Largely as a result of the fallout from the LuxLeaks disclosures, on 17 March the European Commission presented a proposal that all cross-border advance tax rulings and advance pricing arrangements as part of its Transparency Package. The Commission’s proposal is to amend the Directive for Administrative Cooperation in the Field of Taxation to require all Member States to send basic details of all such cross-border rulings to the tax administrations of all other Member States.
Recipient tax authorities would be able to request full details of the advance ruling in order to determine if their Member State was being disadvantaged by the arrangements subject to the ruling. The Commission is also proposing that a central database be developed to simplify this exchange of information in the future.
FEE supports the proposed measures as a step towards ensuring a level playing field for both Member States and businesses of all size in respect of taxation. We also stress that the intention of advance rulings is not to facilitate tax avoidance, but that instead they perform a valuable economic function by providing greater legal certainty when interpreting tax legislation.
Due to the importance of advance rulings, we also call attention to certain factors that may need to be addressed in order that tax authorities do not become overwhelmed by their new obligations and the large amount of information they will receive. This is particularly an issue considering that many tax authorities have seen their budgets cut in recent years.
FEE comment letter to European Parliament Committee on Economic and Monetary Affairson (ECON) re Commission ProposalCommittee on Economic and Monetary Affairson (ECON) re Commission Proposal
Commission Proposal amending Council Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxationamending Council Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation