This document is an excerpt from the EUR-Lex website
Document 52024PC0011
Recommendation for a COUNCIL DECISION to authorise the Commission to open negotiations for the amendment of the five agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino
Henstilling med henblik på RÅDETS AFGØRELSE om bemyndigelse af Kommissionen til at indlede forhandlinger om ændring af de fem aftaler om automatisk udveksling af oplysninger om finansielle konti til forbedring af efterrettelighed vedrørende international beskatning mellem Den Europæiske Union og henholdsvis Det Schweiziske Forbund, Fyrstendømmet Liechtenstein, Fyrstendømmet Andorra, Fyrstendømmet Monaco og Republikken San Marino
Henstilling med henblik på RÅDETS AFGØRELSE om bemyndigelse af Kommissionen til at indlede forhandlinger om ændring af de fem aftaler om automatisk udveksling af oplysninger om finansielle konti til forbedring af efterrettelighed vedrørende international beskatning mellem Den Europæiske Union og henholdsvis Det Schweiziske Forbund, Fyrstendømmet Liechtenstein, Fyrstendømmet Andorra, Fyrstendømmet Monaco og Republikken San Marino
COM/2024/11 final
EUROPEAN COMMISSION
Brussels, 17.1.2024
COM(2024) 11 final
Recommendation for a
COUNCIL DECISION
to authorise the Commission to open negotiations for the amendment of the five agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino
EXPLANATORY MEMORANDUM
1.CONTEXT OF THE RECOMMENDATION
•Reasons for and objectives of the Recommendation
Between 2015 and 2016 the European Union (EU) signed and concluded five agreements on the automatic exchange of financial account information to improve international tax compliance respectively with the Principality of Liechtenstein (“Liechtenstein”) 1 ; the Republic of San Marino (“San Marino”) 2 , the Principality of Andorra (“Andorra”) 3 , the Swiss Confederation (“Switzerland”) 4 and the Principality of Monaco (“Monaco”) 5 . The agreements with Liechtenstein and San Marino applied from 1 January 2016, while the other three agreements applied from 1 January 2017.
The five agreements provide the legal basis for the reciprocal automatic exchange of financial account information between each of the 27 EU Member States and each of these non-EU countries, in accordance with the Common Reporting Standard (“CRS”) developed by the Organisation for Economic Co-operation and Development (OECD). The same standard is implemented within the EU for exchanges of financial account information between its Member States under Council Directive 2014/107/EU of 9 December 2014 6 (DAC 2 – the first amendment to Directive 2011/16/EU 7 on administrative cooperation in the field of taxation – DAC).
Important changes to the CRS were approved at international level on 26 August 2022 8 , with implementation planned from 1 January 2026. The implementation of these changes within the EU has been included in the seventh amendment to DAC (DAC8) 9 .
The changes extend the scope of the CRS to ensure the coverage of electronic money products and central bank digital currencies. They also further improve the due diligence procedures and reporting outcomes, with a view to increasing the usability of CRS information for tax administrations and limiting burdens on financial institutions, where possible. The updated CRS now also contains provisions to ensure an efficient interaction between the CRS and the separate Crypto-Asset Reporting Framework (“CARF”) 10 which was agreed at international level on the same date of the updated CRS. These provisions allow to limit instances of duplicative reporting, while maintaining a maximum amount of operational flexibility of Reporting Financial Institutions that are also subject to obligations under the CARF.
To ensure that the automatic exchange of financial account information between EU Member States and the five non-EU countries under the five respective EU agreements is aligned with, and continue to take place in accordance with, the updated CRS from the date of 1 January 2026, it is necessary to negotiate and agree corresponding amendments to the above mentioned EU agreements.
In May 2018, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (“GDPR”) 11 entered into application. Where appropriate, an updating of the legal references (which currently, when included, still refer to the previous Directive 95/46/EC) and data protection provisions in line with the requirements of the GDPR may therefore be needed. Similarly, there may be a need to reflect recent data protection developments in the five countries.
•Consistency with existing policy provisions in the policy area
This Recommendation is fully consistent with and precisely aims at ensuring that the existing agreements between the EU and the five non-EU countries remain aligned with EU legislation in the same field, notably the DAC, as amended by DAC8. DAC8 includes, among others, the latest changes to the OECD CRS. In the light of the close relationships between the EU and each of the five non-EU countries concerned by this Recommendation, it is important to strengthen along the same lines the administrative cooperation with their tax authorities in the field of automatic exchange of financial account information. A timely update of the five EU agreements would ensure the smooth and effective continuation of this administrative cooperation beyond 1 January 2026.
