The European Commission is to extend the scope of automatic exchange of information between EU tax administrations so that member states share financial details with each other in the same way as they do with the US under the Foreign Account Tax Compliance Act (FATCA).
Under new proposals announced today, dividends, capital gains, all other forms of financial income and account balances, will be added to the list of categories which are subject to automatic information exchange within the EU.
Algirdas Semeta, EU commissioner for taxation, customs, statistics, audit and anti-fraud, said: 'With today's proposal, member states will be better equipped to assess and collect the taxes they are due, while the EU will be well positioned to push for higher standards of tax good governance globally. It will be another powerful weapon in our arsenal to lead a strong attack against tax evasion.'
The new provisions build on two pieces of existing legislation. The first is the EU Savings Tax Directive which requires member states to collect data on the savings of non-resident individuals, and automatically provide this data to the tax authorities where those individuals reside. This system has been in place since 2005, and is to be revised and strengthen before the end of this year.
The second is the Administrative Cooperation Directive which comes into effect on 1 January 2015. This was originally designed to apply to five categories of financial information: income from employment, director's fees, life insurance products, pensions, and immovable property. It will now be extended to apply to dividends, capital gains, other financial income and account balances.
From that date, it will be mandatory for member states to report on these new categories. At the moment, reporting on five existing categories of income and capital is subject to the 'availability' of that data, something which the Commission now says will be re-assessed during a review of the directive in 2017.
The Commission says it has accelerated progress towards a comprehensive automatic information exchange in order to ensure consistency across the EU and to avoid member states triggering a series of 'most favoured nation' claims under FATCA.
