The European Commission this week has presented two Directive proposals, which might be in particularly unpleasant for well-heeled bad sees among tax payers. The objective is to significantly improve cross-border administrative cooperation. For example, member states will no longer be able to reject the provision of information in response to a request for assistance under the cloak of bank secrecy.
As the Commissioner in charge, Laszlo Kovács, commented in a press statement that “it was no longer acceptable that bank secrecy in one member state would be able to constitute an obstacle to the correct assessment of the tax debt of a resident taxpayer in another member state.” The improvement of the administrative cooperation in the tax sector should apply to all types of tax, with exception of those taxes, which are subject to special EU regulations (e.g. Value Added Tax).

With regard to one of the Directive proposals, the Commission is referring to an OECD Model Convention, which includes a provision to the effect that information about a taxpayer cannot just be denied on the basis of this information being held by a bank or another financial institute.

Among others, the Commission wants to introduce the binding spontaneous exchange of information about tax refunds between national tax and revenue authorities. The active participation of representatives of authorities of another country should be made possible in case of official investigations.

The current regulations for mutual legal assistance are already over 30 years old; hence, they originate from a period, where the mobility of capital was significantly lower. According to estimates, tax fraud/evasion in the European Union amounts to about € 6 billion per year.

Both Directive proposals concerning the improved cooperation between tax authorities are available through the following links:

Proposal for a Council Directive on administrative cooperation in the field of taxation

Proposal for a Council Directive concerning mutual assistance for the recovery of claims relating to taxes, duties and other measure