ICSA Ireland

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Europe moves towards more transparent tax regime

12 June 2015

The European Commission has announced a package of measures aimed at increasing tax transparency between member states. The central focus of the measures is the automatic exchange of cross-border tax rulings given by tax authorities.

Under current rules, member states are obliged to provide details on their tax rulings to another member state only if it is of relevance to that member state. It is up to the member state to decide whether a tax ruling is relevant to another member state and, as a result, very little information is shared. 

The proposed package completely removes this discretion and requires the member states to automatically exchange information on their advanced cross-border tax rulings and transfer pricing arrangements. National tax authorities will have to send a quarterly report to all other member states on any cross-border tax rulings that they have issued. The report must contain the following information:

  • Identity of the taxpayer
  • Identity of any persons in the other member state who are likely to be affected by the ruling
  • Content of the cross-border ruling
  • In the case of advanced pricing arrangements, a description of the set of criteria used to make the transfer pricing determination

The recipient member states will have the right to request more detailed information where relevant.

The legislative proposals contained in this package have been submitted to the European Parliament and Council. It is expected that agreement will be reached by the European legislators by the end of 2015 with the legislation coming into force by the beginning of 2016.