Over the last two (2) years several regulations and treaties have been signed by E.U. Member States for the Automatic Exchange of Information for Tax purposes covering:
- Exchange of information (“AEOI”) between the E.U. Member States (AEOI is realized through Directive 2003/48/EC, 2011/16/EC, 2014/107/EU and their amendments, Common Reporting Standard - CRS) and
- E.U. Member States and Jurisdictions outside E.U. such as U.S.A. (AEOI is realized through FATCA) and OECD participating countries (AEOI is realized through MAA Convection and the Standard of Automatic Exchange of Information in Tax Matters, Common Reporting Standard - CRS).
Between E.U. Member States the following Directives were applied for Taxes and exchange of information for Tax purposes:
- Directive 2003/48/EC of 3 June 2003 on taxation of (individuals) saving income in form of interest payment, amended with Directives 2004/66/EC, 2006/98/EC, 2014/48/EU.
- Directive 2003/49/EC of 3 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States, amended with Directives 2004/66/EC, 2004/76/EC and 2006/98/EC.
- Directive 2004/66/EC of 26 April 2004 adapting Directives 1999/45/EC, 2002/83/EC, 2003/37/EC and 2003/59/EC of the European Parliament and of the Council and Council Directives 77/388/EEC, 91/414/EEC, 96/26/EC, 2003/48/EC and 2003/49/EC, in the fields of free movement of goods, freedom to provide services, agriculture, transport policy and taxation, by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia.
- Directive 2004/76/EC of 29 April 2004 on amending Directive 2003/49/EC as regards the possibility for certain Member States to apply transitional periods for the application of a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States.
- Directive 2006/98/EC of 20 November 2006 adapting certain Directives in the field of taxation, by reason of the accession of Bulgaria and Romania.
- Directive 2011/16/EC of 15 February 2011 on administrative cooperation in the field of taxation (and repealing Directive 77/799/EEC).
- Directive 2014/48/EU of 24 March 2014 amending Directive 2003/48/EC on taxation of savings income in the form of interest payments.
- Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards of mandatory automatic exchange of information in the field of taxation.
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 which 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 AEOI 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.). This Directive aims to reduce tax evasion and increase tax collection in E.U. Member States.
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.
Due to the extension of the scope of the DAC with Directive 2014/107/EU, it has also been proposed to repeal the Savings Directive 2003/48/CE in order to have just one standard in the EU and avoid legislative overlaps.
E.U. Council with the following two (2) Directives has repeal Directive 2003/48/CE:
- Directive 2014/48/EU Proposal for a Council Directive repealing Council Directive 2003/48/EC.
- Directive COM/2015/0129 Final Council Directive repealing Council Directive 2003/48/EC.
Therefore, Directive 2003/48/EC is repealed with effect from 1 January 2016. However, a number of obligations under Directive 2003/48/EC, as amended by Directive 2006/98/EC, shall continue to apply.
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