ECOFIN ministers have agreed the European Commission’s proposal for new disclosure and reporting rules for intermediaries, such as tax advisers, accountants and lawyers, involved the design and promotion of ‘aggressive’ cross-border tax planning schemes.
The new reporting requirements, introduced through an amendment to the administrative cooperation directive, will apply from 1 July 2020, with member states obliged to exchange information every three months.
The final version of the directive includes a revised hallmark for payments to connected companies in low-tax jurisdictions, which will now apply to jurisdictions with a zero or ‘almost zero’ corporate tax rate, removing references linking the hallmark to a rate lower than 35% of the average corporate tax rate in the EU.
Five hallmarks will define what is potentially an aggressive tax planning scheme:
generic arrangements such as those in which the intermediary is entitled to receive, for example, 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.
ECOFIN ministers have agreed the European Commission’s proposal for new disclosure and reporting rules for intermediaries, such as tax advisers, accountants and lawyers, involved the design and promotion of ‘aggressive’ cross-border tax planning schemes.
The new reporting requirements, introduced through an amendment to the administrative cooperation directive, will apply from 1 July 2020, with member states obliged to exchange information every three months.
The final version of the directive includes a revised hallmark for payments to connected companies in low-tax jurisdictions, which will now apply to jurisdictions with a zero or ‘almost zero’ corporate tax rate, removing references linking the hallmark to a rate lower than 35% of the average corporate tax rate in the EU.
Five hallmarks will define what is potentially an aggressive tax planning scheme:
generic arrangements such as those in which the intermediary is entitled to receive, for example, 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.
