 Organisation
1. Each Member State shall inform the Commission, within one month from 11 March 2011, of its competent authority for the purposes of this Directive and shall inform the Commission without delay of any change thereto. The Commission shall make the information available to the other Member States and publish a list of the authorities of the Member States in the Official Journal of the European Union . 2. The competent authority shall designate a single central liaison office. The competent authority shall be responsible for informing the Commission and the other Member States thereof. The central liaison office may also be designated as responsible for contacts with the Commission. The competent authority shall be responsible for informing the Commission thereof. 3. The competent authority of each Member State may designate liaison departments with the competence assigned according to its national legislation or policy. The central liaison office shall be responsible for keeping the list of liaison departments up to date and making it available to the central liaison offices of the other Member States concerned and to the Commission. 4. The competent authority of each Member State may designate competent officials. The central liaison office shall be responsible for keeping the list of competent officials up to date and making it available to the central liaison offices of the other Member States concerned and to the Commission. 5. The officials engaged in administrative cooperation pursuant to this Directive shall in any case be deemed to be competent officials for that purpose, in accordance with arrangements laid down by the competent authorities. 6. Where a liaison department or a competent official sends or receives a request or a reply to a request for cooperation, it shall inform the central liaison office of its Member State under the procedures laid down by that Member State. 7. Where a liaison department or a competent official receives a request for cooperation requiring action which falls outside the competence it is assigned according to the national legislation or policy of its Member State, it shall forward such request without delay to the central liaison office of its Member State and inform the requesting authority thereof. In such a case, the period laid down in Article 7 shall start the day after the request for cooperation is forwarded to the central liaison office.
Article 5 Procedure for the exchange of information on request
At the request of the requesting authority, the requested authority shall communicate to the requesting authority any information referred to in Article 1(1) that it has in its possession or that it obtains as a result of administrative enquiries.
Article 6 Administrative enquiries
1. The requested authority shall arrange for the carrying out of any administrative enquiries necessary to obtain the information referred to in Article 5. 2. The request referred to in Article 5 may contain a reasoned request for a specific administrative enquiry. If the requested authority takes the view that no administrative enquiry is necessary, it shall immediately inform the requesting authority of the reasons thereof. 3. In order to obtain the requested information or to conduct the administrative enquiry requested, the requested authority shall follow the same procedures as it would when acting on its own initiative or at the request of another authority in its own Member State. 4. When specifically requested by the requesting authority, the requested authority shall communicate original documents provided that this is not contrary to the provisions in force in the Member State of the requested authority.
Article 7 Time limits
1. The requested authority shall provide the information referred to in Article 5 as quickly as possible, and no later than six months from the date of receipt of the request. However, where the requested authority is already in possession of that information, the information shall be transmitted within two months of that date. 2. In certain special cases, time limits other than those provided for in paragraph 1 may be agreed upon between the requested and the requesting authorities. 3. The requested authority shall confirm immediately and in any event no later than seven working days from receipt, if possible by electronic means, receipt of a request to the requesting authority. 4. Within one month of receipt of the request, the requested authority shall notify the requesting authority of any deficiencies in the request and of the need for any additional background information. In such a case, the time limits provided for in paragraph 1 shall start the day after the requested authority has received the additional information needed. 5. Where the requested authority is unable to respond to the request by the relevant time limit, it shall inform the requesting authority immediately and in any event within three months of the receipt of the request, of the reasons for its failure to do so, and the date by which it considers it might be able to respond. 6. Where the requested authority is not in possession of the requested information and is unable to respond to the request for information or refuses to do so on the grounds provided for in Article 17, it shall inform the requesting authority of the reasons thereof immediately and in any event within one month of receipt of the request.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Fair taxation is one of the main foundations of the European social market economy . It is also and among the key pillars of the Commission’s commitment for ‘ an economy that works for people ’ 1 . A fair tax system should be based on tax rules that ensure everybody pays their fair share, while making it easy for taxpayers, whether businesses or individuals , to comply with the rules. The COVID-19 pandemic and the consequences derived from Russia’s war of aggression against Ukraine add urgency to the need to protect public finances. Member States will require sufficient tax revenues to finance their considerable efforts to contain the negative economic impact of the crises, while ensuring that the most vulnerable groups are protected. In this context, ensuring tax fairness by preventing tax fraud, tax evasion and tax avoidance has become more important than ever. And, in order to better prevent tax fraud, tax evasion and tax avoidance in the EU, it is crucial to strengthen administrative cooperation and exchange of information on tax matters. More specifically, the emergence of alternative means of payment and investment, such as crypto-assets and e-money, threaten to undermine the progress made on tax transparency in recent years and pose substantial risks for tax evasion. Hence, the Commission committed in the Communication for an Action Plan for fair and simple taxation supporting the recovery strategy 2 to update the directive on administrative cooperation to expand its scope to an evolving economy and strengthen the administrative cooperation framework. In support of the work of the Commission , the Council (Ecofin) adopted Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond 3 on 27 November 2020. The Ecofin report to the European Council on tax issues 4 , which was approved by the European Council on 1 December 2021, states that it “ is expected that the Commission will, in 2022, table a legislative proposal on further revision of the Directive 2011/16/EU on administrative cooperation in the field of taxation, concerning exchange of information on crypto-assets and tax rulings for wealthy individuals. ” The European Parliament adopted its resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy 5 where it welcomes the Action Plan and supports its thorough implementation and specifically calls on the Commission to include further categories of income and assets such as crypto-assets in the scope of automatic exchange of information. This proposal should also be seen in the context of the parallel work in the OECD to agree on a standard for the exchange on information for tax purposes in relation to crypto-assets (the CARF) and the extension of the scope of the Common Reporting Standard ( CRS) to cover e-money , which resulted in an agreement in August 2022 6 and was welcomed by the G20 in the Bali Leaders’ Declaration 7 in November 2022. In recent years, the EU has focused its efforts on tackling tax fraud, tax evasion and tax avoidance , and on boosting transparency. M ajor improvements have been made in particular in the field of exchange of information trough a number of amendments to the Directive on Administrative Cooperation (DAC) 8 . Nevertheless, the European Court of Auditors report 9 and the European Parliament resolution 10 pointed at some inefficiencies and the need for improvement in several areas of the Directive , relat ing to all forms of exchanges of information and administrative cooperation. In particular, the lack of specific provisions covering e-money and central banck digital currencies , cross-border tax rulings for high net worth individuals and the lack of clarity of the compliance measures emerged among the most problematic elements of the framework 11 . The European Court of Auditors report notes that ‘Cryptocurrencies are excluded from the scope of information exchange. If a taxpayer holds money in electronic cryptocurrencies, the platform or other electronic provider supplying portfolio services for such customers are not obliged to declare any such amounts or gains acquired to the tax authorities. Therefore, money held in such electronic instruments remains largely untaxed.’ Therefore, there is a clear need to improve the existing framework for exchange of information and administrative cooperation in the EU. In addition to making existing rules more stringent, the expansion of administrative cooperation to new areas is required in the EU. This is to address the challenges posed by the ever increasing use of crypto-assets for investment purposes. This will help tax administrations in the EU to better and more efficiently collect taxes and keep pace with new developments, especially given the differences in the taxation systems for crypto-assets from Member State to Member State. The characteristics of crypto-assets make the traceability and detection of taxable events by tax administrations very difficult. The problem is intensified in particular when trading is carried out using crypto-asset service providers or crypto-asset operators located in another country, or when it is done directly between individuals or entities established in another jurisdiction. The lack of reporting of income from crypto-asset investments leads to a shortfall of Member States’ tax revenues. It also provides crypto-asset users with an advantage over those who do not invest in crypto-assets. If this regulatory gap is not addressed, the objective of fair taxation cannot be ensured. In order to address these concerns, the Commission brought forward this proposal that is based on the OECD crypto-asset reporting framework. The latter specifies due diligence procedures, reporting requirements and other rules for reporting crypto-asset service providers. The main difference between the proposal and the OECD crypto-asset reporting framework is that operators of crypto-asset services active on the EU market are regulated by Regulation XXX. Well functioning and coordinated reporting and exchange of information are further needed to improve the conditions for taking necessary action to enforce sanctions against Russia. This increases the urgency and highlights the importance of introducing provisions to ensure that information related to both holding, and transactions of crypto-assets are reported and exchanged among Member States. This proposal foresees also to strengthen existing provisions of the Directive to reflect the developments observed in the internal market and at international level. It should lead to an effective reporting and exchange of information including by reflecting the latest additions to the Common Reporting Standard including the integration of e-money and central bank digital currency provisions, by providing a clear and harmonised framework for compliance measures, or by extending the scope of cross-border rulings to high net worth individuals.
Revised version (Article 7 Time limits):
1. The requested authority shall provide the information referred to in Article 5 as quickly as possible, and no later than three months from the date of receipt of the request. However, where the requested authority is unable to respond to the request by the relevant time limit, it shall inform the requesting authority immediately and in any event within three months of the receipt of the request, of the reasons for its failure to do so, and the date by which it considers it might be able to respond. The time limit shall not be longer than six months from the date of receipt of the request. However, where the requested authority is already in possession of that information, the information shall be transmitted within two months of that date. 2. In certain special cases, time limits other than those provided for in paragraph 1 may be agreed upon between the requested and the requesting authorities. 3. The requested authority shall confirm immediately and in any event no later than seven working days from receipt, if possible by electronic means, receipt of a request to the requesting authority. 4. Within one month of receipt of the request, the requested authority shall notify the requesting authority of any deficiencies in the request and of the need for any additional background information. In such a case, the time limits provided for in paragraph 1 shall start the day after the requested authority has received the additional information needed. 6. Where the requested authority is not in possession of the requested information and is unable to respond to the request for information or refuses to do so on the grounds provided for in Article 17, it shall inform the requesting authority of the reasons thereof immediately and in any event within one month of receipt of the request.
