5 Taxation
| (a) (30419) 6035/09 COM(09) 29
(b) (30424) 6147/09 COM(09) 28
| Draft Council Directive on administrative cooperation in the field of taxation
Draft Council Directive concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures
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| Legal base | Articles 93 and 94 EC; consultation; unanimity
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| Documents originated | 2 February 2009
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| Deposited in Parliament | 6 February 2009
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| Department | HM Treasury |
| Basis of consideration | (a) EM of 25 February 2009
(b) EM of 26 February 2009
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| Previous Committee Report | None
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| To be discussed in Council | June 2009
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
5.1 Since 1977 there has been a Directive, the Mutual Assistance
Directive, 77/799/EEC, as amended, providing for cooperation between
Member States in relation to the administration of taxation. Similarly
there has been since 1976 a Directive, the Recovery Directive,
codified as 2008/55/EC, providing for mutual assistance between
Member States in the recovery of tax debts and similar levies.
The documents
5.2 The draft Directive, document (a), would replace the present
Mutual Assistance Directive in order to extend the scope and improve
the effectiveness of exchange of information and mutual assistance,
as part of the Community drive to tackle cross-border tax evasion
and other forms of non-compliance or avoidance. The new Directive
would:
- unlike the existing Directive, which is limited to direct
taxes and taxes on insurance premiums, extend to all types of
taxes, other than VAT and excises, which are covered by separate
legislation, and social security (national insurance) contributions;
- provide for exchange of information between Member
States, on request, for tax assessment or compliance purposes
and for procedures for such exchanges, including time limits for
meeting requests;
- provide for spontaneous exchange of information;
- allow automatic exchanges of information between
all Member States on specific categories of income and capital
to be established through a comitology procedure;[29]
- set out, more fully than at present, arrangements
for the presence and participation of officials of one Member
State in enquiries in another Member State and provide for simultaneous
enquiries and checks and service of documents;
- require feedback on cases and strengthen provisions
on sharing best practice;
- introduce OECD standards of access to bank information
and abolish the ability of Member States to refuse information
requests on the grounds of bank secrecy;
- introduce standard forms and formats for information
exchange, so as to improve efficiency and effectiveness;
- enable all Member States to benefit equally from
information received or obtainable from third countries; and
- extend the present disclosure rules to allow
sharing of information received with other authorities within
the Member State, in so far as national law permits.
5.3 The draft Directive, document (b), would replace
the present Recovery Directive in order to extend the scope and
improve mutual assistance between Member States in recovery of
tax debts and similar levies. The new Directive would:
- like the existing Directive,
cover all types of national taxes (direct and indirect), but extend
the scope to local taxes and social security (national insurance)
contributions;
- clarify and simplify arrangements for the exchange
of information in connection with recovery assistance;
- introduce, in addition to exchange of information
on request, a requirement for spontaneous provision of information
concerning tax refunds made to residents of another Member State;
- provide for the presence and participation of
officials of one Member State in enquiries in another Member State,
on condition that they act in accordance with the laws and administrative
provisions of the receiving Member State;
- simplify procedures for the service of documents
relevant to claims;
- introduce a uniform enforcement instrument, to
accompany information requests, in order to speed up the recovery
process and avoid the need for translation of national instruments;
- link the uniform enforcement instrument closely
to provisions on "precautionary measures", which build
on those in the existing Directive, to facilitate requests for
recovery of a claim at an early stage, before the debt has been
notified formally to the debtor in order, for example, to prevent
the debtor from disposing of his assets;
- extend the disclosure provisions of the existing
Directive to allow the sharing of information received with other
authorities within the Member State, as far as national law permits,
and to allow onward transmission of that information to a third
Member State without prior agreement, but in accordance with the
rules laid down in the Directive; and
- set out more extensively than the existing Directive
provisions for the recovery of costs.
The Government's view
5.4 The Financial Secretary to the Treasury (Stephen
Timms) says that the Government welcomes the draft Directive,
document (a), which would replace the Mutual Assistance Directive,
which supports Government objectives in tackling tax evasion and
avoidance. The Minister comments further that:
- the proposed Directive should
enhance cooperation between Member States and strengthen the Community's
contribution to tackling this global problem;
- the Government particularly welcomes the inclusion
of OECD standards of transparency and access to bank information;
- it will wish to consider some aspects of the
proposal further, such as the role of the Commission and the comitology
procedure, to ensure that the Directive achieves its objective
of improved cooperation while protecting national sovereignty
in tax matters; and
- it will wish to explore carefully the proposed
extension of automatic exchange of information in order to understand
whether this would introduce new reporting burdens on industry.
5.5 The Minister tells us that the Government also
welcomes the draft Directive, document (b), which would replace
the Recovery Directive, and which also supports Government objectives
in tackling tax evasion and avoidance. The Minister comments further
that:
- the proposed Directive should
also enhance cooperation between Member States and strengthen
the Community's contribution to tackling this global problem;
and
- the Government will wish to consider some aspects
of the proposal further, such as possible overlap with other Community
existing and proposed legislation, the extension to local authority
taxes and the impact of the provisions on precautionary measures
in the context of the UK legal and administrative framework.
5.6 As for the financial implications of both proposals
the Minister says that there do not appear to be any significant
financial implications for the Community or the UK, although there
may be some information technology and administrative costs. There
should be revenue benefits from improved exchange of information
and recovery of tax debts.
Conclusion
5.7 These proposed Directives appear to offer
improved intra-Community cooperation against tax evasion and avoidance
and we note the Government's welcome for them. However, before
considering the documents further, we should like to hear the
outcome of the Government's examination of aspects of the draft
Directives the Minister has drawn to our attention. Meanwhile
both documents remain under scrutiny.
29 Comitology is the system of committees which oversees
the exercise by the Commission of powers delegated to it by the
Council and the European Parliament. Comitology committees are
made up of representatives of the Member States and chaired by
the Commission. There are three types of procedure (advisory,
management and regulatory), an important difference between which
is the degree of involvement and power of Member States' representatives.
So-called "Regulatory with Scrutiny", introduced in
July 2006, gives a scrutiny role to the European Parliament in
most applications of comitology. Back
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