Brussels, 29/09/2015 (Agence Europe) - The member states of the EU have somewhat reduced the scope of the text proposed in March of this year by the European Commission on the automatic exchange of information on tax rulings. This dossier will be discussed by the permanent representatives on Wednesday 30 September, but the finance ministers will have the final say at their meeting in Luxembourg on Tuesday 6 October, due to the highly political nature of the dossier.
The Commission's role. One of the first points of contention concerns the role the Commission should play in this exchange. The Commission wanted to receive the information exchanged as well. The Council created a framework for the role it had given itself, whereby the European Commission would receive “a limited series of information”. This would allow it to monitor and assess the proper application of the exchange of information, but, and the following constitutes an addition to the Commission's proposal, the information received by the Commission “cannot be used for other purposes”, reads the final compromise text dated 28 September of which EUROPE has had sight. The text also states that the Commission will not be able to receive the identification of the taxpayer concerned by the ruling, a summary of the content of the ruling itself or a description of the criteria used to determine the transfer price in the event of prior agreements on transfer prices ('APA') (the information laid down in articles 5(a), 5(b), 5(c) and 5(e).
Retroactivity. The consensus is moving towards a period of retroactivity of five years, although certain delegations would have preferred three years. The Commission had proposed 10 years. Poland invoked problems related to its Constitution. Other delegations took the view that the burden was disproportionate given the objective of transparency, and others stressed the fact that the requirements go well beyond the OECD provisions. The proposed compromise therefore requires rulings and APAs granted, amended or renewed and still valid within a period of five years before the date of application of the directive to be exchanged (except for individuals and groups with a net annual turnover below €40 million). This threshold, as proposed by the Presidency, is being challenged by a number of delegations. The question of tax rulings and APAs, 'still valid or not', therefore remains to be settled.
The question of the transposition date of the text remains open. The Commission wanted the exchange to start on 1 January 2016. A number of states, such as Germany and the Czech Republic, called for a transposition period of one year, others, such as France and Italy, wanted a shorter period. The compromise text of the Presidency also provides for the exchange to be carried out on a six-monthly basis (rather than quarterly) and within three months (rather than one year) of the end of the six-month period in question.
As regards the scope of application, the definition of tax rulings and APAs remains virtually the same. The text concerns cross-border tax rulings, both binding and non-binding. Excluded from the scope are APAs entered into with third countries, if the international agreement concerning them does not allow this information to be submitted to third parties. (Original version in French by Elodie Lamer)