Article 8 Scope and conditions of mandatory automatic exchange of information
1. The competent authority of each Member State shall, by automatic exchange, communicate to the competent authority of any other Member State, information regarding taxable periods as from 1 January 2014 that is available concerning residents in that other Member State, on the following specific categories of income and capital as they are to be understood under the national legislation of the Member State which communicates the information: (a) income from employment; (b) director’s fees; (c) life insurance products not covered by other Union legal instruments on exchange of information and other similar measures; (d) pensions; (e) ownership of and income from immovable property. 2. Before 1 January 2014, Member States shall inform the Commission of the categories listed in paragraph 1 in respect of which they have information available. They shall inform the Commission of any subsequent changes thereto. 3. The competent authority of a Member State may indicate to the competent authority of any other Member State that it does not wish to receive information on the categories of income and capital referred to in paragraph 1, or that it does not wish to receive information on income or capital not exceeding a threshold amount. It shall also inform the Commission thereof. A Member State may be considered as not wishing to receive information in accordance with paragraph 1, if it does not inform the Commission of any single category in respect of which it has information available. 4. Before 1 July 2016, Member States shall provide the Commission on an annual basis with statistics on the volume of automatic exchanges and, to the extent possible, with information on the administrative and other relevant costs and benefits relating to exchanges that have taken place and any potential changes, for both tax administrations and third parties. 5. Before 1 July 2017, the Commission shall submit a report that provides an overview and an assessment of the statistics and information received, on issues such as the administrative and other relevant costs and benefits of the automatic exchange of information, as well as practical aspects linked thereto. If appropriate, the Commission shall present a proposal to the Council regarding the categories of income and capital and/or the conditions laid down in paragraph 1, including the condition that information concerning residents in other Member States has to be available. When examining a proposal put forward by the Commission, the Council shall assess further strengthening of the efficiency and functioning of the automatic exchange of information and raising the standard thereof, with the aim of providing that: (a) the competent authority of each Member State shall, by automatic exchange, communicate to the competent authority of any other Member State, information regarding taxable periods as from 1 January 2017 concerning residents in that other Member State, on at least three of the specific categories of income and capital listed in paragraph 1, as they are to be understood under the national legislation of the Member State communicating the information; and (b) the list of categories in paragraph 1 be extended to include dividends, capital gains and royalties. 6. The communication of information shall take place at least once a year, within six months following the end of the tax year of the Member State during which the information became available. 7. The Commission shall adopt the practical arrangements for the automatic exchange of information, in accordance with the procedure referred to in Article 26(2), before the dates referred to in Article 29(1). 8. Where Member States agree on the automatic exchange of information for additional categories of income and capital in bilateral or multilateral agreements which they conclude with other Member States, they shall communicate those agreements to the Commission which shall make those agreements available to all the other Member States
Amendment rationale: CONTEXT OF THE PROPOSAL 1. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the European Union and worldwide. Billions of euros are being lost. By reducing fraud and evasion Member States could increase tax revenues which would also provide them with added scope to restructure their tax systems in a way that better promotes growth as outlined in the 2013 Annual Growth Survey. In addition, given the order of magnitude of the challenge, stepping up the fight against tax fraud and evasion is not only an issue of revenue, but also of fairness. Particularly in these difficult economic times, honest taxpayers should not suffer additional tax increases to compensate for revenue losses incurred due to tax fraudsters and evaders. 2. For years, the European Union (EU) has been working actively on these problems, in particular by adopting specific legal instruments to implement automatic exchange of information ("AEOI") within the Union. The EU Savings Directive (the "EUSD") ensures AEOI on interest income and a proposal to enlarge its scope is under discussion in the Council. The Directive on Administrative Cooperation (the "DAC") ensures that, from 2015, Member States will exchange information automatically upon availability on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property. 3. Member States have now expressed a clear wish to go beyond current levels of cooperation. The European Council of 2 March 2012 invited the Council and the Commission to develop rapidly concrete ways to improve the fight against tax fraud. On 6 December 2012, the Commission presented an Action plan to strengthen the fight against tax fraud and tax evasion[1]. The Action Plan highlights the need to promote AEOI as the European and international standard of transparency and exchange of information in tax matters. On 14 May 2013, the ECOFIN Council adopted conclusions welcoming the work by the Commission on developing measures to combat tax fraud, tax evasion and aggressive tax planning and recognising the useful role the Commission Action Plan can play in this regard[2]. 4. The European Council on 22 May 2013 went even further, requesting the extension of AEOI at EU and global levels with a view to fighting against tax fraud, tax evasion and aggressive tax planning. On that occasion, the Commission committed itself to proposing amendments to the DAC in June 2013 in order to expand the scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 5. The objective of the present proposal is, therefore, to expand the scope of AEOI in the EU beyond that provided for in existing EU automatic information exchange arrangements. It would bring the following other items within the scope of the AEOI: dividends, capital gains, other financial income and account balances. The provision for a review and expansion of the DAC in 2017 would remain. However, in line with the objective of enhancing AEOI the removal of the condition of availability would now be considered at that time in respect of all five existing categories together so that the DAC would cover the full range of income. Furthermore, the categories to be considered for inclusion at that time would be amended in the light of the present proposal (see below). Extending the scope of the AEOI would also contribute to ensuring equality of treatment between different types of assets and to avoiding undesirable reallocation of portfolios. 6. The Commission proposes to remove the reference in Article 8(3) of the Directive to a threshold below which a Member State may not wish to receive information from other Member States. Discussions have revealed that such a threshold is not practical for the Member States that are required to report. However, a Member State could continue to opt not to receive any information on a particular category of income. 7. An EU initiative is needed both from an internal market perspective and in terms of efficiency and effectiveness: – An EU initiative ensures a coherent, consistent and comprehensive EU-wide approach to AEOI in the internal market. It would mean a single reporting approach across Member States which would lead to costs savings both for tax administrations and economic operators (see also point 11 below). – An EU legal instrument would also ensure certainty for tax administrations and economic operators within the EU. – An EU legal instrument would contribute to the development of the international standard of AEOI. – An EU legal instrument based on the DAC would involve the use of the IT arrangements already in place or under development to facilitate information reporting under the EUSD and the DAC. Under those Directives, EU Member States share information in specific formats using a specific communication channel (the CCN/CSI system). These formats could easily be extended so as to be usable also for the additional items now proposed for inclusion. As Member States have invested considerable time and money in developing these formats, there would be economies of scale if Member States also exchanged information on the new items using these formats. – Furthermore, the Council already committed itself, in Article 8(5) of the DAC, to consider in due course whether automatic information exchange should be extended, on the basis of an EU-wide legal instrument, to cover other categories of income such as dividends and capital gains. The present proposal is, therefore, merely accelerating work in line with this commitment. 8. The agreements that many governments have concluded or will conclude with the US as regards the US Foreign Account Tax Compliance Act (FATCA)[3] have given further impetus to AEOI as a way of combating tax fraud and evasion. 9. On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced plans for a pilot action on AEOI using the FATCA model agreed with the US as a basis. These Member States also called on Europe to take a lead in promoting AEOI in the world and expressed the wish to discuss how progress could be made within the EU on improving tax information exchange between all Member States. 10. Article 19 of the DAC states that a Member State that provides wider cooperation to a third country may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State. The fact that Member States have concluded or will conclude agreements with the US as regards FATCA means that they provide for a wider cooperation within the meaning of that provision. 11. Expanded AEOI on the basis of an EU-wide legislative instrument would remove the need and incentive for Member States to invoke Article 19 of the DAC, with a view to concluding bilateral or multilateral agreements that may be considered appropriate on the same subject in the absence of relevant Union legislation. The scenario of various agreements concluded under that provision would, in fact, present a number of disadvantages, compared to a solution brought about by EU action: – The level playing field between the Member States might be put at risk if Member States agreed to cooperate on increased AEOI in different ways. This could lead to distortions and artificial flows of capital within the internal market. – If the agreements between Member States were not identical, this could also create difficulties for economic operators that are active in several Member States as they could then face different compliance requirements in different Member States. – It might also mean that Member States would not be able to utilise the IT reporting systems that have been developed within the EU (see above). 12. Timely adoption and implementation are crucial so as to reap the benefits as quickly as possible. In order to ensure consistency with the deadline for the application of AEOI to the categories of income and capital already covered by the DAC, the time limits proposed for transposition and application of the new rules are 31 December 2014 and 1 January 2015, respectively.
Revised version (Article 8 Scope and conditions of mandatory automatic exchange of information):
1. The competent authority of each Member State shall, by automatic exchange, communicate to the competent authority of any other Member State, information regarding taxable periods as from 1 January 2014 that is available concerning residents in that other Member State, on the following specific categories of income and capital as they are to be understood under the national legislation of the Member State which communicates the information: (a) income from employment; (b) director’s fees; (c) life insurance products not covered by other Union legal instruments on exchange of information and other similar measures; (d) pensions; (e) ownership of and income from immovable property. 2. Before 1 January 2014, Member States shall inform the Commission of the categories listed in paragraph 1 in respect of which they have information available. They shall inform the Commission of any subsequent changes thereto. 3. The competent authority of a Member State may indicate to the competent authority of any other Member State that it does not wish to receive information on one or several of the categories of income and capital referred to in paragraph 1. It shall also inform the Commission thereof. A Member State may be considered as not wishing to receive information in accordance with paragraph 1, if it does not inform the Commission of any single category in respect of which it has information available. 3a. Each Member State shall take the necessary measures to require its Reporting Financial Institutions to perform the reporting and due diligence rules included in Annexes I and II and to ensure effective implementation of, and compliance with, such rules in accordance with Section IX of Annex I. Pursuant to the applicable reporting and due diligence rules contained in Annexes I and II, the competent authority of each Member State shall, by automatic exchange, communicate within the deadline laid down in point (b) of paragraph 6 to the competent authority of any other Member State, the following information regarding taxable periods as from 1 January 2016 concerning a Reportable Account: (a) the name, address, TIN(s) and date and place of birth (in the case of an individual) of each Reportable Person that is an Account Holder of the account and, in the case of any Entity that is an Account Holder and that, after application of due diligence rules consistent with the Annexes, is identified as having one or more Controlling Persons that is a Reportable Person, the name, address, and TIN(s) of the Entity and the name, address, TIN(s) and date and place of birth of each Reportable Person; (b) the account number (or functional equivalent in the absence of an account number); (c) the name and identifying number (if any) of the Reporting Financial Institution; (d) the account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year or period, the closure of the account; (e) in the case of any Custodial Account: (i) the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and (ii) the total gross proceeds from the sale or redemption of Financial Assets paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder; (e) in the case of any Custodial Account: (i) the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and (ii) the total gross proceeds from the sale or redemption of Financial Assets paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder; (f) in the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and (g) in the case of any account not described in point (e) or point (f), the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period. For the purposes of the exchange of information under this paragraph, unless otherwise foreseen in this paragraph or in the Annexes, the amount and characterisation of payments made with respect to a Reportable Account shall be determined in accordance with national legislation of the Member State which communicates the information. The first and second subparagraphs of this paragraph shall prevail over point (c) of paragraph 1 or any other Union legal instrument, including Council Directive 2003/48/EC ( 7 ), to the extent that the exchange of information at issue would fall within the scope of point (c) of paragraph 1 or of any other Union legal instrument, including Directive 2003/48/EC. 4. Before 1 July 2016, Member States shall provide the Commission on an annual basis with statistics on the volume of automatic exchanges and, to the extent possible, with information on the administrative and other relevant costs and benefits relating to exchanges that have taken place and any potential changes, for both tax administrations and third parties. 5. Before 1 July 2017, the Commission shall submit a report that provides an overview and an assessment of the statistics and information received, on issues such as the administrative and other relevant costs and benefits of the automatic exchange of information, as well as practical aspects linked thereto. If appropriate, the Commission shall present a proposal to the Council regarding the categories and the conditions laid down in paragraph 1, including the condition that information concerning residents in other Member States has to be available, or the items referred to in paragraph 3a, or both. When examining a proposal presented by the Commission, the Council shall assess further strengthening of the efficiency and functioning of the automatic exchange of information and raising the standard thereof, with the aim of providing that: (a) the competent authority of each Member State shall, by automatic exchange, communicate to the competent authority of any other Member State, information regarding taxable periods as from 1 January 2017 concerning residents in that other Member State, on all categories of income and capital listed in paragraph 1, as they are to be understood under the national legislation of the Member State communicating the information; and (b) the lists of categories and items laid down in paragraphs 1 and 3a be extended to include other categories and items, including royalties. 6. The communication of information shall take place as follows: (a) for the categories laid down in paragraph 1: at least once a year, within six months following the end of the tax year of the Member State during which the information became available; (b) for the information laid down in paragraph 3a: annually, within nine months following the end of the calendar year or other appropriate reporting period to which the information relates. 7. The Commission shall adopt the practical arrangements for the automatic exchange of information, in accordance with the procedure referred to in Article 26(2), before the dates referred to in Article 29(1). 7a. For the purposes of subparagraphs B.1(c) and C.17(g) of Section VIII of Annex I, each Member State shall, by 31 July 2015, provide to the Commission the list of entities and accounts that are to be treated, respectively, as Non-Reporting Financial Institutions and Excluded Accounts. Each Member State shall also inform the Commission if any changes in this respect occur. The Commission shall publish in the Official Journal of the European Union a compiled list of the information received and shall update the list as necessary. Member States shall ensure that those types of Non-Reporting Financial Institutions and Excluded Accounts satisfy all the requirements listed in subparagraphs B.1(c) and C.17(g) of Section VIII of Annex I, and in particular that the status of a Financial Institution as a Non-Reporting Financial Institution or the status of an account as an Excluded Account does not frustrate the purposes of this Directive. 8. Where Member States agree on the automatic exchange of information for additional categories of income and capital in bilateral or multilateral agreements which they conclude with other Member States, they shall communicate those agreements to the Commission which shall make those agreements available to all the other Member States
