The new rules should lead to greater cooperation between Member
States on tax matters and act as a deterrent from using tax rulings as
an instrument for tax abuse. All Member States will be equipped with the
information they need to protect their tax bases and effectively target
companies that try to escape paying their fair share of taxes. The
agreement was reached at a meeting of Economic and Financial Affairs
ministers in Luxembourg.
Following the announcement of the agreement, Jean-Claude Juncker, President of the European Commission said:...
"I
warmly welcome today's agreement as a major step forward. The automatic
exchange of information on tax rulings will provide national
authorities with insight on aggressive tax planning. It marks a leap
forward in our efforts to advance on tax coordination and tax
harmonisation. The current system of corporate tax rules is
unjust and unfit for purpose. There is a plethora of national rules that
allows some companies to win, while others lose out. This unfair
competition is anathema to the principles of fair competition within our
Internal Market."
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "All
EU Member States have today agreed to share more information on tax
rulings given to companies which operate cross-border. This is a major
step in combating aggressive tax planning, creating greater transparency
in corporate taxation and in providing fairer competition for both
businesses and consumers. I see today's agreement as an important signal
that Member States are ready to deliver on our common goal of fair and
effective taxation. The EU will continue to work to implement these
transparency rules worldwide."
What are the key elements of the new rules?
Currently,
Member States share very little information with one another about
their tax rulings. It is at the discretion of the Member State to decide
whether a tax ruling might be relevant to another EU country. As a
result, Member States are often unaware of cross-border tax rulings
issued elsewhere in the EU which may have an impact on their own tax
bases. The lack of transparency on tax rulings can be exploited by
certain companies in order to artificially reduce their tax
contribution.
To redress this situation, the new rules agreed
today will require Member States to automatically exchange information
on their tax rulings. The directive will remove Member States discretion
to decide on what information is shared, when and with whom.
These
rulings - defined widely so as to capture all similar instruments and
irrespective of the actual tax advantage involved - will have to be
exchanged every six months. The agreement will also cover existing
rulings of the past five years. Member States will then be able to ask
for more detailed information on a particular ruling.
The
automatic exchange of information on tax rulings will enable Member
States to detect certain abusive tax practices by companies and take the
necessary action in response. It is expected that this initiative will
deter tax authorities from offering selective tax treatment to companies
once this is open to scrutiny by their peers. This will result in much
healthier tax competition.
In addition, the Commission will
regularly receive the information it needs in order to monitor the
implementation of this directive and ensure that Member States are
complying with their responsibilities.
Member States will have to
transpose the new rules into national law before the end of 2016,
meaning that the Directive will come into effect on 1 January 2017.
