This Friday 26 January, the member states of the EU will hold a new round of negotiations at a working group on the proposed modification of the administrative cooperation directive in order to bring in transparency for tax intermediaries and the automatic exchange of information on the aggressive planning schemes they devise (see EUROPE 11813, 11812). The Bulgarian Presidency of the Council of the EU hopes to reach an agreement at the meeting of the finance ministers in March.
In a working document prepared ahead of the meeting of this 26 January, of which EUROPE has had sight, one of the major changes brought in by the member states in their discussions concerns the place where the tax intermediary must notify the scheme devised for a taxpayer. The Commission wanted the tax adviser to send this information to the tax authorities of the taxpayer's country, so that they could be notified as soon as possible. However, the member states would rather this information be sent to the tax administration of the country in which the intermediary is established. This is the approach the directive on cooperation has always followed, they argue, and it will make it easier to impose sanctions on the intermediary if he or he fails to submit the data.
Another change also seeks to ensure consistency with earlier versions of the directive, this time concerning the automatic exchange of information on tax rulings. This change provides that “bilateral or multilateral advance pricing arrangements with third countries shall be excluded from the scope” of this exchange “where the international tax agreement under which the advance pricing arrangement was negotiated does not permit its disclosure to third parties”.
In its proposed transparency of intermediaries, however, the Commission wanted the schemes in this category to be exchanged (this is the fifth 'hallmark' to define an aggressive planning scheme, in annex 4). The member states deleted this provision and put it in brackets.
Finally, the part of the negotiations likely to be the toughest concerns the third hallmark, related to cross-border transactions. The Commission had stipulated that data related to arrangements involving cross-border payments between two or more affiliated companies were to be exchanged if the beneficiary is a tax resident in a country with no corporate taxation, or a rate of 0%, or a rate below 40% of the EU average rate. Some member states consider that a scheme cannot be labelled aggressive on the grounds of the rate, whilst others hope to keep these conditions in place. This part of the text is therefore also in brackets.
On Wednesday 24 January, the committee on economic and monetary affairs adopted the report by Emmanuel Maurel (S&D, France) on this dossier. Among other changes to the text of the modified directive, Maurel introduced a retroactive effect to the scope of application.
The draft reform tabled by the Commission to the Parliament concerned only future arrangements. This was tantamount to allowing all existing tax evasion and aggressive tax optimisation mechanisms to continue to produce their effects, he argued. His report therefore calls for the directive to be extended to all arrangements still in force. (Original version in French by Élodie Lamer)