Recently the Council Directive 2011/16/EU regarding “Mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements” has been amended to cover the obligation to report potential aggressive cross-border tax-planning arrangements. As a result, reportable cross-border arrangements where the first step of implementation is taken between 25 June 2018 and the date of application of the Directive of 1 July 2020, will have to be retroactively reported by 31 August 2020 and are to be exchanged between EU Member States by 31 October 2020.
In order to meet the purpose of effective combating erosion of the national tax base the Directive puts an obligation on so-called “intermediaries” to report aggressive tax-planning arrangements to which they have been involved regarding design, management and/ or implementation.
The definition of ‘intermediaries’ includes all tax advisers, accountants, lawyers and other professionals that are advising taxpayers on cross-border transactions. It may also include professionals involved in managing the implementation of transactions such as professionals providing trust services and family offices.
In order to ensure full effect of the information disclosure obligation the information, as obtained by the local tax administration, will be exchanged within the EU through a centralized database. Intermediaries or taxpayers are required to file the information with their tax authorities within 30 days beginning:
The Council Directive is due for implementation by the EU Member States before December 31, 2019. Disclosure requirements will apply as from July 1, 2020 while the initial automatic exchange of information between member states will occur as from October 1, 2020.
A set of hallmarks based on a “main benefit test” doctrine has been described in Annex IV to the Council Directive. These hallmarks are divided into five (5) categories comprising (1) generic hallmarks and (2) specific hallmarks linked to the benefit test, (3) specific hallmarks related to cross-border transactions, (4) specific hallmarks concerning automatic exchange of information and beneficial ownership and (5) specific hallmarks concerning transfer pricing.
Non-compliance by intermediary persons and/ or relevant taxpayers may entail risk of severe penalties.
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