Council Directive (EU) 2016/881 of 25 May 2016

What it is

to further extend the scope of the mandatory exchange of information in the field of taxation in the EU. ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion. BACKGROUND: as Multi National Enterprise (MNE) Groups are active in different countries, they have the possibility of engaging in aggressive tax planning practices that are not available for domestic companies. When MNEs do so, purely domestic companies, normally small and medium-sized enterprises (SMEs) may be particularly affected as their tax burden is higher than that of MNE Groups. On the other hand, all Member States may suffer revenue losses and there is the risk of competition to attract MNE Groups by offering them further tax benefits. There is therefore a problem for the proper functioning of the Internal Market. In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the Union and at global level. The automatic exchange of information constitutes an important tool in this regard and the Commission in its Communication of 6 December 2012 containing an Action plan to strengthen the fight against tax fraud and tax evasion highlighted the need to promote vigorously the automatic exchange of information as the future European and international standard for transparency and exchange of information in tax matters. The Committee on Economic and Monetary Affairs adopted, in the framework of a special legislative procedure (Parliament’s consultation), the report by Dariusz ROSATI (EPP, PL) on the proposal for a Council directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation. Associate the Commission with the automatic exchange of information : Members considered that the Commission should be associated with the automatic exchange of information and access to country-by-country reports, as do the national tax authorities, in full respect for confidentiality. The Commission should also have access to the information exchanged between Member States' tax authorities in order to ensure compliance with the relevant competition rules. Moreover, third countries would be able to obtain the information requested by all Member States; it is stated in this regard that the work of sharing the reports with third countries has already begun under the OECD's Multinational Competent Authority Agreement, and it shall be guaranteed that third countries can get the required information from all Member States. Scope and conditions of mandatory automatic exchange of information on country-by-country report : the automatic exchange of information shall take place as soon as possible. Members stated that the country-by-country report shall contain the following information as regards: public subsidies received, the value of assets and annual cost of maintaining them, and sales and purchases made by the Group; the future European tax identification number (TIN) of the Multi National Enterprise (MNE) Group referred to in the Commission's 2012 Action Plan to…

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