Brussels, 02/02/2009 (Agence Europe) - According to proposals presented by the European Commission on Monday 2 February, the member states will no longer be able to invoke banking secrecy to avoid cooperating with each other on issues of tax evasion and fraud. In its adoption of two proposed directives, the Commission is proposing to improve mutual assistance between the taxation authorities of the member states for tax assessment purposes on the one hand, and the recovery of fiscal debt on the other. It recommends mechanisms for the exchange of information which are both simple and fast, in both areas:
Administrative cooperation in the assessment of taxes. The Commission's proposals extend the scope of application of the current regime of mutual assistance in this area (directive 77/799/EEC of the Council), as it covers all tax with the exception of that which is the subject of specific Community regulations, such as VAT and excise. It provides for clearer and more specific cooperation rules, particularly joint procedural rules, along with joint forms, formats and channels for the exchange of information. According to the text, the employees of the tax authorities of one member state will also be able to visit the territory of another member state and actively take part- with the same powers of inspection- in the administrative investigations carried out there.
The Commission's proposal also deals with banking secrecy, which currently allows a member state to refuse to provide information concerning the tax-payer of the requesting member state. "We are not asking the member states to remove banking secrecy, but we would like to put a stop to any potentially abusive use being made of it", László Kovács, European Commissioner for taxation and customs, told the press. When invoked by a member state, banking secrecy is an obstacle to the correct assessment by the authorities of another member state of the total tax due by one of its resident tax-payers. With this proposal, "a member state will not be able to refuse a request for information regarding a tax-payer of the requesting state", explained Mr Kovács. The removal of banking secrecy for non-residents could cause an outcry in the countries of the EU where it is practised (Austria, Belgium and Luxembourg). It is worth noting that banking secrecy may still be practised by a member state in virtue of its own residents.
Mutual assistance in the recovery of taxes. This proposal will make it possible to increase the rate of tax recovery, which currently represents just 5% of the amounts for which assistance is requested. It is therefore proposed to: -cover all taxes and duties levied by the member states and their administrative subdivisions, as well as compulsory social security contributions; - introduce compulsory spontaneous exchange of information concerning refunds of taxes made by national tax authorities to non-residents; - allow officials of one country actively to participate in administrative enquiries on the territory of another country; -allow that recovery assistance is requested in an early stage of the recovery process, if this leads to an increase in the recovery chances; - simplify and rationalise procedures to be used when requested or providing mutual assistance. The proposal will require "profound changes to the rules of the member states", Commissioner Kovács acknowledged. He added that a regime of this kind would "reinforce the position of the EU" in negotiations with third countries of this type of cooperation. The text of the proposals can be consulted at: http://www.ec.europa.eu/taxation_customs/index_en.htm. (A.B./transl.fl)