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EU Ministers Reach Deal On Tax Rulings Info Exchange

by Robert Lee,, London

07 October 2015

On October 6, 2015, European Union (EU) economic and finance ministers reached a unanimous agreement on the automatic exchange of information on cross-border tax rulings.

The agreement follows the publication on October 2 of proposed amendments to Directive 2011/16/EU, aimed at removing obstacles that might hinder the effective and widest possible mandatory automatic exchange of information on cross-border rulings and advance pricing arrangements.

The implementation of the amended directive will remove EU member states' discretion as to what information is shared, when, and with whom. At present, it is up to a member state to decide whether a tax ruling might be relevant to another EU country. According to the Commission, member states are often unaware of cross-border tax rulings issued elsewhere in the EU, and this lack of transparency can be exploited by companies seeking to artificially reduce their tax bill.

Member states will be required to exchange information every six months. The directive will also cover rulings handed down over the past five years, and member states will be able to request more detailed information on particular rulings.

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 harmonization. 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."

Tax Commissioner Pierre Moscovici added: "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."

Member states must transpose the new rules into national law before the end of 2016. The Directive will come into effect on January 1, 2017. The Commission will monitor its implementation and ensure that member states are complying with their responsibilities.

TAGS: tax | business | European Commission | law | multinationals | tax planning | transfer pricing | tax reform | European Union (EU) | Europe | BEPS

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