Revenue has released eBrief No.65/16, setting out the arrangements for implementing Council Directive (EU) 2015/2376; and the OECD's framework for the compulsory spontaneous exchange of information in respect of rulings that was adopted as part of BEPS Action 5.

The brief states that the Council Directive provides for the mandatory automatic exchange of information on advance cross-border rulings and advance pricing arrangements (APAs) provided to companies and other entities in respect of all taxes except VAT, customs duties, excise duties and compulsory social security contributions.

This information is to be exchanged with all other EU member states and a more limited set of information is also to be shared with the European Commission. The subset of information that is to be shared with the Commission should not allow the identification of the underlying taxpayer. The Directive is due to be transposed into Irish law by 31 December 2016 and the new measures will apply from 1 January 2017.

The information exchange must take place within three months of the half calendar year during which the ruling was issued, amended or renewed. This means that, for rulings provided in the first half of the calendar year, information has to be exchanged at the latest by the end of September of that year and, for rulings provided in the latter half of the calendar year, information has to be exchanged at the latest by the end of March of the following year.

The OECD framework provides for the compulsory spontaneous exchange of information on six categories of taxpayer-specific rulings. They include cross-border rulings related to preferential regimes. Currently, from Ireland’s and Revenue’s perspective, this refers to any cross-border opinions provided in respect of the tonnage tax or knowledge development box regimes.

In broad terms, the framework provides that relevant rulings are to be spontaneously exchanged with:  the country of residence of all related parties with which the taxpayer enters into a transaction for which a ruling is granted or, the country of residence of related parties that have made payments giving rise to income benefitting from a preferential regime; and the country of residence of the ultimate parent company and the immediate parent company. The OECD framework applies from 1 April 2016.

The guidance states that the requirements apply to taxpayer-specific communications that Revenue provides to companies and other entities in respect of direct taxes that come within the definition of an advance cross-border ruling or an APA as provided for by the Directive, or that come within the categories of rulings stipulated in the OECD framework. The requirements outlined in the Directive and OECD framework are not mutually exclusive and a Revenue communication may fall within both, the guidance notes.

According to the guidance, taxpayer-specific communications include the opinions that Revenue provides on the application of tax law to particular transactions, events, or activities. Where such opinions come within scope of the exchange of information requirements provided for in the Directive or the OECD framework, Revenue will be exchanging the necessary information with other tax administrations.

Under both the EU Directive and the OECD framework, Revenue will exchange the following information:

• The identity of the taxpayer to whom the opinion was issued;
• The name of the group to which the taxpayer belongs, where appropriate;
• The opinion reference number, if any;
• The date the opinion was issued, amended, or renewed. The start date and end date of the period of validity of the opinion, if specified;
• An indication of the type of opinion being exchanged;
• The amount of the transaction or transactions to which the ruling relate(s), if specified;
• A summary of the content of the opinion; and
• Details of the taxpayer's main business activities, its annual turnover, and its net profit or loss will also be provided, if available.

Where the ruling is being exchanged under the EU Directive, Revenue will also be providing the identity of any other member state likely to be concerned with the opinion, plus details of entities in each of these member states, if any, likely to be affected by the opinion.

Where it is an APA, Revenue will supply a description of the set of criteria used for the determination of the transfer pricing or the transfer price itself; the identification of the method used for determining the transfer pricing or the transfer price itself (where more than one method is used an additional explanation will be provided); and an indication of whether information communicated is based upon the APA itself or the request.

From 1 April 2016 where a taxpayer, or a tax practitioner acting on their behalf, seeks an opinion from Revenue and it comes within scope of the exchange of information requirements in respect of cross-border tax rulings, Revenue will notify the taxpayer or tax practitioner accordingly and will provide the taxpayer or tax practitioner with a copy of the summary of the opinion that is to be exchanged.

Revenue will also advise the taxpayer or tax practitioner of whether the opinion is being exchanged under the EU Directive or OECD framework. Where the opinion is subject to exchange under the OECD framework, Revenue will advise the taxpayer or tax practitioner of the countries with which information will be exchanged. The same procedure will also apply for past opinions coming within the lookback element of each of these initiatives.

Finally, the guidance states that any information communicated between member states under both the EU Directive and the OECD framework is covered by the obligation of taxpayer confidentiality and enjoys the protection extended to similar information under the national law of the member state that receives it.

Revenue Arrangements for Implementing EU and OECD Exchange of Information Requirements In Respect of Tax Rulings is here.