The European Commission (EC) has proposed extending the automatic exchange of information between EU tax administrations, as part of the intensified fight against tax evasion.
Under the proposal, dividends, capital gains, all other forms of financial income and account balances, would be added to the list of categories which are subject to automatic information exchange within the EU (see MEMO/13/533). This paves the way for the EU to have the most comprehensive system of automatic information exchange in the world.
Algirdas Šemeta, Commissioner for Taxation, Customs, Statistics, Audit and Anti-Fraud, says: "With today’s proposal, Member States will be better equipped to assess and collect the taxes they are due, while the EU will be well positioned to push for higher standards of tax good governance globally. It will be another powerful weapon in our arsenal to lead a strong attack against tax evasion."
Two key pieces of legislation already provide for the automatic exchange of information within the EU.
The EU Savings Tax Directive ensures that Member States collect data on the savings of non-resident individuals, and automatically provide this data to the tax authorities where those individuals reside. This system has been in place since 2005. A proposal is on the table in Council to strengthen this Directive, and enlarge its scope. At the European Council in May 2013, Member States committed to adopting the revised Savings Directive before the end of the year.
The Administrative Cooperation Directive foresees the automatic exchange of information on other forms of income from January 1 2015. These are: employment, directors’ fees, life insurance, pensions and property. Today’s proposal seeks to revise the Administrative Cooperation Directive, so that automatic information exchange will also apply to dividends, capital gains, other financial income and account balances from that date.
This proposal, together with the above-mentioned provisions on automatic exchange, will mean that Member States share as much information amongst themselves as they have committed to doing with the USA under the Foreign Account Tax Compliance Act (FATCA).
In December 2012, the Commission presented an Action Plan for a more effective EU response to tax evasion and avoidance (see IP/12/1325). It sets out a comprehensive set of measures to help Member States protect their tax bases and recapture billions of euros legitimately due. The Action Plan highlights the need to promote automatic information exchange as the European and international standard of transparency and exchange of information in tax matters.
The ECOFIN Council on 14 May 2013 welcomed the Action Plan. The European Council on 22 May 2013 requested the extension of automatic exchange of information at EU and global level, for a better fight against tax fraud, tax evasion and aggressive tax planning and welcomed the Commission’s intention to make a proposal in this regard.