Article 9 Scope and conditions of spontaneous exchange of information
1. The competent authority of each Member State shall communicate the information referred to in Article 1(1) to the competent authority of any other Member State concerned, in any of the following circumstances: (a) the competent authority of one Member State has grounds for supposing that there may be a loss of tax in the other Member State; (b) a person liable to tax obtains a reduction in, or an exemption from, tax in one Member State which would give rise to an increase in tax or to liability to tax in the other Member State; (c) business dealings between a person liable to tax in one Member State and a person liable to tax in the other Member State are conducted through one or more countries in such a way that a saving in tax may result in one or the other Member State or in both; (d) the competent authority of a Member State has grounds for supposing that a saving of tax may result from artificial transfers of profits within groups of enterprises; (e) information forwarded to one Member State by the competent authority of the other Member State has enabled information to be obtained which may be relevant in assessing liability to tax in the latter Member State. 2. The competent authorities of each Member State may communicate, by spontaneous exchange, to the competent authorities of the other Member States any information of which they are aware and which may be useful to the competent authorities of the other Member States.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Fair taxation is one of the main foundations of the European social market economy . It is also and among the key pillars of the Commission’s commitment for ‘ an economy that works for people ’ 1 . A fair tax system should be based on tax rules that ensure everybody pays their fair share, while making it easy for taxpayers, whether businesses or individuals , to comply with the rules. The COVID-19 pandemic and the consequences derived from Russia’s war of aggression against Ukraine add urgency to the need to protect public finances. Member States will require sufficient tax revenues to finance their considerable efforts to contain the negative economic impact of the crises, while ensuring that the most vulnerable groups are protected. In this context, ensuring tax fairness by preventing tax fraud, tax evasion and tax avoidance has become more important than ever. And, in order to better prevent tax fraud, tax evasion and tax avoidance in the EU, it is crucial to strengthen administrative cooperation and exchange of information on tax matters. More specifically, the emergence of alternative means of payment and investment, such as crypto-assets and e-money, threaten to undermine the progress made on tax transparency in recent years and pose substantial risks for tax evasion. Hence, the Commission committed in the Communication for an Action Plan for fair and simple taxation supporting the recovery strategy 2 to update the directive on administrative cooperation to expand its scope to an evolving economy and strengthen the administrative cooperation framework. In support of the work of the Commission , the Council (Ecofin) adopted Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond 3 on 27 November 2020. The Ecofin report to the European Council on tax issues 4 , which was approved by the European Council on 1 December 2021, states that it “ is expected that the Commission will, in 2022, table a legislative proposal on further revision of the Directive 2011/16/EU on administrative cooperation in the field of taxation, concerning exchange of information on crypto-assets and tax rulings for wealthy individuals. ” The European Parliament adopted its resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy 5 where it welcomes the Action Plan and supports its thorough implementation and specifically calls on the Commission to include further categories of income and assets such as crypto-assets in the scope of automatic exchange of information. This proposal should also be seen in the context of the parallel work in the OECD to agree on a standard for the exchange on information for tax purposes in relation to crypto-assets (the CARF) and the extension of the scope of the Common Reporting Standard ( CRS) to cover e-money , which resulted in an agreement in August 2022 6 and was welcomed by the G20 in the Bali Leaders’ Declaration 7 in November 2022. In recent years, the EU has focused its efforts on tackling tax fraud, tax evasion and tax avoidance , and on boosting transparency. M ajor improvements have been made in particular in the field of exchange of information trough a number of amendments to the Directive on Administrative Cooperation (DAC) 8 . Nevertheless, the European Court of Auditors report 9 and the European Parliament resolution 10 pointed at some inefficiencies and the need for improvement in several areas of the Directive , relat ing to all forms of exchanges of information and administrative cooperation. In particular, the lack of specific provisions covering e-money and central banck digital currencies , cross-border tax rulings for high net worth individuals and the lack of clarity of the compliance measures emerged among the most problematic elements of the framework 11 . The European Court of Auditors report notes that ‘Cryptocurrencies are excluded from the scope of information exchange. If a taxpayer holds money in electronic cryptocurrencies, the platform or other electronic provider supplying portfolio services for such customers are not obliged to declare any such amounts or gains acquired to the tax authorities. Therefore, money held in such electronic instruments remains largely untaxed.’ Therefore, there is a clear need to improve the existing framework for exchange of information and administrative cooperation in the EU. In addition to making existing rules more stringent, the expansion of administrative cooperation to new areas is required in the EU. This is to address the challenges posed by the ever increasing use of crypto-assets for investment purposes. This will help tax administrations in the EU to better and more efficiently collect taxes and keep pace with new developments, especially given the differences in the taxation systems for crypto-assets from Member State to Member State. The characteristics of crypto-assets make the traceability and detection of taxable events by tax administrations very difficult. The problem is intensified in particular when trading is carried out using crypto-asset service providers or crypto-asset operators located in another country, or when it is done directly between individuals or entities established in another jurisdiction. The lack of reporting of income from crypto-asset investments leads to a shortfall of Member States’ tax revenues. It also provides crypto-asset users with an advantage over those who do not invest in crypto-assets. If this regulatory gap is not addressed, the objective of fair taxation cannot be ensured. In order to address these concerns, the Commission brought forward this proposal that is based on the OECD crypto-asset reporting framework. The latter specifies due diligence procedures, reporting requirements and other rules for reporting crypto-asset service providers. The main difference between the proposal and the OECD crypto-asset reporting framework is that operators of crypto-asset services active on the EU market are regulated by Regulation XXX. Well functioning and coordinated reporting and exchange of information are further needed to improve the conditions for taking necessary action to enforce sanctions against Russia. This increases the urgency and highlights the importance of introducing provisions to ensure that information related to both holding, and transactions of crypto-assets are reported and exchanged among Member States. This proposal foresees also to strengthen existing provisions of the Directive to reflect the developments observed in the internal market and at international level. It should lead to an effective reporting and exchange of information including by reflecting the latest additions to the Common Reporting Standard including the integration of e-money and central bank digital currency provisions, by providing a clear and harmonised framework for compliance measures, or by extending the scope of cross-border rulings to high net worth individuals.
Revised version (Article 9 Scope and conditions of spontaneous exchange of information):
2. The competent authorities of each Member State may communicate, by spontaneous exchange, to the competent authorities of the other Member States any information of which they are aware and which may be useful to the competent authorities of the other Member States.
Article 10 Time limits
1. The competent authority to which information referred to in Article 9(1) becomes available, shall forward that information to the competent authority of any other Member State concerned as quickly as possible, and no later than one month after it becomes available. 2. The competent authority to which information is communicated pursuant to Article 9 shall confirm, if possible by electronic means, the receipt of the information to the competent authority which provided the information immediately and in any event no later than seven working days.
Article 11 Scope and conditions
1. By agreement between the requesting authority and the requested authority and in accordance with the arrangements laid down by the latter, officials authorised by the requesting authority may, with a view to exchanging the information referred to in Article 1(1): (a) be present in the offices where the administrative authorities of the requested Member State carry out their duties; (b) be present during administrative enquiries carried out in the territory of the requested Member State. Where the requested information is contained in documentation to which the officials of the requested authority have access, the officials of the requesting authority shall be given copies thereof. 2. In so far as this is permitted under the legislation of the requested Member State, the agreement referred to in paragraph 1 may provide that, where officials of the requesting authority are present during administrative enquiries, they may interview individuals and examine records. Any refusal by the person under investigation to respect the inspection measures of the officials of the requesting authority shall be treated by the requested authority as if that refusal was committed against officials of the latter authority. 3. Officials authorised by the requesting Member State present in another Member State in accordance with paragraph 1 shall at all times be able to produce written authority stating their identity and their official capacity.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Fair taxation is one of the main foundations of the European social market economy . It is also and among the key pillars of the Commission’s commitment for ‘ an economy that works for people ’ 1 . A fair tax system should be based on tax rules that ensure everybody pays their fair share, while making it easy for taxpayers, whether businesses or individuals , to comply with the rules. The COVID-19 pandemic and the consequences derived from Russia’s war of aggression against Ukraine add urgency to the need to protect public finances. Member States will require sufficient tax revenues to finance their considerable efforts to contain the negative economic impact of the crises, while ensuring that the most vulnerable groups are protected. In this context, ensuring tax fairness by preventing tax fraud, tax evasion and tax avoidance has become more important than ever. And, in order to better prevent tax fraud, tax evasion and tax avoidance in the EU, it is crucial to strengthen administrative cooperation and exchange of information on tax matters. More specifically, the emergence of alternative means of payment and investment, such as crypto-assets and e-money, threaten to undermine the progress made on tax transparency in recent years and pose substantial risks for tax evasion. Hence, the Commission committed in the Communication for an Action Plan for fair and simple taxation supporting the recovery strategy 2 to update the directive on administrative cooperation to expand its scope to an evolving economy and strengthen the administrative cooperation framework. In support of the work of the Commission , the Council (Ecofin) adopted Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond 3 on 27 November 2020. The Ecofin report to the European Council on tax issues 4 , which was approved by the European Council on 1 December 2021, states that it “ is expected that the Commission will, in 2022, table a legislative proposal on further revision of the Directive 2011/16/EU on administrative cooperation in the field of taxation, concerning exchange of information on crypto-assets and tax rulings for wealthy individuals. ” The European Parliament adopted its resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy 5 where it welcomes the Action Plan and supports its thorough implementation and specifically calls on the Commission to include further categories of income and assets such as crypto-assets in the scope of automatic exchange of information. This proposal should also be seen in the context of the parallel work in the OECD to agree on a standard for the exchange on information for tax purposes in relation to crypto-assets (the CARF) and the extension of the scope of the Common Reporting Standard ( CRS) to cover e-money , which resulted in an agreement in August 2022 6 and was welcomed by the G20 in the Bali Leaders’ Declaration 7 in November 2022. In recent years, the EU has focused its efforts on tackling tax fraud, tax evasion and tax avoidance , and on boosting transparency. M ajor improvements have been made in particular in the field of exchange of information trough a number of amendments to the Directive on Administrative Cooperation (DAC) 8 . Nevertheless, the European Court of Auditors report 9 and the European Parliament resolution 10 pointed at some inefficiencies and the need for improvement in several areas of the Directive , relat ing to all forms of exchanges of information and administrative cooperation. In particular, the lack of specific provisions covering e-money and central banck digital currencies , cross-border tax rulings for high net worth individuals and the lack of clarity of the compliance measures emerged among the most problematic elements of the framework 11 . The European Court of Auditors report notes that ‘Cryptocurrencies are excluded from the scope of information exchange. If a taxpayer holds money in electronic cryptocurrencies, the platform or other electronic provider supplying portfolio services for such customers are not obliged to declare any such amounts or gains acquired to the tax authorities. Therefore, money held in such electronic instruments remains largely untaxed.’ Therefore, there is a clear need to improve the existing framework for exchange of information and administrative cooperation in the EU. In addition to making existing rules more stringent, the expansion of administrative cooperation to new areas is required in the EU. This is to address the challenges posed by the ever increasing use of crypto-assets for investment purposes. This will help tax administrations in the EU to better and more efficiently collect taxes and keep pace with new developments, especially given the differences in the taxation systems for crypto-assets from Member State to Member State. The characteristics of crypto-assets make the traceability and detection of taxable events by tax administrations very difficult. The problem is intensified in particular when trading is carried out using crypto-asset service providers or crypto-asset operators located in another country, or when it is done directly between individuals or entities established in another jurisdiction. The lack of reporting of income from crypto-asset investments leads to a shortfall of Member States’ tax revenues. It also provides crypto-asset users with an advantage over those who do not invest in crypto-assets. If this regulatory gap is not addressed, the objective of fair taxation cannot be ensured. In order to address these concerns, the Commission brought forward this proposal that is based on the OECD crypto-asset reporting framework. The latter specifies due diligence procedures, reporting requirements and other rules for reporting crypto-asset service providers. The main difference between the proposal and the OECD crypto-asset reporting framework is that operators of crypto-asset services active on the EU market are regulated by Regulation XXX. Well functioning and coordinated reporting and exchange of information are further needed to improve the conditions for taking necessary action to enforce sanctions against Russia. This increases the urgency and highlights the importance of introducing provisions to ensure that information related to both holding, and transactions of crypto-assets are reported and exchanged among Member States. This proposal foresees also to strengthen existing provisions of the Directive to reflect the developments observed in the internal market and at international level. It should lead to an effective reporting and exchange of information including by reflecting the latest additions to the Common Reporting Standard including the integration of e-money and central bank digital currency provisions, by providing a clear and harmonised framework for compliance measures, or by extending the scope of cross-border rulings to high net worth individuals.
Revised version (Article 11 Scope and conditions):
2. Where officials of the requesting authority are present during administrative enquiries, or participate in the administrative enquiries through the use of electronic means of communication, they may interview individuals and examine records subject to the procedural arrangements laid down by the requested Member State. Any refusal by the person under investigation to respect the inspection measures of the officials of the requesting authority shall be treated by the requested authority as if that refusal was committed against officials of the latter authority. 3. Officials authorised by the requesting Member State present in another Member State in accordance with paragraph 1 shall at all times be able to produce written authority stating their identity and their official capacity.
