ECOFIN has adopted amendments to the administrative cooperation directive, introducing new disclosure and reporting rules for tax intermediaries involved in designing and promoting aggressive cross-border tax planning schemes.
The rules are built around a set of hallmarks linked to a ‘main benefit’ test. The directive will apply from 1 July 2020, with the first exchanges of information between member states to take place by 31 October 2020.
The five main hallmarks defining what is potentially an aggressive tax planning scheme are:
generic arrangements such as those in which the intermediary is entitled to receive a fee based on the amount of the tax advantage derived from the tax scheme;
specific hallmarks linked to the ‘main benefit test’ of obtaining a tax advantage;
cross-border transactions between related parties, designed to exploit jurisdictions where the corporate tax rate is zero, or ‘almost zero’;
any scheme designed to circumvent EU legislation or agreements on automatic exchange of information; and
schemes not conforming to the arm’s-length principle or the OECD’s transfer pricing guidelines.
The directive was adopted at the ECOFIN meeting on 25 May. The Commission first put forward its proposal for the new rules in June 2017. The EU Parliament and the Council approved the draft directive in March. See https://bit.ly/2GX7tte.
ECOFIN has adopted amendments to the administrative cooperation directive, introducing new disclosure and reporting rules for tax intermediaries involved in designing and promoting aggressive cross-border tax planning schemes.
The rules are built around a set of hallmarks linked to a ‘main benefit’ test. The directive will apply from 1 July 2020, with the first exchanges of information between member states to take place by 31 October 2020.
The five main hallmarks defining what is potentially an aggressive tax planning scheme are:
generic arrangements such as those in which the intermediary is entitled to receive a fee based on the amount of the tax advantage derived from the tax scheme;
specific hallmarks linked to the ‘main benefit test’ of obtaining a tax advantage;
cross-border transactions between related parties, designed to exploit jurisdictions where the corporate tax rate is zero, or ‘almost zero’;
any scheme designed to circumvent EU legislation or agreements on automatic exchange of information; and
schemes not conforming to the arm’s-length principle or the OECD’s transfer pricing guidelines.
The directive was adopted at the ECOFIN meeting on 25 May. The Commission first put forward its proposal for the new rules in June 2017. The EU Parliament and the Council approved the draft directive in March. See https://bit.ly/2GX7tte.
