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International Working Committees
Introduction
In June 2017, the European Commission released the
fiercely debated proposal for a directive to introduce
mandatory disclosure rules in the area of taxation (Pro-
posal) in the European Union (EU)
1
.
The proposed legislation is highly relevant to EU tax pro-
fessionals but also to enterprises with activities in the
EU, implementing tax planning structures that could po-
tentially be regarded aggressive. Specifically, such enter-
prises may under certain circumstances have own obliga-
tion to report information to national tax authorities. In
any case, they must be aware that potential tax planning
structures they might use shall become reportable and
subject to automatic exchange of information among
Member States
2
, once the Directive is implemented.
Mandatory Disclosure Rules have been examined by the
OECD in the framework of the Base Erosion and Profit
Shifting (BEPS) Project
3
and in particular in Action 12
(Disclosure of Aggressive Tax Planning). It was conclu-
ded that relevant legislation should be straightforward,
precise as to identification of the structures triggering
disclosure obligations, effective, flexible and limited by
the principle of proportionality
4
.
1 European Commission, Proposal for A Council Directive amending
Directive 2011/16/EU as regards mandatory automatic exchange of in-
formation in the field of taxation in relation to reportable cross-border
arrangements, COM(2017)335 final, June 2017, available at: https://
ec.europa.eu/taxation_customs/business/company-tax/transparen-cy-intermediaries_en
2 The new rules are suggested to be inserted as amendment to the
existing Directive regarding Administrative Cooperation (Council Di-
rective 2011/16/EU - DAC). Thus the scope of the DAC shall be expan-
ded.
3 According to the OECD BEPS “refers to tax avoidance strategies that
exploit gaps and mismatches in tax rules to artificially shift profits to
low or no-tax locations.” Identifying appropriate actions to tackle BEPS
at international level has been the mission of the inclusive framework,
consisting of over 100 jurisdictions. Cf. OECD, About BEPS and the
Inclusive Framework, available at:
http://www.oecd.org/tax/beps/beps-about.htm
4 OECD, Mandatory Disclosure Rules, Action 12 – 2015 Final Report,
2015.
Legislative action to this effect at EU level was conceived
to respond to Panama Papers leaks. Committed to elimi-
nate such phenomena, the Commission listed one year
ago (in July 2
0
16), a number of measures to enhance tax
transparency in the EU and improve the function of the
Single Market
5
. Amongst others, anti-money laundering
legislation, beneficial ownership, whistleblowers’ pro-
tection and increased oversight of tax advisors’ activities
were brought forward. As a result, the rules examined
herein are promoted as complementary to other legisla-
tive measures, already adopted or under consideration.
The specific purpose assigned to these rules is twofold:
(i) to ensure that Member States are promptly informed
on aggressive tax planning schemes and can react ef-
fectively and
(ii) to discourage tax professionals from involvement
with arguable arrangements.
The essence of the new rules lies with the obligatory re-
porting to Member States’ tax authorities of cross-bor-
der arrangements involving at least one Member State
before implementation, where possible, or following
first taxpayer’s implementing actions
6
. The obligation is
triggered where the arrangements have one or more of
the features identified in the Proposal as hallmarks
7
. In
particular, there are four categories of hallmarks:
(i) generic,
(ii) specific, linked to the so-called main benefits test,
(iii) specific, related to cross-border transactions and
(iv) specific related to automatic exchange of informa-
tion in the EU.
5 European Commission, Fair Taxation: The Commission Sets Out Next
Steps To Increase Tax Transparency and Tackle Tax Abuse, Press Rele-
ase, July 2016.
6 The deadline for the fulfillment of the obligation depends on the
reporting subject. In principle. tax intermediaries designing or imple-
menting suspicious arrangements must report them within 5 days
from their complete communication to the taxpayer. Nevertheless,
taxpayers may proceed with reporting after the first implementing
actions.
7 Cf. Annex to the Directive “Hallmarks”.
AND THE BLAME GOES TO …
EU TAX INTERMEDIARIES
by
PIERGIORGIO VALENTE
Chairman IAFEI International Tax Committee, July 10, 2017, Link Campus University, Rome, Italy
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