Article 12 Simultaneous controls
1. Where two or more Member States agree to conduct simultaneous controls, in their own territory, of one or more persons of common or complementary interest to them, with a view to exchanging the information thus obtained, paragraphs 2, 3 and 4 shall apply. 2. The competent authority in each Member State shall identify independently the persons for whom it intends to propose a simultaneous control. It shall notify the competent authority of the other Member States concerned of any cases for which it proposes a simultaneous control, giving reasons for its choice. It shall specify the period of time during which those controls are to be conducted. 3. The competent authority of each Member State concerned shall decide whether it wishes to take part in simultaneous controls. It shall confirm its agreement or communicate its reasoned refusal to the authority that proposed a simultaneous control. 4. The competent authority of each Member State concerned shall appoint a representative with responsibility for supervising and coordinating the control operation.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal Fair taxation is one of the main foundations of the European social market economy . It is also and among the key pillars of the Commission’s commitment for ‘ an economy that works for people ’ 1 . A fair tax system should be based on tax rules that ensure everybody pays their fair share, while making it easy for taxpayers, whether businesses or individuals , to comply with the rules. The COVID-19 pandemic and the consequences derived from Russia’s war of aggression against Ukraine add urgency to the need to protect public finances. Member States will require sufficient tax revenues to finance their considerable efforts to contain the negative economic impact of the crises, while ensuring that the most vulnerable groups are protected. In this context, ensuring tax fairness by preventing tax fraud, tax evasion and tax avoidance has become more important than ever. And, in order to better prevent tax fraud, tax evasion and tax avoidance in the EU, it is crucial to strengthen administrative cooperation and exchange of information on tax matters. More specifically, the emergence of alternative means of payment and investment, such as crypto-assets and e-money, threaten to undermine the progress made on tax transparency in recent years and pose substantial risks for tax evasion. Hence, the Commission committed in the Communication for an Action Plan for fair and simple taxation supporting the recovery strategy 2 to update the directive on administrative cooperation to expand its scope to an evolving economy and strengthen the administrative cooperation framework. In support of the work of the Commission , the Council (Ecofin) adopted Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond 3 on 27 November 2020. The Ecofin report to the European Council on tax issues 4 , which was approved by the European Council on 1 December 2021, states that it “ is expected that the Commission will, in 2022, table a legislative proposal on further revision of the Directive 2011/16/EU on administrative cooperation in the field of taxation, concerning exchange of information on crypto-assets and tax rulings for wealthy individuals. ” The European Parliament adopted its resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy 5 where it welcomes the Action Plan and supports its thorough implementation and specifically calls on the Commission to include further categories of income and assets such as crypto-assets in the scope of automatic exchange of information. This proposal should also be seen in the context of the parallel work in the OECD to agree on a standard for the exchange on information for tax purposes in relation to crypto-assets (the CARF) and the extension of the scope of the Common Reporting Standard ( CRS) to cover e-money , which resulted in an agreement in August 2022 6 and was welcomed by the G20 in the Bali Leaders’ Declaration 7 in November 2022. In recent years, the EU has focused its efforts on tackling tax fraud, tax evasion and tax avoidance , and on boosting transparency. M ajor improvements have been made in particular in the field of exchange of information trough a number of amendments to the Directive on Administrative Cooperation (DAC) 8 . Nevertheless, the European Court of Auditors report 9 and the European Parliament resolution 10 pointed at some inefficiencies and the need for improvement in several areas of the Directive , relat ing to all forms of exchanges of information and administrative cooperation. In particular, the lack of specific provisions covering e-money and central banck digital currencies , cross-border tax rulings for high net worth individuals and the lack of clarity of the compliance measures emerged among the most problematic elements of the framework 11 . The European Court of Auditors report notes that ‘Cryptocurrencies are excluded from the scope of information exchange. If a taxpayer holds money in electronic cryptocurrencies, the platform or other electronic provider supplying portfolio services for such customers are not obliged to declare any such amounts or gains acquired to the tax authorities. Therefore, money held in such electronic instruments remains largely untaxed.’ Therefore, there is a clear need to improve the existing framework for exchange of information and administrative cooperation in the EU. In addition to making existing rules more stringent, the expansion of administrative cooperation to new areas is required in the EU. This is to address the challenges posed by the ever increasing use of crypto-assets for investment purposes. This will help tax administrations in the EU to better and more efficiently collect taxes and keep pace with new developments, especially given the differences in the taxation systems for crypto-assets from Member State to Member State. The characteristics of crypto-assets make the traceability and detection of taxable events by tax administrations very difficult. The problem is intensified in particular when trading is carried out using crypto-asset service providers or crypto-asset operators located in another country, or when it is done directly between individuals or entities established in another jurisdiction. The lack of reporting of income from crypto-asset investments leads to a shortfall of Member States’ tax revenues. It also provides crypto-asset users with an advantage over those who do not invest in crypto-assets. If this regulatory gap is not addressed, the objective of fair taxation cannot be ensured. In order to address these concerns, the Commission brought forward this proposal that is based on the OECD crypto-asset reporting framework. The latter specifies due diligence procedures, reporting requirements and other rules for reporting crypto-asset service providers. The main difference between the proposal and the OECD crypto-asset reporting framework is that operators of crypto-asset services active on the EU market are regulated by Regulation XXX. Well functioning and coordinated reporting and exchange of information are further needed to improve the conditions for taking necessary action to enforce sanctions against Russia. This increases the urgency and highlights the importance of introducing provisions to ensure that information related to both holding, and transactions of crypto-assets are reported and exchanged among Member States. This proposal foresees also to strengthen existing provisions of the Directive to reflect the developments observed in the internal market and at international level. It should lead to an effective reporting and exchange of information including by reflecting the latest additions to the Common Reporting Standard including the integration of e-money and central bank digital currency provisions, by providing a clear and harmonised framework for compliance measures, or by extending the scope of cross-border rulings to high net worth individuals.
Revised version (Article 12 Simultaneous controls):
1. Where two or more Member States agree to conduct simultaneous controls, in their own territory, of one or more persons of common or complementary interest to them, with a view to exchanging the information thus obtained, paragraphs 2, 3 and 4 shall apply. 2. The competent authority in each Member State shall identify independently the persons for whom it intends to propose a simultaneous control. It shall notify the competent authority of the other Member States concerned of any cases for which it proposes a simultaneous control, giving reasons for its choice. It shall specify the period of time during which those controls are to be conducted. 3. The competent authority of each Member State concerned shall decide whether it wishes to take part in simultaneous controls. It shall confirm its agreement or communicate its reasoned refusal to the authority that proposed a simultaneous control within 60 days of receiving the proposal. 4. The competent authority of each Member State concerned shall appoint a representative with responsibility for supervising and coordinating the control operation.
Article 13 Request for notification
1. At the request of the competent authority of a Member State, the competent authority of another Member State shall, in accordance with the rules governing the notification of similar instruments in the requested Member State, notify the addressee of any instruments and decisions which emanate from the administrative authorities of the requesting Member State and concern the application in its territory of legislation on taxes covered by this Directive. 2. Requests for notification shall indicate the subject of the instrument or decision to be notified and shall specify the name and address of the addressee, together with any other information which may facilitate identification of the addressee. 3. The requested authority shall inform the requesting authority immediately of its response and, in particular, of the date of notification of the instrument or decision to the addressee. 4. The requesting authority shall only make a request for notification pursuant to this Article when it is unable to notify in accordance with the rules governing the notification of the instruments concerned in the requesting Member State, or where such notification would give rise to disproportionate difficulties. The competent authority of a Member State may notify any document by registered mail or electronically directly to a person within the territory of another Member State.
Article 14 Conditions
1. Where a competent authority provides information pursuant to Articles 5 or 9, it may request the competent authority which receives the information to send feedback thereon. If feedback is requested, the competent authority which received the information shall, without prejudice to the rules on tax secrecy and data protection applicable in its Member State, send feedback to the competent authority which provided the information as soon as possible and no later than three months after the outcome of the use of the requested information is known. The Commission shall determine the practical arrangements in accordance with the procedure referred to in Article 26(2). 2. Member States’ competent authorities shall send feedback on the automatic exchange of information to the other Member States concerned once a year, in accordance with practical arrangements agreed upon bilaterally.
Article 15 Scope and conditions
1. Member States shall, together with the Commission, examine and evaluate administrative cooperation pursuant to this Directive and shall share their experience, with a view to improving such cooperation and, where appropriate, drawing up rules in the fields concerned. 2. Member States may, together with the Commission, produce guidelines on any aspect deemed necessary for sharing best practices and sharing experience.
Article 16 Disclosure of information and documents
1. Information communicated between Member States in any form pursuant to this Directive shall be covered by the obligation of official secrecy and enjoy the protection extended to similar information under the national law of the Member State which received it. Such information may be used for the administration and enforcement of the domestic laws of the Member States concerning the taxes referred to in Article 2. Such information may also be used for the assessment and enforcement of other taxes and duties covered by Article 2 of Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures ( 7 ) , or for the assessment and enforcement of compulsory social security contributions. In addition, it may be used in connection with judicial and administrative proceedings that may involve penalties, initiated as a result of infringements of tax law, without prejudice to the general rules and provisions governing the rights of defendants and witnesses in such proceedings. 2. With the permission of the competent authority of the Member State communicating information pursuant to this Directive, and only in so far as this is allowed under the legislation of the Member State of the competent authority receiving the information, information and documents received pursuant to this Directive may be used for other purposes than those referred to in paragraph 1. Such permission shall be granted if the information can be used for similar purposes in the Member State of the competent authority communicating the information. 3. Where a competent authority of a Member State considers that information which it has received from the competent authority of another Member State is likely to be useful for the purposes referred to in paragraph 1 to the competent authority of a third Member State, it may transmit that information to the latter competent authority, provided that transmission is in accordance with the rules and procedures laid down in this Directive. It shall inform the competent authority of the Member State from which the information originates about its intention to share that information with a third Member State. The Member State of origin of the information may oppose such a sharing of information within 10 working days of receipt of the communication from the Member State wishing to share the information. 4. Permission to use information pursuant to paragraph 2, which has been transmitted pursuant to paragraph 3, may be granted only by the competent authority of the Member State from which the information originates. 5. Information, reports, statements and any other documents, or certified true copies or extracts thereof, obtained by the requested authority and communicated to the requesting authority in accordance with this Directive may be invoked as evidence by the competent bodies of the requesting Member State on the same basis as similar information, reports, statements and any other documents provided by an authority of that Member State.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The European Commission is pursuing an ambitious agenda against tax evasion and avoidance, with a view to delivering fairer and more effective taxation in the EU. Increasing tax transparency is central to this agenda. Over the past few years, significant progress has been made in enhancing tax transparency and strengthening the cooperation between tax authorities across the EU. Member States have agreed on new legislation to automatically exchange information on tax rulings 1 and on tax-related country-by-country reports of multinationals' 2 . In April 2016, the Commission also proposed that large multinationals should publicly disclose a specified set of tax-related data on a country-by-country basis. With regard to individuals' accounts, new EU legislation entered into force in January 2016, under which Member States' tax authorities will automatically exchange information on financial accounts held abroad. This will help prevent funds from being hidden offshore to escape taxation. Recent media leaks, which exposed the large scale concealment of offshore funds, confirm the importance of the EU's tax transparency agenda. They also highlighted areas where further measures still need to be taken to reinforce the EU and international transparency framework. In particular, it has become apparent that tax authorities need greater access to information on the beneficial owners of intermediary entities and other relevant customer due diligence information, if they are to effectively identify and address tax evasion. The G20 statement of 18 April calls on the Financial Action Task Force ('FATF') and the Global Forum on Transparency and Exchange of Information for Tax Purposes to make initial proposals to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange. In their statement of 14 April 2016, the five EU Ministers of Finance attending the G20 focused on fight against tax evasion, aggressive tax planning and money laundering. In particular, the statement stressed the vital importance of the effective and rapid implementation of the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”). In addition, it outlined the challenges faced with regard to availability of beneficial ownership information and underlined the common patterns among money laundering, tax evasion and illicit finance. Directive 2014/107/EU (“Directive”) amending Directive 2011/16/EU (“Directive on Administrative Cooperation”) was adopted in 2014 and applies as of 1 January 2016 to 27 Member States and as of 1 January 2017 to Austria. This Directive implements the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”) within the EU. As such, it ensures that information on Account Holders of Financial Accounts is reported to the Member State where the Account Holder is resident. In addition, the Directive foresees that, where the Account Holder is an intermediary structure (i.e. a Passive Non-Financial Entity), the Financial Institutions shall look through that Entity and identify and report its Controlling Persons (beneficial owners in anti-money-laundering terminology 3 ). That important element in the application of the Directive involves a step relying entirely on anti-money-laundering (“AML”) information for the identification of the Controlling Persons. Without access by the tax authorities to that AML information, the effectiveness of the monitoring of Financial Institutions on applying the Directive on Administrative Cooperation will be reduced significantly. In the absence of that information, those authorities will not be able to monitor, audit and confirm that the Financial Institutions apply properly the Directive and identify correctly and report the Controlling Persons of intermediary structures. Therefore, the objective of this initiative is to enable tax authorities to consistently access the AML information for the performance of their duties in monitoring the proper application of the Directive on Administrative Cooperation by Financial Institutions. Tax administrations' access to AML information differs considerably throughout the EU. Even when this access is granted, authorities often still encounter significant barriers that hinder the effectiveness of their work against tax avoidance and evasion. The amendments to the Fourth Anti-Money-Laundering Directive, referred to in the next section, are important to improve the identification of money-laundering, corruption, terrorist financing and other criminal activities. Tax authorities should also have access to such information in order to maximise their capacity to tackle tax evasion and avoidance. The Commission is therefore proposing that this access should be granted through the Directive on Administrative Cooperation, which is the framework for many of the EU's other tax transparency measures. The enabling of that access concerns internal organisational matters in Member States and does not involve any reporting or other administrative obligations on the side of external stakeholders. Any potential additional burden from Financial Institutions having to present AML information to tax authorities during checks, reviews and audits would be: (i) strictly linked to the supervision of already existing obligations , whose impact on the administrative burden was already taken into consideration when those obligations were first laid down, (ii) on a case by case basis depending on the findings during checks, reviews and audits, and (iii) always in the context of comprehensive checks, reviews and audits of the fulfilment of all those existing obligations for identification of reportable persons under the Directive on Administrative Cooperation and not only the one for identifying controlling persons/beneficial owners Consistency with existing policy provisions in the policy area Amendments to the Fourth Anti-Money-Laundering Directive (COM(2016) 450) In its Action plan for strengthening the fight against terrorist financing adopted on 2 February 2016, the Commission committed to propose amendments to the Fourth Anti-Money-Laundering Directive 4 (“4 AMLD”) in the first half of 2016 to further reinforce the rules against terrorist financing. The need to further reinforce the AML rules in order to improve transparency and the availability of beneficial ownership information also led the Commission to propose amendments to the 4 AMLD after assessing policy options in a second part of the Impact Assessment of those amendments to the 4 AMLD. The amendments to the 4 AMLD recognise the links between the AML and tax evasion and the challenges faced globally. Those amendments rely on the clear synergies in the customer due diligence performed under the 4 AMLD and the customer due diligence performed under the Directive on Administrative Cooperation. Similarly, the fact that the AML information is clearly identifiable and available under specific provisions in the 4 AMLD provides an opportunity for a direct reference to those provisions, without the need for Financial Institutions to duplicate such information for the purposes of the Directive on Administrative Cooperation. Those two proposals are presented together with the Communication issued on the same date (COM(2016) 451).
Revised version (Article 16 Disclosure of information and documents):
1. Information communicated between Member States in any form pursuant to this Directive shall be covered by the obligation of official secrecy and enjoy the protection extended to similar information under the national law of the Member State which received it. Such information may be used for the administration and enforcement of the domestic laws of the Member States concerning the taxes referred to in Article 2. Such information may also be used for the assessment and enforcement of other taxes and duties covered by Article 2 of Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures ( 3 ), or for the assessment and enforcement of compulsory social security contributions. In addition, it may be used in connection with judicial and administrative proceedings that may involve penalties, initiated as a result of infringements of tax law, without prejudice to the general rules and provisions governing the rights of defendants and witnesses in such proceedings. 2. With the permission of the competent authority of the Member State communicating information pursuant to this Directive, and only in so far as this is allowed under the legislation of the Member State of the competent authority receiving the information, information and documents received pursuant to this Directive may be used for other purposes than those referred to in paragraph 1. Such permission shall be granted if the information can be used for similar purposes in the Member State of the competent authority communicating the information. 3. Where a competent authority of a Member State considers that information which it has received from the competent authority of another Member State is likely to be useful for the purposes referred to in paragraph 1 to the competent authority of a third Member State, it may transmit that information to the latter competent authority, provided that transmission is in accordance with the rules and procedures laid down in this Directive. It shall inform the competent authority of the Member State from which the information originates about its intention to share that information with a third Member State. The Member State of origin of the information may oppose such a sharing of information within 10 working days of receipt of the communication from the Member State wishing to share the information. 4. Permission to use information pursuant to paragraph 2, which has been transmitted pursuant to paragraph 3, may be granted only by the competent authority of the Member State from which the information originates. 5. Information, reports, statements and any other documents, or certified true copies or extracts thereof, obtained by the requested authority and communicated to the requesting authority in accordance with this Directive may be invoked as evidence by the competent bodies of the requesting Member State on the same basis as similar information, reports, statements and any other documents provided by an authority of that Member State. 6. Notwithstanding paragraphs 1 to 4 of this Article, information communicated between Member States pursuant to Article 8aa shall be used for the purposes of assessing high-level transfer-pricing risks and other risks related to base erosion and profit shifting, including assessing the risk of non-compliance by members of the MNE Group with applicable transfer-pricing rules, and where appropriate for economic and statistical analysis. Transfer-pricing adjustments by the tax authorities of the receiving Member State shall not be based on the information exchanged pursuant to Article 8aa. Notwithstanding the above, there is no prohibition on using the information communicated between Member States pursuant to Article 8aa as a basis for making further enquiries into the MNE Group's transfer-pricing arrangements or into other tax matters in the course of a tax audit, and, as a result, appropriate adjustments to the taxable income of a Constituent Entity may be made.
Article 17 Limits
1. A requested authority in one Member State shall provide a requesting authority in another Member State with the information referred to in Article 5 provided that the requesting authority has exhausted the usual sources of information which it could have used in the circumstances for obtaining the information requested, without running the risk of jeopardising the achievement of its objectives. 2. This Directive shall impose no obligation upon a requested Member State to carry out enquiries or to communicate information, if it would be contrary to its legislation to conduct such inquiries or to collect the information requested for its own purposes. 3. The competent authority of a requested Member State may decline to provide information where the requesting Member State is unable, for legal reasons, to provide similar information. 4. The provision of information may be refused where it would lead to the disclosure of a commercial, industrial or professional secret or of a commercial process, or of information whose disclosure would be contrary to public policy. 5. The requested authority shall inform the requesting authority of the grounds for refusing a request for information.
Article 18 Obligations
1. If information is requested by a Member State in accordance with this Directive, the requested Member State shall use its measures aimed at gathering information to obtain the requested information, even though that Member State may not need such information for its own tax purposes. That obligation is without prejudice to paragraphs 2, 3 and 4 of Article 17, the invocation of which shall in no case be construed as permitting a requested Member State to decline to supply information solely because it has no domestic interest in such information. 2. In no case shall Article 17(2) and (4) be construed as permitting a requested authority of a Member State to decline to supply information solely because this information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. 3. Notwithstanding paragraph 2, a Member State may refuse the transmission of requested information where such information concerns taxable periods prior to 1 January 2011 and where the transmission of such information could have been refused on the basis of Article 8(1) of Directive 77/799/EEC if it had been requested before 11 March 2011.
Article 19 Extension of wider cooperation provided to a third country
Where a Member State provides a wider cooperation to a third country than that provided for under this Directive, that Member State may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State.
Article 20 Standard forms and computerised formats
1. Requests for information and for administrative enquiries pursuant to Article 5 and their replies, acknowledgements, requests for additional background information, inability or refusal pursuant to Article 7 shall, as far as possible, be sent using a standard form adopted by the Commission in accordance with the procedure referred to in Article 26(2). The standard forms may be accompanied by reports, statements and any other documents, or certified true copies or extracts thereof. 2. The standard form referred to in paragraph 1 shall include at least the following information to be provided by the requesting authority: (a) the identity of the person under examination or investigation; (b) the tax purpose for which the information is sought. The requesting authority may, to the extent known and in line with international developments, provide the name and address of any person believed to be in possession of the requested information as well as any element that may facilitate the collection of information by the requested authority. 3. Spontaneous information and its acknowledgement pursuant to Articles 9 and 10 respectively, requests for administrative notifications pursuant to Article 13 and feedback information pursuant to Article 14 shall be sent using the standard form adopted by the Commission in accordance with the procedure referred to in Article 26(2). 4. The automatic exchange of information pursuant to Article 8 shall be sent using a standard computerised format aimed at facilitating such automatic exchange and based on the existing computerised format pursuant to Article 9 of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments ( 8 ) , to be used for all types of automatic exchange of information, adopted by the Commission in accordance with the procedure referred to in Article 26(2).
Amendment rationale: CONTEXT OF THE PROPOSAL 1. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the European Union and worldwide. Billions of euros are being lost. By reducing fraud and evasion Member States could increase tax revenues which would also provide them with added scope to restructure their tax systems in a way that better promotes growth as outlined in the 2013 Annual Growth Survey. In addition, given the order of magnitude of the challenge, stepping up the fight against tax fraud and evasion is not only an issue of revenue, but also of fairness. Particularly in these difficult economic times, honest taxpayers should not suffer additional tax increases to compensate for revenue losses incurred due to tax fraudsters and evaders. 2. For years, the European Union (EU) has been working actively on these problems, in particular by adopting specific legal instruments to implement automatic exchange of information ("AEOI") within the Union. The EU Savings Directive (the "EUSD") ensures AEOI on interest income and a proposal to enlarge its scope is under discussion in the Council. The Directive on Administrative Cooperation (the "DAC") ensures that, from 2015, Member States will exchange information automatically upon availability on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property. 3. Member States have now expressed a clear wish to go beyond current levels of cooperation. The European Council of 2 March 2012 invited the Council and the Commission to develop rapidly concrete ways to improve the fight against tax fraud. On 6 December 2012, the Commission presented an Action plan to strengthen the fight against tax fraud and tax evasion[1]. The Action Plan highlights the need to promote AEOI as the European and international standard of transparency and exchange of information in tax matters. On 14 May 2013, the ECOFIN Council adopted conclusions welcoming the work by the Commission on developing measures to combat tax fraud, tax evasion and aggressive tax planning and recognising the useful role the Commission Action Plan can play in this regard[2]. 4. The European Council on 22 May 2013 went even further, requesting the extension of AEOI at EU and global levels with a view to fighting against tax fraud, tax evasion and aggressive tax planning. On that occasion, the Commission committed itself to proposing amendments to the DAC in June 2013 in order to expand the scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 5. The objective of the present proposal is, therefore, to expand the scope of AEOI in the EU beyond that provided for in existing EU automatic information exchange arrangements. It would bring the following other items within the scope of the AEOI: dividends, capital gains, other financial income and account balances. The provision for a review and expansion of the DAC in 2017 would remain. However, in line with the objective of enhancing AEOI the removal of the condition of availability would now be considered at that time in respect of all five existing categories together so that the DAC would cover the full range of income. Furthermore, the categories to be considered for inclusion at that time would be amended in the light of the present proposal (see below). Extending the scope of the AEOI would also contribute to ensuring equality of treatment between different types of assets and to avoiding undesirable reallocation of portfolios. 6. The Commission proposes to remove the reference in Article 8(3) of the Directive to a threshold below which a Member State may not wish to receive information from other Member States. Discussions have revealed that such a threshold is not practical for the Member States that are required to report. However, a Member State could continue to opt not to receive any information on a particular category of income. 7. An EU initiative is needed both from an internal market perspective and in terms of efficiency and effectiveness: – An EU initiative ensures a coherent, consistent and comprehensive EU-wide approach to AEOI in the internal market. It would mean a single reporting approach across Member States which would lead to costs savings both for tax administrations and economic operators (see also point 11 below). – An EU legal instrument would also ensure certainty for tax administrations and economic operators within the EU. – An EU legal instrument would contribute to the development of the international standard of AEOI. – An EU legal instrument based on the DAC would involve the use of the IT arrangements already in place or under development to facilitate information reporting under the EUSD and the DAC. Under those Directives, EU Member States share information in specific formats using a specific communication channel (the CCN/CSI system). These formats could easily be extended so as to be usable also for the additional items now proposed for inclusion. As Member States have invested considerable time and money in developing these formats, there would be economies of scale if Member States also exchanged information on the new items using these formats. – Furthermore, the Council already committed itself, in Article 8(5) of the DAC, to consider in due course whether automatic information exchange should be extended, on the basis of an EU-wide legal instrument, to cover other categories of income such as dividends and capital gains. The present proposal is, therefore, merely accelerating work in line with this commitment. 8. The agreements that many governments have concluded or will conclude with the US as regards the US Foreign Account Tax Compliance Act (FATCA)[3] have given further impetus to AEOI as a way of combating tax fraud and evasion. 9. On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced plans for a pilot action on AEOI using the FATCA model agreed with the US as a basis. These Member States also called on Europe to take a lead in promoting AEOI in the world and expressed the wish to discuss how progress could be made within the EU on improving tax information exchange between all Member States. 10. Article 19 of the DAC states that a Member State that provides wider cooperation to a third country may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State. The fact that Member States have concluded or will conclude agreements with the US as regards FATCA means that they provide for a wider cooperation within the meaning of that provision. 11. Expanded AEOI on the basis of an EU-wide legislative instrument would remove the need and incentive for Member States to invoke Article 19 of the DAC, with a view to concluding bilateral or multilateral agreements that may be considered appropriate on the same subject in the absence of relevant Union legislation. The scenario of various agreements concluded under that provision would, in fact, present a number of disadvantages, compared to a solution brought about by EU action: – The level playing field between the Member States might be put at risk if Member States agreed to cooperate on increased AEOI in different ways. This could lead to distortions and artificial flows of capital within the internal market. – If the agreements between Member States were not identical, this could also create difficulties for economic operators that are active in several Member States as they could then face different compliance requirements in different Member States. – It might also mean that Member States would not be able to utilise the IT reporting systems that have been developed within the EU (see above). 12. Timely adoption and implementation are crucial so as to reap the benefits as quickly as possible. In order to ensure consistency with the deadline for the application of AEOI to the categories of income and capital already covered by the DAC, the time limits proposed for transposition and application of the new rules are 31 December 2014 and 1 January 2015, respectively.
