Brussels, 24/06/2009 (Agence Europe) - The European Commission is ready to take another step in the work to improving tax information exchange (EUROPE 9916). It is gearing up to recommend that European finance ministers provide it with a mandate for negotiating on behalf of the European Union, anti-fraud agreements with Andorra, Monaco, San Marino and Switzerland. Technically, it will adopt draft directives for negotiations by written procedure that it will submit to the Council for approval. Tax information exchange is on the agenda for the Ecofin Council on Tuesday 7 July under the Swedish presidency. If a unanimous decision of ministers is not taken in July, the Commission hopes that it will take action by the end of September for the G20 summit in Pittsburgh. At this event, European members of the G20 will examine progress in Europe in this area since the London summit at the beginning of April (EUROPE 9876).
To launch negotiations, the Commission is using the example of the anti fraud agreement between the EU and Liechtenstein which is currently being finalised. This focuses on direct and indirect taxation and will include clauses on tax information exchange in compliance with specific standards elaborated by the Organisation for Economic Cooperation and Development (OECD). It is at this stage too difficult to say what the position of the four European countries in question will be. Political pressure from the G20 is certainly strong but nothing so far suggests that these countries will agree to negotiating global agreements with the EU. Switzerland, which has an anti fraud agreement with the EU, which only focuses on indirect tax, favours renegotiating bilateral agreements on the double taxation in order to comply with its commitment to respect OECD standards.
The conclusion with the five European countries (Andorra, Liechtenstein, Monaco, San Marino and Switzerland) of anti fraud agreements that include OECD standards would have a significant impact on European legislation on income tax and physical savings (directive 2003/48/EC). The most recent date of entry into force of one of these agreements, accompanied by the commitment of the US in participating with the EU in tax information exchange, corresponds to the end of the transition period for directive 2003/48/EC. This transition period authorises three member states (Austria, Belgium, Luxembourg) to apply a withholding tax on saving income placed on their territory by non-residents and therefore is not included in the automatic exchange of information in force in the rest of the EU.
On Tuesday 23 June in Berlin during an international conference jointly organised by Germany and France (EUROPE 9927), 19 member countries of the OECD adopted a declaration listing position retaliation measures against jurisdictions not applying the organisation's standards on tax information exchange. The countries could take measures if they consider they have been harmed: application of higher withholding taxes to a wide variety of payments in non-cooperative jurisdictions; the refusal to recognise tax deductions on payments to people or companies based in the jurisdictions concerned and the denunciation of treaties linking the countries harmed to the jurisdictions refusing to take part in tax information exchange. (M.B./trans/rh)