Exchange of information and collaboration among tax authorities
Exchange of information and collaboration among tax authorities Who is really on the other side of the table and what do they know about your company María Antonia Azpeitia (Madrid) Paul Halprin (Amsterdam) Exchange of information ‒ Tax Treaties (Article 26 of the OECD Model Tax Treaty) ‒ Bilateral Agreements on mutual administrative and legal assistance (Tax Information Exchange Agreements) ‒ Council Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation ‒ Savings Directive 2003/48/EC ‒ Council Regulation 1798/2003/EC on Administrative Cooperation in the Field of Value Added Tax and repealing Regulation ‒ Domestic legislation and practice of the tax authorities © 2015 Baker & McKenzie Amsterdam N.V. 2 OECD Framework • Exchange of information (Common Standard) With regards to information, the Action 13: • Base Erosion Profit Shifting (BEPS) © 2015 Baker & McKenzie Amsterdam N.V. 3 Exchange of information | OECD framework Content of the new standard: ‒ ‒ The CRS (Common Reporting Standard) which contains the reporting and due diligence rules to be imposed by participating jurisdictions on their financial institutions Will need to be translated into domestic law The Model CAA (Competent Authority Agreement), which contains detailed rules on exchange of the information Can be executed within existing legal frameworks, including bilateral tax treaties (provided they include a provision equivalent to Article 26 of the OECD Model Tax Convention), or the Multilateral Convention on Mutual Administrative Assistance on Tax Matters (the Multilateral Convention) © 2015 Baker & McKenzie Amsterdam N.V. 4 Exchange of information | OECD framework Current situation (AEOI Standard): • Over 60 countries and jurisdictions have already publicly committed to implementation • More than 40 have committed to a specific and ambitious timetable leading to the first information exchanges in 2017. © 2015 Baker & McKenzie Amsterdam N.V. 5 Exchange of information | OECD framework In 2013 the G20 Leaders endorsed an Action Plan to address Base Erosion and Profit Shifting (BEPS: 15-point Action Plan) With regard to information, Action 13: Is focused on achieving better transparency for tax administrations and more global consistency for taxpayers: Establishes format for transfer pricing documentation and a template for country-by-country reporting to Tax Authorities © 2015 Baker & McKenzie Amsterdam N.V. 6 Exchange of information | An EU perspective Administrative cooperation in the field of taxation • Council Directive 2011/16/EU of 15 February 2011 overhauling Directive 77/799/EEC • Establishes time limits for provision of information on request • Allows officials of one member state to participate in administrative enquiries on the territory of another member • Introduces provisions on the automatic unconditional exchange of readily available information from 2015 © 2015 Baker & McKenzie Amsterdam N.V. 7 Exchange of information | An EU perspective Administrative cooperation in the field of taxation • Provides that information exchange is made using standardised forms, formats and channels of communication • Extends co-operation to cover taxes of any kind related to individuals (ownership of and income from immovable property; life insurance products not covered by any other agreement; pensions; income from employment; directors' fees) © 2015 Baker & McKenzie Amsterdam N.V. 8 Exchange of information | An EU perspective Combatting corporate tax avoidance • Tax Transparency Package: • Transparency on Tax Rulings • Streamline legislation on the automatic exchange of information • Assess possible new transparency requirements for multinatiols • Review the Code of Conduct on Business Taxation © 2015 Baker & McKenzie Amsterdam N.V. 9 Exchange of information | An EU perspective • EU Savings Directive (EUSD) (2003/48/EC) enables automatic exchange of information between EU jurisdictions on savings income of EU residents • Directive 2014/48/EC (24 of March of 2014) has modified the Savings Directive to adapt it to the international standard of automatic exchange of information (AEOI) − 2014: Austria & Luxembourg have removed their vetoes on the amendment of the Savings Directive following commitment by the EC to reach similar agreements with other European (non EU) financial centers (Switzerland, Liechtenstein, Andorra, Monaco and San Marino) © 2015 Baker & McKenzie Amsterdam N.V. 10 Exchange of information | An EU perspective Amendments after the review of the Savings Directive: • Close loopholes concerning intermediate structures and financial products (all untaxed entities & legal arrangements) • Extend scope of global assets held by structures • Extend to new types of saving income and products (all life insurance, structured notes and derivatives.) New rules must be adopted by Members before 1 January 2016 © 2015 Baker & McKenzie Amsterdam N.V. 11 Exchange of information | An EU perspective Council Regulation 1798/2003/EC on Administrative Cooperation in the Field of Value Added Tax and repealing Regulation • Exchange of information upon request • Request for notification • Exchange of information without request (automatic exchange) © 2015 Baker & McKenzie Amsterdam N.V. 12 Exchange of information | The EU G5 • 2013: France, Germany, Italy, Spain and the UK have committed themselves to work together even more effectively to combat international tax evasion, beyond the provisions of the Directive. • The five countries are already launching a pilot multilateral exchange facility project based on the arrangements made with the US under FATCA and look forward to a speedy conclusion of bilateral agreements based on the Model. • A group of more than 40 "early adopters" has welcomed the initiative (OECD and non-OECD members) © 2015 Baker & McKenzie Amsterdam N.V. 13 Exchange of information and other tools • A multi-jurisdictional tax audit is an arrangement (formal or informal) by two or more countries to examine simultaneously and independently, each in its own territory, the tax affairs of taxpayers in which they have a common or related interest with a view to exchanging any relevant information that they obtain. • Joint tax audits arise when a tax authority invites other countries to join in conducting a joint audit. One single audit team, with the same information, which has to come to one conclusion Until now, not a lot of appetite for joint audits © 2015 Baker & McKenzie Amsterdam N.V. 14 Exchange of information and tools | Practical experience • Are taxing authorities effectively using exchange of information and tools of cooperation? • Is there a focus on specific companies / industries or structures / planning schemes? • Formal / informal requests? • Spontaneous exchange of information? © 2015 Baker & McKenzie Amsterdam N.V. 15 Exchange of information and tools | Practical background Upon request: • How active are jurisdictions / tax audit teams? • Equal treatment of all counterparts? • What if a taxing authority does not have the information requested? Can they ask the taxpayer for it and under which kind of proceedings? • Does a request for an exchange of information trigger an audit? © 2015 Baker & McKenzie Amsterdam N.V. 16 Exchange of information and tools | Practical experience • • Are taxing authorities notifying taxpayers? • Do the taxpayers of the country requesting the information have an opportunity to be involved / make a representation beforehand? • Can taxpayers appeal against the requests? National rules / principles limiting the exchange of information: can taxing authorities ask for information that they could not have obtained in their own country? How do rules like attorney / client privilege –that differ substantially among countries- operate in these situations? © 2015 Baker & McKenzie Amsterdam N.V. 17 Exchange of information and tools | Practical experience • Do you have experience / are you aware of cases where foreign tax auditors have been involved in a tax audit of your country? Joint audit? • Any experience on multi jurisdictional tax audits? • Areas of special focus? • VAT and Customs? • Transfer pricing and alleged base erosion schemes ? © 2015 Baker & McKenzie Amsterdam N.V. 18 Contact María Antonia Azpeitia Partner Tax Paul Halprin Legal Director Tax [email protected] + 34 91 230 45 30 [email protected] + 31 20 551 7820 © 2015 Baker & McKenzie Amsterdam N.V. 20 www.bakermckenzie.nl © 2015 Baker & McKenzie. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. 21 © 2015 Baker & McKenzie Amsterdam N.V.
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