UK And EU Finalize A Draft Brexit Deal Including In Taxation

The UK and the EU have finalized a draft Brexit deal with a commitment to continue implementing OECD tax standards.

General tax issue

Under the draft agreement, the EU and the United Kingdom commit themselves to implement the principles of good governance in the area of taxation, including the global standards on transparency and exchange of information, fair taxation, and the OECD standards against base erosion and profit shifting. Both parties will also improve international tax cooperation and facilitate tax revenue collection, among other things.

The United Kingdom also agrees to continue applying its domestic laws that transpose some EU laws, including Council Directive 2011/16/EU, which involves administrative tax cooperation, and Council Directive (EU) 2016/1164, which sets out rules against tax avoidance that affects the internal market like the U.K. and the EU have reaffirmed their commitments to curb harmful tax practices.

Gibraltar protocol

The draft agreement also includes a protocol concerning Gibraltar. Under article 3 of the protocol, G-20 and OECD standards linked to good fiscal governance, transparency, exchanges of information and harmful tax practices, and in particular the economic substance criteria established by the OECD Forum on Harmful Tax Practices shall be complied with in Gibraltar, with a view to Gibraltar's participation in the OECD inclusive framework on base erosion and profit shifting.

Spain and the U.K. government will set up necessary cooperation mechanisms regarding Gibraltar in the areas of tax transparency and the protection of the three jurisdictions' financial interests. Specifically, Spain and the United Kingdom will establish an enhanced system of administrative cooperation to fight against fraud, smuggling, money laundering, and to resolve tax residence conflicts.

Next Steps

British and EU negotiators will continue working on a political declaration on a framework for the future EU-U.K. relationship, using an outline that was also published November 14. The negotiators are aiming to finalize a full political declaration by the end of November, according to a joint EU-U.K. statement. The UK government will present a final version of the agreement to Parliament.

Source: UK Government