European Union: Evaluation of Administrative Cooperation in Direct Taxation: Public Consultation and Call for Evidence

The European Commission is set to evaluate Directive 2011/16/EU, which focuses on administrative cooperation in the field of direct taxation (DAC). This directive establishes the rules and procedures for close cooperation among Member States’ tax authorities, providing a harmonized framework for mutual assistance through exchanging information and other forms of advanced cooperation.

KEY OBJECTIVES OF THE EVALUATION

The evaluation aims to assess the effectiveness of administrative cooperation on direct taxation, following the better regulation criteria:

• Relevance
• Effectiveness
• Efficiency
• Coherence

This evaluation includes a call for evidence and a public consultation, open for feedback until 30 July 2024.

IMPORTANCE OF AUTOMATIC EXCHANGE OF INFORMATION (AEOI)

AEOI is one of the critical tools for cooperation in this field. Since 1 January 2015, information has been automatically exchanged on five categories of income and capital:

• Income from employment
• Pensions
• Directors’ fees
• Life insurance products
• Ownership of and income from immovable property

AMENDMENTS TO THE DAC OVER THE YEARS

The scope of administrative cooperation on direct taxation has expanded over the years to include:

• DAC2: Financial account information
• DAC3: Cross-border tax rulings and advance pricing agreements
• DAC4: Country-by-country reports
• DAC5: Anti-money laundering data
• DAC6: Reportable cross-border arrangements indicating potential tax avoidance risks
• DAC7: Income received from online platforms and simultaneous controls for joint audits
• DAC8: Exchange of information on crypto assets

REQUIREMENT FOR EVALUATION

Article 27(1) of the DAC mandates an evaluation of these mechanisms. Consequently, the European Commission will submit a report on the application of the DAC to the European Parliament and the Council.

Links to:

• Call for Evidence and Public Consultation Cooperation on direct taxation - evaluation (europa.eu)

Source/ recommended read:

• Evaluation of administrative cooperation in the field of direct taxation: open public consultation and call for evidence - European Commission (europa.eu)