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Use of an EU tax identification number

Use of an EU tax identification number
17 May 2013
In February 2013, the EU Commission launched a public consultation seeking views on the potential introduction of a European tax identification number (TIN) to address the marked rise in taxpayers' mobility, the increase in number of cross-border transactions and increasing internationalisation of financial instruments.

The EU Commission cites that the above internationalisation trends make it more difficult for Member States to properly assess and collect taxes due, thus undermining the function of Member States' taxation systems and often entailing double (non-) taxation, which incites tax fraud and evasion. The public consultation launched by the EU Commission is aimed at collecting opinion on creating an EU Taxpayer Identification Number (TIN) and the consultation asks for information around the scope of an EU TIN (operationally and taxpayers covered) practical aspects (possible simplification and step-by-step approach); its design and functioning, and the various legal considerations (eg data protection).

Taxand responds to this publication consultation paper providing views on the alternatives to an EU TIN and step-by-step approach; the scope of an EU TIN; practical considerations; the lifetime and portability of the EU TIN; and the accessibility to EU TIN by economic operators.

Taxand's key comments include:

  • For the specific case of investment funds, management companies may have branches located across the EU and for this reason, a consistent identification number would be useful.
  • Transparency should not be a criterion to distinguish between entities as far as the allocation of an EU TIN is concerned
  • The entity's legal seat should be key to determining its tax residence
  • A TIN should never be revoked, only renewed (eg when a taxpayer's country of residence changes)


Taxand's Take

Every taxpayer should have a TIN, including partnerships and trusts, and the term 'person' should be clearly defined. It would be preferable to speak of natural and legal persons instead of individuals and non-natural persons. It would also be useful if offshore investment funds could be identified in a given EU member State by means of a TIN.

All EU TINs should be assigned by the taxpayer's country of residence because the taxpayer is liable for taxes there. When verifying EU TINs, data protection needs to be ensured. Only in exceptional circumstances should it be envisaged to check the name of the taxpayer (the VIES-system could be used as a reference).

Taxand's Take Author