Revised version (Article 20 Standard forms and computerised formats):
1. Requests for information and for administrative enquiries pursuant to Article 5 and their replies, acknowledgements, requests for additional background information, inability or refusal pursuant to Article 7 shall, as far as possible, be sent using a standard form adopted by the Commission in accordance with the procedure referred to in Article 26(2). The standard forms may be accompanied by reports, statements and any other documents, or certified true copies or extracts thereof. 2. The standard form referred to in paragraph 1 shall include at least the following information to be provided by the requesting authority: (a) the identity of the person under examination or investigation; (b) the tax purpose for which the information is sought. The requesting authority may, to the extent known and in line with international developments, provide the name and address of any person believed to be in possession of the requested information as well as any element that may facilitate the collection of information by the requested authority. 3. Spontaneous information and its acknowledgement pursuant to Articles 9 and 10 respectively, requests for administrative notifications pursuant to Article 13 and feedback information pursuant to Article 14 shall be sent using the standard form adopted by the Commission in accordance with the procedure referred to in Article 26(2). 4. The automatic exchange of information pursuant to Article 8 shall be sent using a standard computerised format aimed at facilitating such automatic exchange and based on the existing computerised format pursuant to Article 9 of Directive 2003/48/EC, to be used for all types of automatic exchange of information, adopted by the Commission in accordance with the procedure referred to in Article 26(2).
Article 21 Practical arrangements
1. Information communicated pursuant to this Directive shall, as far as possible, be provided by electronic means using the CCN network. Where necessary, the Commission shall adopt practical arrangements necessary for the implementation of the first subparagraph in accordance with the procedure referred to in Article 26(2). 2. The Commission shall be responsible for whatever development of the CCN network is necessary to permit the exchange of that information between Member States. Member States shall be responsible for whatever development of their systems is necessary to enable that information to be exchanged using the CCN network. Member States shall waive all claims for the reimbursement of expenses incurred in applying this Directive except, where appropriate, in respect of fees paid to experts. 3. Persons duly accredited by the Security Accreditation Authority of the Commission may have access to that information only in so far as it is necessary for the care, maintenance and development of the CCN network. 4. Requests for cooperation, including requests for notification, and attached documents may be made in any language agreed between the requested and requesting authority. Those requests shall be accompanied by a translation into the official language or one of the official languages of the Member State of the requested authority only in special cases when the requested authority states its reason for requesting a translation.
Amendment rationale: CONTEXT OF THE PROPOSAL 1. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the European Union and worldwide. Billions of euros are being lost. By reducing fraud and evasion Member States could increase tax revenues which would also provide them with added scope to restructure their tax systems in a way that better promotes growth as outlined in the 2013 Annual Growth Survey. In addition, given the order of magnitude of the challenge, stepping up the fight against tax fraud and evasion is not only an issue of revenue, but also of fairness. Particularly in these difficult economic times, honest taxpayers should not suffer additional tax increases to compensate for revenue losses incurred due to tax fraudsters and evaders. 2. For years, the European Union (EU) has been working actively on these problems, in particular by adopting specific legal instruments to implement automatic exchange of information ("AEOI") within the Union. The EU Savings Directive (the "EUSD") ensures AEOI on interest income and a proposal to enlarge its scope is under discussion in the Council. The Directive on Administrative Cooperation (the "DAC") ensures that, from 2015, Member States will exchange information automatically upon availability on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property. 3. Member States have now expressed a clear wish to go beyond current levels of cooperation. The European Council of 2 March 2012 invited the Council and the Commission to develop rapidly concrete ways to improve the fight against tax fraud. On 6 December 2012, the Commission presented an Action plan to strengthen the fight against tax fraud and tax evasion[1]. The Action Plan highlights the need to promote AEOI as the European and international standard of transparency and exchange of information in tax matters. On 14 May 2013, the ECOFIN Council adopted conclusions welcoming the work by the Commission on developing measures to combat tax fraud, tax evasion and aggressive tax planning and recognising the useful role the Commission Action Plan can play in this regard[2]. 4. The European Council on 22 May 2013 went even further, requesting the extension of AEOI at EU and global levels with a view to fighting against tax fraud, tax evasion and aggressive tax planning. On that occasion, the Commission committed itself to proposing amendments to the DAC in June 2013 in order to expand the scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 5. The objective of the present proposal is, therefore, to expand the scope of AEOI in the EU beyond that provided for in existing EU automatic information exchange arrangements. It would bring the following other items within the scope of the AEOI: dividends, capital gains, other financial income and account balances. The provision for a review and expansion of the DAC in 2017 would remain. However, in line with the objective of enhancing AEOI the removal of the condition of availability would now be considered at that time in respect of all five existing categories together so that the DAC would cover the full range of income. Furthermore, the categories to be considered for inclusion at that time would be amended in the light of the present proposal (see below). Extending the scope of the AEOI would also contribute to ensuring equality of treatment between different types of assets and to avoiding undesirable reallocation of portfolios. 6. The Commission proposes to remove the reference in Article 8(3) of the Directive to a threshold below which a Member State may not wish to receive information from other Member States. Discussions have revealed that such a threshold is not practical for the Member States that are required to report. However, a Member State could continue to opt not to receive any information on a particular category of income. 7. An EU initiative is needed both from an internal market perspective and in terms of efficiency and effectiveness: – An EU initiative ensures a coherent, consistent and comprehensive EU-wide approach to AEOI in the internal market. It would mean a single reporting approach across Member States which would lead to costs savings both for tax administrations and economic operators (see also point 11 below). – An EU legal instrument would also ensure certainty for tax administrations and economic operators within the EU. – An EU legal instrument would contribute to the development of the international standard of AEOI. – An EU legal instrument based on the DAC would involve the use of the IT arrangements already in place or under development to facilitate information reporting under the EUSD and the DAC. Under those Directives, EU Member States share information in specific formats using a specific communication channel (the CCN/CSI system). These formats could easily be extended so as to be usable also for the additional items now proposed for inclusion. As Member States have invested considerable time and money in developing these formats, there would be economies of scale if Member States also exchanged information on the new items using these formats. – Furthermore, the Council already committed itself, in Article 8(5) of the DAC, to consider in due course whether automatic information exchange should be extended, on the basis of an EU-wide legal instrument, to cover other categories of income such as dividends and capital gains. The present proposal is, therefore, merely accelerating work in line with this commitment. 8. The agreements that many governments have concluded or will conclude with the US as regards the US Foreign Account Tax Compliance Act (FATCA)[3] have given further impetus to AEOI as a way of combating tax fraud and evasion. 9. On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced plans for a pilot action on AEOI using the FATCA model agreed with the US as a basis. These Member States also called on Europe to take a lead in promoting AEOI in the world and expressed the wish to discuss how progress could be made within the EU on improving tax information exchange between all Member States. 10. Article 19 of the DAC states that a Member State that provides wider cooperation to a third country may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State. The fact that Member States have concluded or will conclude agreements with the US as regards FATCA means that they provide for a wider cooperation within the meaning of that provision. 11. Expanded AEOI on the basis of an EU-wide legislative instrument would remove the need and incentive for Member States to invoke Article 19 of the DAC, with a view to concluding bilateral or multilateral agreements that may be considered appropriate on the same subject in the absence of relevant Union legislation. The scenario of various agreements concluded under that provision would, in fact, present a number of disadvantages, compared to a solution brought about by EU action: – The level playing field between the Member States might be put at risk if Member States agreed to cooperate on increased AEOI in different ways. This could lead to distortions and artificial flows of capital within the internal market. – If the agreements between Member States were not identical, this could also create difficulties for economic operators that are active in several Member States as they could then face different compliance requirements in different Member States. – It might also mean that Member States would not be able to utilise the IT reporting systems that have been developed within the EU (see above). 12. Timely adoption and implementation are crucial so as to reap the benefits as quickly as possible. In order to ensure consistency with the deadline for the application of AEOI to the categories of income and capital already covered by the DAC, the time limits proposed for transposition and application of the new rules are 31 December 2014 and 1 January 2015, respectively.
Revised version (Article 21 Practical arrangements):
1. Information communicated pursuant to this Directive shall, as far as possible, be provided by electronic means using the CCN network. Where necessary, the Commission shall adopt practical arrangements necessary for the implementation of the first subparagraph in accordance with the procedure referred to in Article 26(2). 2. The Commission shall be responsible for whatever development of the CCN network is necessary to permit the exchange of that information between Member States and for ensuring the security of the CCN network. Member States shall be responsible for whatever development of their systems is necessary to enable that information to be exchanged using the CCN network and for ensuring the security of their systems. Member States shall ensure that each individual Reportable Person is notified of a breach of security with regard to his data when that breach is likely to adversely affect the protection of his personal data or privacy. Member States shall waive all claims for the reimbursement of expenses incurred in applying this Directive except, where appropriate, in respect of fees paid to experts. 3. Persons duly accredited by the Security Accreditation Authority of the Commission may have access to that information only in so far as it is necessary for the care, maintenance and development of the CCN network. 4. Requests for cooperation, including requests for notification, and attached documents may be made in any language agreed between the requested and requesting authority. Those requests shall be accompanied by a translation into the official language or one of the official languages of the Member State of the requested authority only in special cases when the requested authority states its reason for requesting a translation.
Article 22 Specific obligations
1. Member States shall take all necessary measures to: (a) ensure effective internal coordination within the organisation referred to in Article 4; (b) establish direct cooperation with the authorities of the other Member States referred to in Article 4; (c) ensure the smooth operation of the administrative cooperation arrangements provided for in this Directive. 2. The Commission shall communicate to each Member State any general information concerning the implementation and application of this Directive which it receives and which it is able to provide.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The COVID-19 outbreak is a severe public health crisis which has affected all Member States. It poses a major challenge for public health care systems and is likely to have severe implications for the Union’s economies for an extended period of time. This situation creates an overwhelming disruption in the life of citizens and businesses, who struggle to carry out their activities due notably to the constraints linked to the lockdowns in many Member States. In light of these unprecedented circumstances, a number of Member States and persons liable to report information under Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation 1 have requested the deferral of certain deadlines for the filing and exchanging of information under this Directive. More specifically, the requests for deferral pertain to automatic exchanges of information on financial accounts of which the beneficiaries are tax resident in another Member State 2 and reportable cross-border arrangements 3 that feature in Annex IV to Council Directive 2011/16/EU. The severe disruption caused by the COVID-19 pandemic hampers the timely compliance of financial institutions and of the persons liable to report cross-border arrangements and affect negatively the capacity of Member States’ tax administrations to collect and process the data. This situation requires an urgent and coordinated response within the Union and where relevant at global level. In this regard, it would be useful to take into account the initiative of the Steering Group of the Global Forum with respect to the common reporting standard (CRS) for Reporting Financial Institutions, the latter being transposed in Union law via Council Directive (EU) 2014/107. It is therefore necessary to defer the deadline for the exchange of information on financial accounts of which the beneficiaries are tax resident in another Member State. This would accordingly allow Member States to adjust their national deadlines for the filing of such information by the Reporting Financial Institutions. In the same vein, the deadlines for filing and exchanging information on cross-border arrangements under Annex IV of Council Directive 2011/16/EU should also be extended. Meanwhile, it should also be recalled that the exchange of information on financial accounts of which the beneficiaries are tax resident in another Member State and on reportable cross-border arrangements under Annex IV to Council Directive 2011/16/EU is crucial in the fight against tax avoidance and tax evasion in the Union. Member States will need tax revenues to finance their considerable efforts to contain the negative economic impact of the measures against the COVID-19 pandemic. Ensuring tax fairness by preventing tax avoidance and tax evasion becomes more important than ever. While the current crisis calls for adjusting the calendar for filing and transmitting some tax data, it should not lead to relinquishing the efforts of national administrations for ensuring fair taxation. The length of the deferral should not disrupt the established structure and functioning of Council Directive 2011/16/EU. Rather, it should be of limited duration, in proportion to the practical difficulties caused by a temporary lockdown aiming at containing the pandemic. Considering the current uncertainty about the evolution of the COVID-19 pandemic, it is useful to provide for the possibility of one further extension of the deferral period for filing and exchanging information. This would be necessary if during part or all of the period of deferral, the exceptional circumstances of severe risks for public health caused by the COVID-19 pandemic persist and Member States have to either implement new or continue existing lockdown measures. Such extension should not disrupt the established structure and functioning of Council Directive 2011/16/EU. Rather, it should be of a limited and pre-determined duration in proportion to the practical difficulties caused by the temporary lockdown. The extension should not affect the essential elements of the obligation to report and exchange information under this Directive. It may merely extend the deferral of the deadline for complying with such obligations while ensure that no information remains without eventually being exchanged.
