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On 13 March 2018, the EU Finance Ministers reached a political agreement on the Proposal for a Council Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (the “Directive Proposal”). ATOZ, Taxand Luxembourg, provides an overview of what will need to be reported, who will be subject to the new reporting duties and when the reporting will have to be performed.
What will need to be reported under the Directive Proposal?
The Directive Proposal aims at the disclosure, by EU intermediaries, of potentially aggressive tax planning arrangements of a cross-border dimension.
Therefore, in order to be subject to mandatory reporting, the arrangement has to:
An arrangement is considered as cross-border if, subject to certain conditions, it concerns either more than one EU Member State or, an EU Member State and a third country.
The Directive Proposal does not provide us with any precise definition of the concept of aggressive tax planning. Instead, the thinking is that it would be more effective to capture potentially aggressive tax arrangements through compiling a list of features and elements of transactions that present a strong indication of tax avoidance or abuse.
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Following the political agreement reached yesterday, before becoming a final act, the Directive Proposal will have to be formally adopted at one of the upcoming ECOFIN meetings. The new measures will have to be implemented into national law by 31 December 2019 and the new reporting requirements will apply from 1 July 2020. The first automatic exchange of information by EU Member States will need to be completed by 31 October 2020.
Taxpayers that intend to invest abroad (within or outside the EU) or that are in the process of investing abroad should seek advice from their tax adviser in order to analyse the potential impact of the new reporting requirements on their investments.