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Mandatory disclosure of potentially harmful tax planning arrangements by intermediaries

Daphne Cozonis 03 Apr 2018

On 13 March 2018, the Council of the European Union reached political agreement on a European Commission’s Directive proposal to introduce -through an amendment to Directive 2011/16/EU on administrative cooperation in the field of taxation- mandatory disclosure rules for intermediaries who design, market, organise, make available for implementation or provide assistance or advice in relation to certain cross-border arrangements. Zepos & Yannopoulos, Taxand Greece, explores. 

In accordance with the proposed Directive, intermediaries, such as lawyers, accountants or advisers, must report and Member States must subsequently exchange information on potentially aggressive tax planning arrangements with a cross-border element concerning at least one EU Member State and arrangements designed to circumvent reporting obligations involving automatic exchanges of information or to conceal beneficial ownership information.

The term aggressive tax planning is undefined, but the Directive refers instead to specified hallmarks, which are features that should be present in an arrangement in order for it to be reportable under the Directive.

Generic hallmarks and a number of specific hallmarks may only be taken into account if they meet the “main benefit test”, which is satisfied when obtaining a tax advantage constitutes the main benefit or one of the main benefits a person may reasonably be expected to derive from an arrangement.

Discover more: Mandatory disclosure of potentially harmful tax planning arrangements by intermediaries

Taxand's Take

Hallmarks which are not linked to the main benefit test concern:

• Specified cross-border transactions such as arrangements involving deductible cross-border payments between associated enterprises when the recipient is not resident for tax purposes in any jurisdiction, deductions for the same depreciation claimed in more than one jurisdiction, relief from double taxation in more than one jurisdiction in respect of the same item of income or capital, arrangements including transfers of assets where there is a material difference in the amount being treated as payable in consideration for the transferred assets in the jurisdictions involved
• Specified arrangements designed to circumvent reporting obligations involving automatic exchanges of information under EU or OECD laws or agreements
• Arrangements involving a non-transparent legal or beneficial ownership chain under specific conditions, including lack of substantive economic activity
• Transfer pricing, such as arrangements involving the transfer of hard-to-value intangibles or certain cross-border transfers of functions

Article tags

Greece | International Tax