The Commission is expected to present a proposal before the end of June for an amendment to the directive on administrative cooperation, to provide for automatic exchange of tax planning information between member states. Tax schemes that involve at least two member states, or a member state and a third country, will be covered by the amendment.
At a recent meeting of the EU Parliament’s PANA committee of inquiry in relation to money laundering, tax avoidance and tax evasion, European Commission president, Jean-Claude Juncker, announced the Commission’s intention to bring forward ‘in the coming weeks’ a new proposal for intermediaries to report cross-border tax planning schemes.
Tax Journal understands that an intermediary will be defined as any person responsible for ‘designing, marketing, organising or managing the implementation of the tax aspects of a reportable cross-border arrangement, in the course of providing services relating to taxation’. Such intermediaries would have to disclose any tax planning scheme within five working days after making it available to a taxpayer. Where the adviser or intermediary is established in a third country, the requirement to disclose the tax scheme would shift to the taxpayer.
Member states would then have to automatically exchange the information on a quarterly basis, with limited access granted to the Commission.
The commission has drawn up five hallmarks to define what is potentially an aggressive tax planning scheme:
the first covers generic arrangements such as those in which the intermediary is entitled to receive, for example, a fee based on the amount of the tax advantage derived from the tax scheme;
the second is linked to a ‘main benefit test’;
the third covers cross-border transactions between related parties, designed to exploit jurisdictions where the corporate tax rate is zero, or lower than half the average corporate rate in the EU, or where there may be a double deduction;
the fourth covers any scheme designed to circumvent EU legislation or agreements on automatic exchange of information; and
the fifth concerns schemes not conforming to the arm’s length principle or the OECD’s transfer pricing guidelines.
The Commission intends the new rules to come into force in 2019.
The Commission is expected to present a proposal before the end of June for an amendment to the directive on administrative cooperation, to provide for automatic exchange of tax planning information between member states. Tax schemes that involve at least two member states, or a member state and a third country, will be covered by the amendment.
At a recent meeting of the EU Parliament’s PANA committee of inquiry in relation to money laundering, tax avoidance and tax evasion, European Commission president, Jean-Claude Juncker, announced the Commission’s intention to bring forward ‘in the coming weeks’ a new proposal for intermediaries to report cross-border tax planning schemes.
Tax Journal understands that an intermediary will be defined as any person responsible for ‘designing, marketing, organising or managing the implementation of the tax aspects of a reportable cross-border arrangement, in the course of providing services relating to taxation’. Such intermediaries would have to disclose any tax planning scheme within five working days after making it available to a taxpayer. Where the adviser or intermediary is established in a third country, the requirement to disclose the tax scheme would shift to the taxpayer.
Member states would then have to automatically exchange the information on a quarterly basis, with limited access granted to the Commission.
The commission has drawn up five hallmarks to define what is potentially an aggressive tax planning scheme:
the first covers generic arrangements such as those in which the intermediary is entitled to receive, for example, a fee based on the amount of the tax advantage derived from the tax scheme;
the second is linked to a ‘main benefit test’;
the third covers cross-border transactions between related parties, designed to exploit jurisdictions where the corporate tax rate is zero, or lower than half the average corporate rate in the EU, or where there may be a double deduction;
the fourth covers any scheme designed to circumvent EU legislation or agreements on automatic exchange of information; and
the fifth concerns schemes not conforming to the arm’s length principle or the OECD’s transfer pricing guidelines.
The Commission intends the new rules to come into force in 2019.
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")