Revised version (Article 22 Specific obligations):
1. Member States shall take all necessary measures to: (a) ensure effective internal coordination within the organisation referred to in Article 4; (b) establish direct cooperation with the authorities of the other Member States referred to in Article 4; (c) ensure the smooth operation of the administrative cooperation arrangements provided for in this Directive. 1a. For the purpose of the implementation and enforcement of the laws of the Member States giving effect to this Directive and to ensure the functioning of the administrative cooperation it establishes, Member States shall provide by law for access by tax authorities to the mechanisms, procedures, documents and information referred to in Articles 13, 30, 31 and 40 of Directive (EU) 2015/849 of the European Parliament and of the Council ( 4 ). 2. The Commission shall communicate to each Member State any general information concerning the implementation and application of this Directive which it receives and which it is able to provide.
Article 23 Evaluation
1. Member States and the Commission shall examine and evaluate the functioning of the administrative cooperation provided for in this Directive. 2. Member States shall communicate to the Commission any relevant information necessary for the evaluation of the effectiveness of administrative cooperation in accordance with this Directive in combating tax evasion and tax avoidance. 3. Member States shall communicate to the Commission a yearly assessment of the effectiveness of the automatic exchange of information referred to in Article 8 as well as the practical results achieved. The form and the conditions of communication of that yearly assessment shall be adopted by the Commission in accordance with the procedure referred to in Article 26(2). 4. The Commission shall, in accordance with the procedure referred to in Article 26(2), determine a list of statistical data which shall be provided by the Member States for the purposes of evaluation of this Directive. 5. Information communicated to the Commission under paragraphs 2, 3 and 4 shall be kept confidential by the Commission in accordance with the provisions applicable to Union authorities. 6. Information communicated to the Commission by a Member State under paragraphs 2, 3 and 4, as well as any report or document produced by the Commission using such information, may be transmitted to other Member States. Such transmitted information shall be covered by the obligation of official secrecy and enjoy the protection extended to similar information under the national law of the Member State which received it. Reports and documents produced by the Commission referred to in this paragraph may only be used by the Member States for analytical purposes but shall not be published or made available to any other person or body without express agreement of the Commission.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The European Commission is pursuing an ambitious agenda against tax evasion and avoidance, with a view to delivering fairer and more effective taxation in the EU. Increasing tax transparency is central to this agenda. Over the past few years, significant progress has been made in enhancing tax transparency and strengthening the cooperation between tax authorities across the EU. Member States have agreed on new legislation to automatically exchange information on tax rulings 1 and on tax-related country-by-country reports of multinationals' 2 . In April 2016, the Commission also proposed that large multinationals should publicly disclose a specified set of tax-related data on a country-by-country basis. With regard to individuals' accounts, new EU legislation entered into force in January 2016, under which Member States' tax authorities will automatically exchange information on financial accounts held abroad. This will help prevent funds from being hidden offshore to escape taxation. Recent media leaks, which exposed the large scale concealment of offshore funds, confirm the importance of the EU's tax transparency agenda. They also highlighted areas where further measures still need to be taken to reinforce the EU and international transparency framework. In particular, it has become apparent that tax authorities need greater access to information on the beneficial owners of intermediary entities and other relevant customer due diligence information, if they are to effectively identify and address tax evasion. The G20 statement of 18 April calls on the Financial Action Task Force ('FATF') and the Global Forum on Transparency and Exchange of Information for Tax Purposes to make initial proposals to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange. In their statement of 14 April 2016, the five EU Ministers of Finance attending the G20 focused on fight against tax evasion, aggressive tax planning and money laundering. In particular, the statement stressed the vital importance of the effective and rapid implementation of the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”). In addition, it outlined the challenges faced with regard to availability of beneficial ownership information and underlined the common patterns among money laundering, tax evasion and illicit finance. Directive 2014/107/EU (“Directive”) amending Directive 2011/16/EU (“Directive on Administrative Cooperation”) was adopted in 2014 and applies as of 1 January 2016 to 27 Member States and as of 1 January 2017 to Austria. This Directive implements the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”) within the EU. As such, it ensures that information on Account Holders of Financial Accounts is reported to the Member State where the Account Holder is resident. In addition, the Directive foresees that, where the Account Holder is an intermediary structure (i.e. a Passive Non-Financial Entity), the Financial Institutions shall look through that Entity and identify and report its Controlling Persons (beneficial owners in anti-money-laundering terminology 3 ). That important element in the application of the Directive involves a step relying entirely on anti-money-laundering (“AML”) information for the identification of the Controlling Persons. Without access by the tax authorities to that AML information, the effectiveness of the monitoring of Financial Institutions on applying the Directive on Administrative Cooperation will be reduced significantly. In the absence of that information, those authorities will not be able to monitor, audit and confirm that the Financial Institutions apply properly the Directive and identify correctly and report the Controlling Persons of intermediary structures. Therefore, the objective of this initiative is to enable tax authorities to consistently access the AML information for the performance of their duties in monitoring the proper application of the Directive on Administrative Cooperation by Financial Institutions. Tax administrations' access to AML information differs considerably throughout the EU. Even when this access is granted, authorities often still encounter significant barriers that hinder the effectiveness of their work against tax avoidance and evasion. The amendments to the Fourth Anti-Money-Laundering Directive, referred to in the next section, are important to improve the identification of money-laundering, corruption, terrorist financing and other criminal activities. Tax authorities should also have access to such information in order to maximise their capacity to tackle tax evasion and avoidance. The Commission is therefore proposing that this access should be granted through the Directive on Administrative Cooperation, which is the framework for many of the EU's other tax transparency measures. The enabling of that access concerns internal organisational matters in Member States and does not involve any reporting or other administrative obligations on the side of external stakeholders. Any potential additional burden from Financial Institutions having to present AML information to tax authorities during checks, reviews and audits would be: (i) strictly linked to the supervision of already existing obligations , whose impact on the administrative burden was already taken into consideration when those obligations were first laid down, (ii) on a case by case basis depending on the findings during checks, reviews and audits, and (iii) always in the context of comprehensive checks, reviews and audits of the fulfilment of all those existing obligations for identification of reportable persons under the Directive on Administrative Cooperation and not only the one for identifying controlling persons/beneficial owners Consistency with existing policy provisions in the policy area Amendments to the Fourth Anti-Money-Laundering Directive (COM(2016) 450) In its Action plan for strengthening the fight against terrorist financing adopted on 2 February 2016, the Commission committed to propose amendments to the Fourth Anti-Money-Laundering Directive 4 (“4 AMLD”) in the first half of 2016 to further reinforce the rules against terrorist financing. The need to further reinforce the AML rules in order to improve transparency and the availability of beneficial ownership information also led the Commission to propose amendments to the 4 AMLD after assessing policy options in a second part of the Impact Assessment of those amendments to the 4 AMLD. The amendments to the 4 AMLD recognise the links between the AML and tax evasion and the challenges faced globally. Those amendments rely on the clear synergies in the customer due diligence performed under the 4 AMLD and the customer due diligence performed under the Directive on Administrative Cooperation. Similarly, the fact that the AML information is clearly identifiable and available under specific provisions in the 4 AMLD provides an opportunity for a direct reference to those provisions, without the need for Financial Institutions to duplicate such information for the purposes of the Directive on Administrative Cooperation. Those two proposals are presented together with the Communication issued on the same date (COM(2016) 451).
Revised version (Article 23 Evaluation):
1. Member States and the Commission shall examine and evaluate the functioning of the administrative cooperation provided for in this Directive. 2. Member States shall communicate to the Commission any relevant information necessary for the evaluation of the effectiveness of administrative cooperation in accordance with this Directive in combating tax evasion and tax avoidance. 3. Member States shall communicate to the Commission a yearly assessment of the effectiveness of the automatic exchange of information referred to in Articles 8, 8a and 8aa as well as the practical results achieved. The Commission shall, by means of implementing acts, adopt the form of and the conditions of communication for that yearly assessment. Those implementing acts shall be adopted in accordance with the procedure referred to in Article 26(2). 4. The Commission shall, in accordance with the procedure referred to in Article 26(2), determine a list of statistical data which shall be provided by the Member States for the purposes of evaluation of this Directive.
Article 24 Exchange of information with third countries
1. Where the competent authority of a Member State receives from a third country information that is foreseeably relevant to the administration and enforcement of the domestic laws of that Member State concerning the taxes referred to in Article 2, that authority may, in so far as this is allowed pursuant to an agreement with that third country, provide that information to the competent authorities of Member States for which that information might be useful and to any requesting authorities. 2. Competent authorities may communicate, in accordance with their domestic provisions on the communication of personal data to third countries, information obtained in accordance with this Directive to a third country, provided that all of the following conditions are met: (a) the competent authority of the Member State from which the information originates have consented to that communication; (b) the third country concerned has given an undertaking to provide the cooperation required to gather evidence of the irregular or illegal nature of transactions which appear to contravene or constitute an abuse of tax legislation.
Article 25 Data protection
All exchange of information pursuant to this Directive shall be subject to the provisions implementing Directive 95/46/EC. However, Member States shall, for the purpose of the correct application of this Directive, restrict the scope of the obligations and rights provided for in Article 10, Article 11(1), Articles 12 and 21 of Directive 95/46/EC to the extent required in order to safeguard the interests referred to in Article 13(1)(e) of that Directive.
Amendment rationale: CONTEXT OF THE PROPOSAL 1. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the European Union and worldwide. Billions of euros are being lost. By reducing fraud and evasion Member States could increase tax revenues which would also provide them with added scope to restructure their tax systems in a way that better promotes growth as outlined in the 2013 Annual Growth Survey. In addition, given the order of magnitude of the challenge, stepping up the fight against tax fraud and evasion is not only an issue of revenue, but also of fairness. Particularly in these difficult economic times, honest taxpayers should not suffer additional tax increases to compensate for revenue losses incurred due to tax fraudsters and evaders. 2. For years, the European Union (EU) has been working actively on these problems, in particular by adopting specific legal instruments to implement automatic exchange of information ("AEOI") within the Union. The EU Savings Directive (the "EUSD") ensures AEOI on interest income and a proposal to enlarge its scope is under discussion in the Council. The Directive on Administrative Cooperation (the "DAC") ensures that, from 2015, Member States will exchange information automatically upon availability on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property. 3. Member States have now expressed a clear wish to go beyond current levels of cooperation. The European Council of 2 March 2012 invited the Council and the Commission to develop rapidly concrete ways to improve the fight against tax fraud. On 6 December 2012, the Commission presented an Action plan to strengthen the fight against tax fraud and tax evasion[1]. The Action Plan highlights the need to promote AEOI as the European and international standard of transparency and exchange of information in tax matters. On 14 May 2013, the ECOFIN Council adopted conclusions welcoming the work by the Commission on developing measures to combat tax fraud, tax evasion and aggressive tax planning and recognising the useful role the Commission Action Plan can play in this regard[2]. 4. The European Council on 22 May 2013 went even further, requesting the extension of AEOI at EU and global levels with a view to fighting against tax fraud, tax evasion and aggressive tax planning. On that occasion, the Commission committed itself to proposing amendments to the DAC in June 2013 in order to expand the scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 5. The objective of the present proposal is, therefore, to expand the scope of AEOI in the EU beyond that provided for in existing EU automatic information exchange arrangements. It would bring the following other items within the scope of the AEOI: dividends, capital gains, other financial income and account balances. The provision for a review and expansion of the DAC in 2017 would remain. However, in line with the objective of enhancing AEOI the removal of the condition of availability would now be considered at that time in respect of all five existing categories together so that the DAC would cover the full range of income. Furthermore, the categories to be considered for inclusion at that time would be amended in the light of the present proposal (see below). Extending the scope of the AEOI would also contribute to ensuring equality of treatment between different types of assets and to avoiding undesirable reallocation of portfolios. 6. The Commission proposes to remove the reference in Article 8(3) of the Directive to a threshold below which a Member State may not wish to receive information from other Member States. Discussions have revealed that such a threshold is not practical for the Member States that are required to report. However, a Member State could continue to opt not to receive any information on a particular category of income. 7. An EU initiative is needed both from an internal market perspective and in terms of efficiency and effectiveness: – An EU initiative ensures a coherent, consistent and comprehensive EU-wide approach to AEOI in the internal market. It would mean a single reporting approach across Member States which would lead to costs savings both for tax administrations and economic operators (see also point 11 below). – An EU legal instrument would also ensure certainty for tax administrations and economic operators within the EU. – An EU legal instrument would contribute to the development of the international standard of AEOI. – An EU legal instrument based on the DAC would involve the use of the IT arrangements already in place or under development to facilitate information reporting under the EUSD and the DAC. Under those Directives, EU Member States share information in specific formats using a specific communication channel (the CCN/CSI system). These formats could easily be extended so as to be usable also for the additional items now proposed for inclusion. As Member States have invested considerable time and money in developing these formats, there would be economies of scale if Member States also exchanged information on the new items using these formats. – Furthermore, the Council already committed itself, in Article 8(5) of the DAC, to consider in due course whether automatic information exchange should be extended, on the basis of an EU-wide legal instrument, to cover other categories of income such as dividends and capital gains. The present proposal is, therefore, merely accelerating work in line with this commitment. 8. The agreements that many governments have concluded or will conclude with the US as regards the US Foreign Account Tax Compliance Act (FATCA)[3] have given further impetus to AEOI as a way of combating tax fraud and evasion. 9. On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced plans for a pilot action on AEOI using the FATCA model agreed with the US as a basis. These Member States also called on Europe to take a lead in promoting AEOI in the world and expressed the wish to discuss how progress could be made within the EU on improving tax information exchange between all Member States. 10. Article 19 of the DAC states that a Member State that provides wider cooperation to a third country may not refuse to provide such wider cooperation to any other Member State wishing to enter into such mutual wider cooperation with that Member State. The fact that Member States have concluded or will conclude agreements with the US as regards FATCA means that they provide for a wider cooperation within the meaning of that provision. 11. Expanded AEOI on the basis of an EU-wide legislative instrument would remove the need and incentive for Member States to invoke Article 19 of the DAC, with a view to concluding bilateral or multilateral agreements that may be considered appropriate on the same subject in the absence of relevant Union legislation. The scenario of various agreements concluded under that provision would, in fact, present a number of disadvantages, compared to a solution brought about by EU action: – The level playing field between the Member States might be put at risk if Member States agreed to cooperate on increased AEOI in different ways. This could lead to distortions and artificial flows of capital within the internal market. – If the agreements between Member States were not identical, this could also create difficulties for economic operators that are active in several Member States as they could then face different compliance requirements in different Member States. – It might also mean that Member States would not be able to utilise the IT reporting systems that have been developed within the EU (see above). 12. Timely adoption and implementation are crucial so as to reap the benefits as quickly as possible. In order to ensure consistency with the deadline for the application of AEOI to the categories of income and capital already covered by the DAC, the time limits proposed for transposition and application of the new rules are 31 December 2014 and 1 January 2015, respectively.
