EU tax information requests will no longer have to name a bank

9 December 2010

The EU's Economic and Financial Affairs Council has weakened the restrictions imposed on tax authorities' demands for cross-border co-operation.

The new rules were decided earlier this week (Tuesday 7 December), when Ecofin agreed to amend the European directive on administrative co-operation in tax affairs.

The existing 1977 directive allows member states with banking secrecy laws to ignore requests from other EU tax authorities. Under the amended directive this will no longer be allowed.

Any member state trying to assess the tax liability of one of its residents will be able to request all relevant information held by any other EU country.

Ecofin's statement makes the usual noises about safeguarding against "fishing expeditions" by tax authorities, but in fact the protection for taxpayers is now very weak. A tax authority requesting co-operation from another need only give the individual's name and the reason for the request.

It need not identify the financial institutions that the individual is suspected of dealing with - so the country receiving the request must pass it on to all of its institutions.

This regime is much slacker than the OECD convention -now included in most bilateral tax treaties - which requires the request to identify the suspected individual's bank.

Ecofin also agreed to amend the directive to cover taxes of all types, not just income tax; and to require tax information requests to be answered within a fixed time limit.

At the same meeting Ecofin also agreed a staged move to automatic exchange of tax information. It will start in 2015 with partial automatic exchange and will be reviewed two years later.

Sources

EU Economic and Financial Affairs Council (PDF file)

European Commission

Tax-News