Brussels, 13/03/2015 (Agence Europe) - Under draft legislation to be unveiled on Wednesday 18 March that EUROPE has seen, the European Commission wants to introduce automatic exchange of information (AEI) on crossborder tax rulings on 1 January 2016.
In an amendment to the EU Directive on administrative cooperation, the European Commission wants member states to automatically exchange with each other and also with the Commission each quarter details of crossborder tax rulings and advance pricing arrangements (APA). This would also apply to any rulings granted over the ten years before the directive comes into force, as long as they are still in force today. The proposals do not cover tax rulings for individuals.
The rulings covered by the new rules are agreements or arrangements offering similar benefits that are granted by a tax office in a member state (or a tax office subdivision) that clarify or interpret legal clauses or administrative clauses in the member state's tax rules at any level and that apply to crossborder transactions (investment, supply of goods and services, the use of tangible or intangible assets and the like) and which are granted ahead of the transactions.
Foreign content. Information would need to be exchanged in the month following the quarter during which a ruling or APA was granted or amended. The information must cover at least the following: - identification of the taxpayer and the company it belongs to; - the contents of the ruling or APA; - a description of the criteria used to decide on the transfer prices for APAs; - identification of other countries that may be directly or indirectly concerned by the ruling or APA; and - identification of any other body (not individual) in the member state that may be concerned. The Commission says that the shared information should be as brief as possible but sufficient to enable the country receiving it to be able to work out whether it should ask for more information. “More information” can go as far as the full tax ruling or APA.
The Commission says the limited nature of the information to be shared with the member states should provide sufficient protection of commercial interests.
The information must also be sent to the Commission, but the member state must still notify the Commission in advance of any state aid.
By 1 October 2017, countries must supply the European Commission with annual statistics on the volume of information shared with other member states, giving information about the administrative costs and benefits of the information exchange. By 1 October 2018, the Commission will draw up a report and, if necessary, legislative proposals on categories of income or capital and/or details of the information exchange.
The draft legislation foresees the establishment of a central database of information exchanged under this proposal. The central database would make exchange of information easier and help countries research and react to the exchanged rulings.
The current version of the directive on administrative cooperation currently covers the “spontaneous” transfer of information about tax rulings, an approach hindered by practical problems, such as the fact that it is left to the member state granting the ruling to decide which countries should be provided with information about it. The Commission says that the proposal is in line with the OECD's “Base erosion and profit shifting” action plan and hopes it will be adopted before the end of December 2015 so it can come into force on 1 January 2016. (Elodie Lamer)