Such an update would also have the advantage of facilitating the tasks of Reporting Financial Institutions, which would be able to follow uniform procedures, for the Customer Due Diligence and the reporting, under DAC and under the five EU agreements at stake. The requested software developments and the administrative adaptations would be more limited for them.
•Consistency with other Union policies
This Recommendation takes account of the Union policies in the field of the fight against money laundering and terrorist financing, because the Customer Due Diligence activities to be performed by Financial Institutions, in view of collecting the financial account information to be exchanged under the agreements, will be substantially aligned with those that the same Financial Institutions have to apply as obliged entities under the EU legal framework set to fight against money laundering and terrorist financing.
This Recommendation takes also account of the Union policies in the field of respect of fundamental rights, notably on protection of personal data in case of outflow of these data to non-EU and non-EEA countries.
2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
•Legal basis
This Recommendation to the Council is submitted pursuant to Article 218(3) and (4) of the Treaty on the functioning of the European Union (TFEU).
• Subsidiarity (for non-exclusive competence)
This Recommendation concern the adoption by the non-EU countries in question of measures equivalent to the system established within EU legislation in the same field, notably under the DAC, as amended by DAC8. The Union has therefore competence to negotiate and conclude the amendments to the related agreements which are necessary to this aim. As previously mentioned, this amendment of the EU agreements will enable the Reporting Financial Institutions in the EU to follow uniform procedures, for the Customer Due Diligence and the reporting, under DAC and under the five EU agreements at stake. The negotiation at Union level on these aspects is in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on the European Union.
•Proportionality
This Commission Recommendation is in line with the principle of proportionality and do not go beyond what is necessary to meet the objective of providing a uniform framework for the administrative cooperation between the EU Member States and the five non-EU countries concerned in the field of automatic exchange of financial account information between tax authorities.
•Choice of instruments
Decision of the Council of the European Union.
3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
•Ex-post evaluations/fitness checks of existing legislation
Not applicable.
•Stakeholder consultations
Informal consultations between the Commission services and the relevant authorities of each of the five non-EU countries concerned were held during the first Semester of 2023. Member States were informed about the outcome of those informal consultations.
•Impact assessment
In line with tool 7 of the Better Regulation Toolbox 12 , an impact assessment was not carried out because the Commission has little or no choice in the matter.
Indeed, the Recommendation concerns amendments of the five existing agreements and is aimed at aligning them with what has been already agreed at international level i.e. the changes to the CRS that were approved at the OECD on 26 August 2022.
•Fundamental rights
Where authorised by the Council to open and conduct the negotiation, the Commission will be vigilant at ensuring that any amended agreement will respect the key values of the European Union as established in Article 2 of the Treaty on European Union and the Charter of Fundamental Rights of the European Union.
As the five agreements at stake were concluded or negotiated before the adoption and/or the entry into application of the GDPR, and as they involve the exchange of personal data, the negotiation will include a review and, where appropriate, an updating of the legal references and of the data protection provisions in line with the requirements of the GDPR.
4.BUDGETARY IMPLICATIONS
The proposal has no implication for the EU budget, notably because the Commission has, and will continue to have, no role in the processing of the financial account information and personal data exchanged between tax authorities under the five agreements at stake.
5.OTHER ELEMENTS
Not applicable.
Recommendation for a
COUNCIL DECISION
to authorise the Commission to open negotiations for the amendment of the five agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 218(3) and (4),
Having regard to the recommendation from the European Commission,
Whereas:
(1)These five agreements 13 at present provide the legal basis for the reciprocal automatic exchange of financial account information between each of the 27 EU Member States and each of these non-EU countries, in accordance with the internationally agreed OECD Common Reporting Standard (“CRS”). They are aimed at improving international tax compliance while assisting tax authorities in preventing and tackling tax fraud and evasion.
(2)The same standard is implemented within the EU for exchanges between its Member States under the Council Directive 2014/107/EU of 9 December 2014 14 , the first amendment to Council Directive 2011/16/EU 15 on administrative cooperation in the field of taxation.
(3)Important changes to the CRS were approved at international level on 26 August 2022 16 , with implementation from 1 January 2026.
(4)The implementation of these changes within the EU has been included in the seventh amendment to Council Directive 2011/16/EU on administrative cooperation in the field of taxation 17 .
(5)Article 8 of each of these five agreements contains identical provisions for bilateral formal consultations between the Contracting Parties to take place when an important change is adopted at OECD level to any of the elements of the Global Standard. Paragraph 4 of said Article 8 states: “Following the consultations, this Agreement may be amended by means of a protocol or a new agreement between the Contracting Parties”.
(6)It is in the interest of the European Union and its Member States to achieve a smooth continuation beyond 1 January 2026 of the cooperation in the field of automatic exchange of financial account information between tax authorities which is provided by these five agreements.
(7)To this aim, a negotiation should be opened with a view to amending these five agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino,
HAS ADOPTED THIS DECISION:
Article 1
The Commission is hereby authorised to open negotiations, on behalf of the Union, to amend the Agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino.
Article 2
The Commission shall conduct the negotiations in accordance with the negotiating directives set out in the Annex, and in consultation with the special committee designated by the Council in accordance with Article 218 (4) TFEU.
Article 3
This Decision is addressed to the Commission.
Done at Brussels,
For the Council
The President
EUROPEAN COMMISSION
Brussels, 17.1.2024
COM(2024) 11 final
ANNEX
to the
Recommendation for a COUNCIL DECISION
to authorise the Commission to open negotiations for the amendment of the five agreements on the automatic exchange of financial account information to improve international tax compliance between the European Union and, respectively, the Swiss Confederation, the Principality of Liechtenstein, the Principality of Andorra, the Principality of Monaco and the Republic of San Marino
ANNEX
1.The five agreements subject to negotiation in view of their amendment
The European Union signed and concluded between 2015 and 2016 the following five international agreements, in the form of Protocols replacing the title and the entire content of pre-existing agreements on taxation of savings income with the same non-EU countries:
–“Agreement between the European Union and the Swiss Confederation on the automatic exchange of financial account information to improve international tax compliance”, as resulting from a Protocol signed between the EU and the Swiss Confederation (“Switzerland”) on 27 May 2015 1 ;
–“Agreement between the European Union and the Principality of Liechtenstein on the automatic exchange of financial account information to improve international tax compliance”, as resulting from a Protocol signed between the EU and the Principality of Liechtenstein (“Liechtenstein”) on 28 October 2015 2 ;
–“Agreement between the European Union and the Principality of Andorra on the automatic exchange of financial account information to improve international tax compliance”, as resulting from a Protocol signed between the EU and the Principality of Andorra (“Andorra”) on 12 February 2016 3 ;
–“Agreement between the European Union and the Principality of Monaco on the automatic exchange of financial account information to improve international tax compliance in accordance with the Standard for Automatic Exchange of Financial Account Information in Tax Matters developed by the Organisation for Economic Cooperation and Development (OECD)”, as resulting from a Protocol signed between the EU and the Principality of Monaco (“Monaco”) on 12 July 2016 4 ;
–“Agreement between the European Union and the Republic of San Marino on the automatic exchange of financial account information to improve international tax compliance”, as resulting from a Protocol signed between the EU and the Republic of San Marino (“San Marino”) on 8 December 2015 5 .
The five agreements, which have all entered into force and are currently applicable, provide the legal basis for the reciprocal automatic exchange of financial account information between each of the 27 EU Member States and each of these non-EU countries, in accordance with the Common Reporting Standard (“CRS”) developed by the Organisation for Economic Cooperation and Development (OECD). The same standard is implemented within the EU for exchanges between its Member States under Council Directive 2014/107/EU of 9 December 2014 6 (DAC 2 – the first amendment to Directive 2011/16/EU 7 on administrative cooperation in the field of taxation – DAC).
2.Justification and objective of the amendment
Important changes to the CRS were approved at international level on 26 August 2022, with implementation planned from 1 January 2026. The implementation of these changes within the EU has been included in the seventh amendment to DAC (DAC8) 8 .
To ensure that the automatic exchange of financial account information between EU Member States and the five non-EU countries under the five respective EU agreements is aligned with, and continue to take place in accordance with, the updated CRS from the date of 1 January 2026, it is necessary to negotiate and agree corresponding amendments to the above mentioned five EU agreements.
In May 2018, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (“GDPR”) 9 entered into application. Where appropriate, an updating of the legal references (which currently, when included, still refer to the previous Directive 95/46/EC) and data protection provisions in line with the requirements of the GDPR may therefore be needed. Similarly, there may be a need to reflect recent data protection developments in the five countries.
3.Scope of the amendment subject to negotiation
The changes to the CRS which were approved at international level on 26 August 2022 10 extend the scope of the CRS to ensure the coverage of electronic money products and central bank digital currencies. They also further improve the due diligence procedures and reporting outcomes, with a view to increasing the usability of CRS information for tax administrations and limiting burdens on financial institutions, where possible. The CRS now also contains provisions to ensure an efficient interaction between the CRS and the separate internationally agreed Crypto-Asset Reporting Framework (“CARF”) 11 , notably to limit instances of duplicative reporting, while maintaining a maximum amount of operational flexibility of Reporting Financial Institutions that are also subject to obligations under the CARF.
Insofar as data protection is concerned:
–An amendment to the agreement with Switzerland will have to ensure that updated provisions are included on the exchange and use of personal data (including on purpose limitation, data security and data retention), taking into account the EU Adequacy Decision concerning Switzerland 12 and the Opinion released on 8 July 2015 on the agreement by the European Data Protection Supervisor (EDPS) 13 . It will also have to ensure updated references to the applicable Swiss primary and secondary legislation.
–An amendment to the agreement with Liechtenstein will have to ensure that updated provisions are included on the exchange and use of personal data (including on purpose limitation, data security and data retention), while taking into account that Liechtenstein, as a Member of the European Economic Area (EEA), implemented the provisions of the GDPR in its territory pursuant to the EEA Agreement.
–An amendment to the agreement with Andorra will have to ensure that updated provisions are included on the exchange and use of personal data (including on purpose limitation, data security and data retention), taking into account the EU Adequacy Decision concerning Andorra 14 and the abovementioned EDPS opinion on the agreement with Switzerland. It will also have to ensure updated references to the applicable Andorran primary and secondary legislation.
–An amendment to the agreements with Monaco and San Marino will have to ensure that data protection safeguards meet the requirements of Article 46 of the GDPR, as well as to include updated references to the primary and secondary legislation adopted by these two countries (as applicable or as it will be applicable by the date of 1 January 2026 set for the implementation of the amendment incorporating the CRS changes in the two agreements concerned).
4.Form of the amendment subject to negotiation
Within the EU, the 2022 changes to the CRS were implemented under DAC8 in the form of amendments to Annex I of the DAC, which substantially reproduces the CRS and the related due diligence rules to be applied by the Reporting Financial Institutions.
In the framework of each of the five EU agreements subject to negotiation in view of their amendment, an Annex I fulfils substantially the same function as the Annex I to DAC, while an Annex II contains some complementary rules based on the internationally agreed OECD Commentaries to the CRS.
In order to ensure the possibility to use a simplified procedure for provisional application in case of time constraints, as allowed by Article 8 paragraph 5 of the majority of the five agreements 15 , the negotiations should mainly focus on the alignment of Annex I and Annex II of the respective agreements with the changes to the CRS and its Commentaries, as long as such an alignment can alone be sufficient and compatible with the full legal validity and enforceability of the amendment.
Any addition or change to the existing Confidentiality and Personal Data Safeguards provisions in the currently applicable text of the agreements could also be negotiated in a form avoiding unnecessary changes to the main body of the agreements, provided that the solutions agreed and made publicly available are compliant with the provisions of Chapter V of the GDPR including where appropriate its Article 46.
The amendment will therefore touch upon the articles of the main body of the agreements only insofar as such changes appear to be necessary for ensuring legal certainty or are a necessary condition for the approval of the amendment by the Contracting Parties.
5.Procedure
Article 8 of each of the five EU agreements contains identical provisions for bilateral formal consultations between the Contracting Parties (the EU with its Member States, on one side, and the relevant non-EU country on the other side) to take place “when an important change is adopted at OECD level to any of the elements of the Global Standard”. Paragraph 4 of said Article 8 states: “Following the consultations, this Agreement may be amended by means of a protocol or a new agreement between the Contracting Parties”. Paragraph 5 (not included in the EU agreement with Andorra) allows for the possibility of a consensus between the parties on a form of provisional application of the changes affecting Annex I and/or Annex II of the agreements, when one of the parties has already formally implemented them, as it is the case for the EU Member States in the light of the formal adoption by the Council of DAC8.
As soon as it is authorised by the Council, the Commission shall launch the formal consultations and shall conduct the negotiation in accordance with these negotiating directives, in consultation with the current and upcoming Presidency of the Council and with any special committee that might be designated by the Council to this effect in accordance with Article 218 (4) TFEU.
