The European Council of Economic and Financial Affairs (ECOFIN) on October 14th, 2014 agreed to an amendment of the text of the Directive on Administrative Cooperation in the Field of Taxation, Directive 2011/16/EU (“DAC” or “EUDAC”).
The new Directive, Directive 2014/107/EU is amending Directive 2011/16/EU, is adopted on December 9th, 2014 and significantly extends the scope of the automatic exchange of information (“AEOI” or “AEI”) for tax purposes.
While the previous Directive, Directive 2011/16/EU, requires the AEI on income and assets of five (5) types: employment income, directors’ fees, life insurance products not covered by other Directives, pensions, ownership of and income from immovable property; the amending Directive, Directive 2014/107/EU adds new types of information to AEI. The additional information is related to interest, dividends, other income from assets held by a custodial institution, sales and redemption proceeds from financial assets, as well as financial information such as aggregated annual accounts data (balances etc.).
Exchange of information proposed in Directive 2014/107/EU is based on the Common Reporting Standard (“CRS”) developed by the OECD, which draws in many aspects on FATCA, and aims to be the Global Standard for Automatic Exchange of Information.
Directive 2014/107/EU shall become effective as early as 1 January 2016, with a view of performing the first exchange of information between tax authorities in 2017.
With the adoption of the DAC, the 28 EU Member States, including Luxembourg and Austria, have to create a legislative framework in order the EU Member States to apply AEI for tax purposes among themselves.
At OECD level, 61 jurisdictions, including all the 28 EU Member States, by signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, agreed to automatically exchange information for tax purposes on the basis of OECD Common Reporting Standard. The overwhelming majority of the signatories have committed to perform the first exchange of information between tax authorities in 2017.
Financial Institutions will be required to identify residency of customers and annually report financial account information as from 1 January 2016.
EU Council Directives
[Doc] Directive 2011/16/EU
[Doc] Directive 2014/107/EU
[Link] Harmful Tax Competition
[Link] OECD: Standard for Automatic Exchange of Financial Account Information in Tax Matters: Implementation Handbook
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