Mandatory Disclosure Directive in Official Journal EU
The Mandatory Disclosure Directive will come into effect on 25 June 2018. Under this Directive, intermediaries must notify the Tax Administration of intended arrangements that potentially classify as aggressive tax planning.
13 June 2018
Publication of Directive
Earlier on, we informed you about the Brussels political agreement reached on 13 March 2018, as regards the Directive proposal of the European Commission (EC) on the automatic exchange of information relating to aggressive tax planning arrangements with a cross-border dimension.
New developments can now be reported, because the Council of the European Union formally adopted the Directive proposal on 25 May 2018. The Directive was subsequently published in the Official Journal of the European Union on 5 June 2018. The Directive will come into effect on the twentieth day after this publication, i.e., on 25 June 2018.
The Member States should adopt and publish the laws, regulations and administrative provisions necessary to comply with the Directive, at the latest on 31 December 2019. They should subsequently apply these provisions as from 1 July 2020. However, intermediaries should keep records of the planning arrangements falling under the scope of the reporting obligation as soon as the Directive enters into force. The Tax Administration should receive the requested information on 31 August 2020 at the latest. The first batch of data will then need to have been exchanged on 31 October 2020 at the latest.
The Directive explicitly obliges the Member States to implement mandatory disclosure for all manner of aggressive tax planning arrangements with a cross-border dimension. The Directive likewise ensures the Member States that data will automatically be exchanged between the tax authorities.
According to the EC, reporting under a mandatory disclosure regime will increase the pressure on intermediaries (such as tax lawyers) to refrain from designing, marketing and implementing aggressive tax planning arrangements. Taxpayers would equally be prevented from designing such structures if the data involved is automatically exchanged between Member States. The Directive leaves it up to the European Member States to impose sanctions (whether administrative or otherwise) if the Directive is not complied with.
Under the Directive, intermediaries have the obligation to notify the tax authorities about potentially aggressive tax planning arrangements they are involved in, either professionally, or because they have designed them, or because they promote them. An intermediary can be a legal entity, a natural person or an unincorporated enterprise. When it is not possible to designate an intermediary, or if an intermediary has a right of non-disclosure, the obligation to provide information transfers to the taxpayer.
The impossibility of specifying all potential forms of aggressive tax planning – which is partly due to the static character of the Directive – has made the EC opt for listing features that are strong indicators of aggressive tax planning. These generally formulated features have been appended to the Directive.
The annex to the Directive stipulates the obligation for intermediaries to report to the tax authorities within a period of thirty days. This period starts on the day on which (i) the reportable cross-border arrangement has been made available for implementation; or (ii) on the day after the reportable cross-border arrangement is ready for implementation; or (iii) when the first step in the implementation of the reportable cross-border arrangement has been made. Whichever of the steps referred to before occurs first is decisive. To this end, a standard form will be created. The Tax Administration must automatically exchange the information with other EU authorities once every quarter. This will be done by uploading the information into a central directory, to which all tax authorities will be granted access.
Source: Press release of the Council of the European Commission of 25 May 2018 in respect of the agreement on the Directive providing for the mandatory disclosure of 21 June 2017 (COM (2017) 335 final) and Directive (EU) 2018/822 of the Council of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements