Administrative cooperation in the field of taxation

 

SUMMARY OF:

Directive 2011/16/EU on administrative cooperation in the field of taxation

WHAT IS THE AIM OF THE DIRECTIVE?

Directive 2011/16/EU (directive on administrative cooperation – DAC) sets out rules for:

• secure administrative cooperation between national tax authorities;
• the electronic exchange of tax information;
• the coordination and evaluation of cooperation between the European Union (EU) Member States and the European Commission.

Amending Directive (EU) 2023/2226 (known as DAC8) amends certain aspects of Directive 2011/16/EU. In particular, it introduces mandatory automatic information exchange for crypto-asset service providers.

KEY POINTS

Directive 2011/16/EU applies to all taxes, apart from the following:

• value added tax (VAT) or customs duties;
• excise duties covered by other EU legislation;
• compulsory social security contributions;
• fees for certificates and documents issued by public authorities;
• payments to public utilities.

Amending Directive (EU) 2021/514 clarifies that VAT and other indirect taxes fall within the scope of Directive 2011/16/EU. Thus, information communicated between Member States may also be used for the assessment, administration and enforcement of VAT and other indirect taxes.

Member States appoint an authority to oversee the directive. This establishes a central liaison office, whose role is to:

• maintain contacts with the Commission and national counterparts;
• process requests for information.

Exchange of information on request

The procedure requires that:

• an authority contacted by another (requesting authority) share any information in its possession or which it subsequently uncovers;
• standard computerised forms drawn up by the Commission be used, where possible;
• the requesting authority specify:
  • the tax reasons behind its request,
  • the information it requires;
• the requested authority:
  • acknowledge electronically within 7 working days that it has received the request,
  • gather the information, even if it does not need it for its own tax purposes,
  • provide the information as quickly as possible, and within 3 months at the latest, or within 2 months if it already holds the information,
  • reply within 1 month if it requires additional details, does not have the information or refuses to share it on grounds such as commercial secrecy or public policy, or because it refers to taxes prior to January 2011.

Every year, authorities in one Member State automatically exchange information with their counterparts in another Member State for on the latter’s nationals residing on the former’s territory. This information relates to the following categories:

• employment income;
• director’s fees;
• income from life insurance schemes;
• pensions;
• ownership of and income from immovable property;
• royalties (introduced in DAC7);
• non-custodial dividend income (introduced in DAC8).

Member States:

• aim to include an individual’s tax identification number (TIN) along with the above information from 1 January 2024;
• inform the Commission annually of the information exchanged, which initially covers two of the above categories but will cover at least five of them from 1 January 2026;
• require that the national authority providing the information under DAC2 (‘reporting financial institution’) implement the detailed financial and personal reporting and due diligence rules set out in Annexes I and II and automatically exchange:
  • information on advance cross-border rulings and advance pricing arrangements under DAC3,
  • multinational enterprise group country-by-country reports, including data on every tax jurisdiction in which it is active and on pre-tax profit (Annex III lists the details required) under DAC4,
  • reportable cross-border arrangements involving more than one Member State or a Member State and a non-EU country under DAC6;
• require that digital platforms (‘platform operators’) under DAC7 report in a Member State and implement the reporting and due diligence rules contained in Annex V on sellers using their services for:
  • the rental of immovable residential and commercial property,
  • personal services,
  • the sale of goods,
  • transport rentals;
• provide the Commission annually with statistics on the automatic exchange of information;
• keep records of the information received via the automatic exchanges for at least five years;
• monitor and assess the administrative cooperation and share their findings annually with the Commission;
• determine penalties for breaches of the legislation.

Spontaneous information exchange

National authorities must spontaneously provide information to their counterparts as quickly as possible, and within no more than 1 month, if they believe:

• another Member State may have a tax loss;
• someone receives a tax benefit in one Member State that would increase their liability in another;
• business dealings between two people in different Member States could lead to tax savings for either or both;
• tax savings are based on artificial profit transfers within groups of companies;
• information they receive from another authority could be relevant in assessing tax liability in the Member State.

Additional administrative cooperation

National authorities may:

• request that their officials participate in enquiries carried out in another Member State;
• agree to carry out simultaneous checks in two or more Member States on individuals of common interest;
• ask for feedback on information they have provided and give annual feedback on the automatic exchange of information to their partners.

Information

• communicated between Member States is covered by official secrecy rules;
• may be used to:
  • enforce national legislation on VAT, other indirect taxes, customs duties, anti-money laundering and countering terrorism financing,
  • assess other taxes and duties covered by mutual assistance arrangements,
  • support judicial and administrative proceedings that may lead to penalties;
• may be shared with a non-EU country if the Member State originally providing it agrees;
• received from a non-EU country, with its agreement, may be provided to another Member State if judged to be of use.

The Commission provides Member States with the electronic and automated means to verify whether an individual’s TIN is correct.

The directive repealed Directive 77/799/EEC on 1 January 2013.

Amending Directive (EU) 2023/2226 extends administrative tax cooperation to crypto-assets by requiring that:

• crypto-asset service providers comply with the detailed reporting and due diligence obligations in Annex VI;
• national authorities automatically share the information they receive from the service providers with their EU counterparts within 9 months of the end of the calendar year – the first exchange will take place from 1 January 2026.

It also requires that national authorities communicate the following information for each:

• person covered by the legislation (‘reportable person’) – name, address, Member State of residence, TIN and date and place of birth;
• crypto-asset service provider – name, address, TIN and, if available, the individual identification number provided upon registration;
• crypto-asset transactions – details such as the amount paid, units involved and market value.

It requires that the Commission:

• standardise the computerised form to be used for the information exchange;
• set the practical and technical arrangements for registering and identifying crypto-asset operators;
• establish a crypto-asset register by 31 December 2025;
• provide Member States with access to a secure central directory by 31 December 2026.

FROM WHEN DO THE RULES APPLY?

Directive 2011/16/EU had to be transposed into national law by 1 January 2013, except for the provisions of Article 8, which had to be transposed by 1 January 2015.

Amending Directive (EU) 2023/2226 applies from 1 January 2026, although some of its articles will not apply until 1 January 2030.

BACKGROUND

• Faced with the increasing mobility of taxpayers, more cross-border transactions and the arrival of new financial instruments, national tax administrations must increase administrative cooperation to ensure tax compliance and reduce tax evasion, tax avoidance and tax fraud.
• For further information, see:
  • Administrative cooperation in (direct) taxation in the EU (European Commission).

MAIN DOCUMENT

Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, pp. 1–12).

Successive amendments to Directive 2011/16/EU have been incorporated into the original document. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Commission Implementing Regulation (EU) 2023/823 of 13 April 2023 laying down detailed rules for implementing certain provisions of Council Directive 2011/16/EU as regards the assessment and determination of equivalence of information in an agreement between the competent authorities of a Member State and a non-Union jurisdiction (OJ L 103, 18.4.2023, pp. 1–4).

Regulation (EU) 2023/1113 of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849 (OJ L 150, 9.6.2023, pp. 1–39).

Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (OJ L 150, 9.6.2023, pp. 40–205).

See consolidated version.

Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (OJ L, 2023/2226, 24.10.2023).

Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (OJ L 328, 22.12.2022, pp. 1–58).

See consolidated version.

Commission Implementing Regulation (EU) 2015/2378 of 15 December 2015 laying down detailed rules for implementing certain provisions of Council Directive 2011/16/EU on administrative cooperation in the field of taxation and repealing Implementing Regulation (EU) No 1156/2012 (OJ L 332, 18.12.2015, pp. 19–45).

See consolidated version.

last update 24.01.2024