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The Council adopted a Directive strengthening EU rules on the exchange of information on savings incomes, aimed at enabling the Member States to clamp down better on tax fraud and tax evasion. Directive 2003/48/EC requires the Member States to exchange information automatically so as to enable interest payments made in one Member State to residents of other Member States to be taxed in accordance with the laws of the state of tax residence.
The text enlarges the scope of Directive 2003/48/EC, reflecting changes to savings products and developments in investor behaviour since it came into force in 2005. The scope now covers new types of savings income and products that generate interest or equivalent income. It includes life insurance contracts, as well as a broader coverage of investment funds. And tax authorities, using a "look-through" approach, will be required to take steps to identify who is benefiting from interest payments.
The European Council in December 2013 called for the amending directive to be adopted by March 2014, given its significance in combating tax fraud and tax evasion. The Member States will have until 1 January 2016 to adopt the national legislation necessary to comply with the Directive.
Adoption of the legislative act, 21.3.14
Commissioner Šemeta: Today marks a major breakthrough in EU tax policy and a major step forward in our common fight against tax evasion
This agreement – which was endorsed by EU leaders last week - is highly significant for many reasons. First, it means that one of our key tools for tax transparency in the EU will be considerably strengthened. Loopholes exploited by evaders will be closed. Second, it is politically symbolic. An important anti-evasion file has been unblocked, after years of deadlock. This is proof of the widespread acceptance that the days of bank secrecy and tax intransparency are over. Finally, today's adoption means that we remain on track as global front-runners in tax good governance.
The revised Savings Tax Directive will be part of the EU's legislative structure for implementing the new global standard on automatic exchange of information. The EU has engaged actively in the OECD's process to develop the new global standard, contributing practical experience and long-standing expertise. As a result, we can now be confident that our approach is fully consistent with the global one. The two should blend seamlessly together, thereby avoiding disruptions for our businesses.
I would like to commend the OECD for the work they have done in creating the new global standard, which is truly remarkable. And I must also commend Austria and Luxembourg for their decision to move on the Savings Directive – which facilitated today's adoption. I know that this file is of enormous national significance for them, and I am glad that they are now reassured that their interests are protected and respected.
I believe they were particularly encouraged by the report that I gave to Finance Ministers, on the progress we are making in negotiations for stronger tax agreements with our closest neighbours. Switzerland and the four other countries now accept that the automatic exchange of information must be at the core of their relations with the EU in taxation. This would have been inconceivable even a year ago, and it shows how far we've come in changing mind-sets globally. I have assured Member States that our negotiations with these countries will continue with speed and ambition, with the aim of presenting results before the end of the year.
Tax evasion undermines fiscal sustainability, fair taxation and level competition. The loss of billions in unpaid taxes weighs heavily on the pockets of honest tax-payers. That is why the campaign against evasion has leapt to the top of everyone's political agenda over the past couple of years.
We have made immense progress, and today is another milestone. But it is not the last one. For example, I expect swift agreement on the Administrative Cooperation Directive to cement the widest scope of automatic exchange between our Member States. It is another crucial instrument for the widest possible tax transparency in Europe. And our work to ensure that companies pay their fair share of tax – including multinational and digital ones - must maintain full pace. I will therefore continue to work tirelessly – together with the Member States, OECD and other international partners – to improve the tax framework and strengthen our tools against tax evasion and avoidance.
See also: statement by ECOFIN/Stournaras
OECD's Gurría welcomes international progress towards automatic exchange of information
OECD Secretary-General Angel Gurría has welcomed moves by more than 40 countries – reinforced by EU leaders - to commit to a detailed timetable to step up the fight against tax evasion. The European Council last week called on a number of European states to join a group of “early adopter” countries committed to the new single global standard for the automatic exchange of information between tax authorities, developed by the OECD. The early adopters this week publicly announced their commitment to implement the new standard on the basis of ambitious, specific and coordinated timelines. At the same time, Austria and Luxembourg dropped their objections to revision of the EU Savings Directive, thereby paving the way for its adoption today.
Mr Gurría said: “The commitment by so many countries and jurisdictions to implement the OECD’s Global Standard on the basis of a specific and ambitious timetable is good news for everyone who wants to see a fair and transparent international tax system. The rapidity with which the new norms are being developed and agreed shows that the political momentum for reform is now overwhelming. He added: “Adopting the new global standard is not just a question of establishing co-operation between states, it is also about restoring the trust of citizens in government".
The OECD is expected to deliver a detailed Commentary on the new standard, as well as technical solutions to implement the actual information exchanges, during a meeting of G20 finance ministers in September 2014.
European Council Conclusions: European Semester / Savings taxation
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