Revised version (Article 25 Data protection):
1. All exchange of information pursuant to this Directive shall be subject to the provisions implementing Directive 95/46/EC. However, Member States shall, for the purpose of the correct application of this Directive, restrict the scope of the obligations and rights provided for in Article 10, Article 11(1), Articles 12 and 21 of Directive 95/46/EC to the extent required in order to safeguard the interests referred to in Article 13(1)(e) of that Directive. 2. Reporting Financial Institutions and the competent authorities of each Member State shall be considered to be data controllers for the purposes of Directive 95/46/EC. 3. Notwithstanding paragraph 1, each Member State shall ensure that each Reporting Financial Institution under its jurisdiction informs each individual Reportable Person concerned that the information relating to him referred to in Article 8(3a) will be collected and transferred in accordance with this Directive and shall ensure that the Reporting Financial Institution provides to that individual all information that he is entitled to under its domestic legislation implementing Directive 95/46/EC in sufficient time for the individual to exercise his data protection rights and, in any case, before the Reporting Financial Institution concerned reports the information referred to in Article 8(3a) to the competent authority of its Member State of residence. 4. Information processed in accordance with this Directive shall be retained for no longer than necessary to achieve the purposes of this Directive, and in any case in accordance with each data controller's domestic rules on statute of limitations.
Article 26 Committee
1. The Commission shall be assisted by a committee referred to as the ‘Committee on Administrative Cooperation for Taxation’. 2. Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply. The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three months.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The European Commission is pursuing an ambitious agenda against tax evasion and avoidance, with a view to delivering fairer and more effective taxation in the EU. Increasing tax transparency is central to this agenda. Over the past few years, significant progress has been made in enhancing tax transparency and strengthening the cooperation between tax authorities across the EU. Member States have agreed on new legislation to automatically exchange information on tax rulings 1 and on tax-related country-by-country reports of multinationals' 2 . In April 2016, the Commission also proposed that large multinationals should publicly disclose a specified set of tax-related data on a country-by-country basis. With regard to individuals' accounts, new EU legislation entered into force in January 2016, under which Member States' tax authorities will automatically exchange information on financial accounts held abroad. This will help prevent funds from being hidden offshore to escape taxation. Recent media leaks, which exposed the large scale concealment of offshore funds, confirm the importance of the EU's tax transparency agenda. They also highlighted areas where further measures still need to be taken to reinforce the EU and international transparency framework. In particular, it has become apparent that tax authorities need greater access to information on the beneficial owners of intermediary entities and other relevant customer due diligence information, if they are to effectively identify and address tax evasion. The G20 statement of 18 April calls on the Financial Action Task Force ('FATF') and the Global Forum on Transparency and Exchange of Information for Tax Purposes to make initial proposals to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange. In their statement of 14 April 2016, the five EU Ministers of Finance attending the G20 focused on fight against tax evasion, aggressive tax planning and money laundering. In particular, the statement stressed the vital importance of the effective and rapid implementation of the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”). In addition, it outlined the challenges faced with regard to availability of beneficial ownership information and underlined the common patterns among money laundering, tax evasion and illicit finance. Directive 2014/107/EU (“Directive”) amending Directive 2011/16/EU (“Directive on Administrative Cooperation”) was adopted in 2014 and applies as of 1 January 2016 to 27 Member States and as of 1 January 2017 to Austria. This Directive implements the Global Standard for Automatic Exchange of Financial Account Information in Tax Matters (“Global Standard”) within the EU. As such, it ensures that information on Account Holders of Financial Accounts is reported to the Member State where the Account Holder is resident. In addition, the Directive foresees that, where the Account Holder is an intermediary structure (i.e. a Passive Non-Financial Entity), the Financial Institutions shall look through that Entity and identify and report its Controlling Persons (beneficial owners in anti-money-laundering terminology 3 ). That important element in the application of the Directive involves a step relying entirely on anti-money-laundering (“AML”) information for the identification of the Controlling Persons. Without access by the tax authorities to that AML information, the effectiveness of the monitoring of Financial Institutions on applying the Directive on Administrative Cooperation will be reduced significantly. In the absence of that information, those authorities will not be able to monitor, audit and confirm that the Financial Institutions apply properly the Directive and identify correctly and report the Controlling Persons of intermediary structures. Therefore, the objective of this initiative is to enable tax authorities to consistently access the AML information for the performance of their duties in monitoring the proper application of the Directive on Administrative Cooperation by Financial Institutions. Tax administrations' access to AML information differs considerably throughout the EU. Even when this access is granted, authorities often still encounter significant barriers that hinder the effectiveness of their work against tax avoidance and evasion. The amendments to the Fourth Anti-Money-Laundering Directive, referred to in the next section, are important to improve the identification of money-laundering, corruption, terrorist financing and other criminal activities. Tax authorities should also have access to such information in order to maximise their capacity to tackle tax evasion and avoidance. The Commission is therefore proposing that this access should be granted through the Directive on Administrative Cooperation, which is the framework for many of the EU's other tax transparency measures. The enabling of that access concerns internal organisational matters in Member States and does not involve any reporting or other administrative obligations on the side of external stakeholders. Any potential additional burden from Financial Institutions having to present AML information to tax authorities during checks, reviews and audits would be: (i) strictly linked to the supervision of already existing obligations , whose impact on the administrative burden was already taken into consideration when those obligations were first laid down, (ii) on a case by case basis depending on the findings during checks, reviews and audits, and (iii) always in the context of comprehensive checks, reviews and audits of the fulfilment of all those existing obligations for identification of reportable persons under the Directive on Administrative Cooperation and not only the one for identifying controlling persons/beneficial owners Consistency with existing policy provisions in the policy area Amendments to the Fourth Anti-Money-Laundering Directive (COM(2016) 450) In its Action plan for strengthening the fight against terrorist financing adopted on 2 February 2016, the Commission committed to propose amendments to the Fourth Anti-Money-Laundering Directive 4 (“4 AMLD”) in the first half of 2016 to further reinforce the rules against terrorist financing. The need to further reinforce the AML rules in order to improve transparency and the availability of beneficial ownership information also led the Commission to propose amendments to the 4 AMLD after assessing policy options in a second part of the Impact Assessment of those amendments to the 4 AMLD. The amendments to the 4 AMLD recognise the links between the AML and tax evasion and the challenges faced globally. Those amendments rely on the clear synergies in the customer due diligence performed under the 4 AMLD and the customer due diligence performed under the Directive on Administrative Cooperation. Similarly, the fact that the AML information is clearly identifiable and available under specific provisions in the 4 AMLD provides an opportunity for a direct reference to those provisions, without the need for Financial Institutions to duplicate such information for the purposes of the Directive on Administrative Cooperation. Those two proposals are presented together with the Communication issued on the same date (COM(2016) 451).
Revised version (Article 26 Committee procedure):
1. The Commission shall be assisted by the Committee on administrative cooperation for taxation. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011 of the European Parliament and of the Council ( 4 ). 2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.
Article 27 Reporting
Every five years after 1 January 2013, the Commission shall submit a report on the application of this Directive to the European Parliament and to the Council.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The COVID-19 outbreak is a severe public health crisis which has affected all Member States. It poses a major challenge for public health care systems and is likely to have severe implications for the Union’s economies for an extended period of time. This situation creates an overwhelming disruption in the life of citizens and businesses, who struggle to carry out their activities due notably to the constraints linked to the lockdowns in many Member States. In light of these unprecedented circumstances, a number of Member States and persons liable to report information under Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation 1 have requested the deferral of certain deadlines for the filing and exchanging of information under this Directive. More specifically, the requests for deferral pertain to automatic exchanges of information on financial accounts of which the beneficiaries are tax resident in another Member State 2 and reportable cross-border arrangements 3 that feature in Annex IV to Council Directive 2011/16/EU. The severe disruption caused by the COVID-19 pandemic hampers the timely compliance of financial institutions and of the persons liable to report cross-border arrangements and affect negatively the capacity of Member States’ tax administrations to collect and process the data. This situation requires an urgent and coordinated response within the Union and where relevant at global level. In this regard, it would be useful to take into account the initiative of the Steering Group of the Global Forum with respect to the common reporting standard (CRS) for Reporting Financial Institutions, the latter being transposed in Union law via Council Directive (EU) 2014/107. It is therefore necessary to defer the deadline for the exchange of information on financial accounts of which the beneficiaries are tax resident in another Member State. This would accordingly allow Member States to adjust their national deadlines for the filing of such information by the Reporting Financial Institutions. In the same vein, the deadlines for filing and exchanging information on cross-border arrangements under Annex IV of Council Directive 2011/16/EU should also be extended. Meanwhile, it should also be recalled that the exchange of information on financial accounts of which the beneficiaries are tax resident in another Member State and on reportable cross-border arrangements under Annex IV to Council Directive 2011/16/EU is crucial in the fight against tax avoidance and tax evasion in the Union. Member States will need tax revenues to finance their considerable efforts to contain the negative economic impact of the measures against the COVID-19 pandemic. Ensuring tax fairness by preventing tax avoidance and tax evasion becomes more important than ever. While the current crisis calls for adjusting the calendar for filing and transmitting some tax data, it should not lead to relinquishing the efforts of national administrations for ensuring fair taxation. The length of the deferral should not disrupt the established structure and functioning of Council Directive 2011/16/EU. Rather, it should be of limited duration, in proportion to the practical difficulties caused by a temporary lockdown aiming at containing the pandemic. Considering the current uncertainty about the evolution of the COVID-19 pandemic, it is useful to provide for the possibility of one further extension of the deferral period for filing and exchanging information. This would be necessary if during part or all of the period of deferral, the exceptional circumstances of severe risks for public health caused by the COVID-19 pandemic persist and Member States have to either implement new or continue existing lockdown measures. Such extension should not disrupt the established structure and functioning of Council Directive 2011/16/EU. Rather, it should be of a limited and pre-determined duration in proportion to the practical difficulties caused by the temporary lockdown. The extension should not affect the essential elements of the obligation to report and exchange information under this Directive. It may merely extend the deferral of the deadline for complying with such obligations while ensure that no information remains without eventually being exchanged.
Revised version (Article 27 Reporting):
1. Every five years after 1 January 2013, the Commission shall submit a report on the application of this Directive to the European Parliament and to the Council. 2. Every two years after 1 July 2020, the Member States and the Commission shall evaluate the relevance of Annex IV and the Commission shall present a report to the Council. That report shall, where appropriate, be accompanied by a legislative proposal.
Article 28 Repeal of Directive 77/799/EEC
Directive 77/799/EEC is repealed with effect from 1 January 2013. References made to the repealed Directive shall be construed as references to this Directive.
Article 29 Transposition
1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive with effect from 1 January 2013. However, they shall bring into force the laws, regulations and administrative provisions necessary to comply with Article 8 of this Directive with effect from 1 January 2015. They shall forthwith inform the Commission thereof. When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by the Member States. 2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.
Article 30 Entry into force
This Directive shall enter into force on the day of its publication in the Official Journal of the European Union .
Article 31 Addressees
This Directive is addressed to the Member States.