EU: New transparency rules for tax advisers | KPMG | BE

EU: Disclosure rules, reportable cross-border arrangements by tax advisers

EU: Disclosure rules, cross-border arrangements

The European Commission today issued a release concerning a political agreement reached by EU Member States on new transparency rules for “intermediaries”—tax advisers, accountants, banks, and lawyers—who design and promote tax planning schemes for their clients.

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As noted in the EC release, tax intermediaries who provide their clients with complex cross-border financial schemes that could help avoid tax will be required to report these structures to their tax authorities. In turn, EU Member States will exchange this information with each other, further increasing scrutiny around the activities of tax planners and advisers.

The new reporting requirements have an effective date of 1 July 2020, with EU Member States obliged to exchange information every three months after that. The first exchange will take place by 31 October 2020.

KPMG observation

Today’s action is the latest in a series of EU initiatives in the field of the automatic exchange of information in tax matters. The revised Directive (DAC 6) introduces an obligation on intermediaries to disclose potentially aggressive cross-border tax planning arrangements and also provides the means for tax administrations to exchange information on these structures. The enhanced transparency requirement is a response to recent revelations on harmful tax practices and the use of offshore companies (e.g., the so-called “LuxLeaks,” Panama papers, and paradise papers) and the disclosure rules proposed by the OECD in BEPS Action 12.

The burden of reporting cross-border arrangements falls primarily on the intermediary. An intermediary is any person who designs, markets, organizes or makes available for implementation or manages the implementation of a reportable cross-border arrangement. This definition is extended to persons who know or could reasonably be expected to know that they have undertaken to provide aid, assistance or advice with respect to a reportable cross-border arrangement. If there is no intermediary, the obligation to disclose shifts to the taxpayer that uses the arrangement. This can be the situation, for example, because the taxpayer designs and implements an arrangement in-house, when the intermediary does not have a presence within the EU or when the intermediary cannot disclose the information because of a legal professional privilege.

 

Read a March 2018 report prepared by the KPMG member firm in the Netherlands

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