Please find attached a confidential document of the Council working group on business taxation that was given to us in the context of our attempts to set up an inquiry committee: CodeOfConductTaxRulings4.6.2012
It is particularly relevant in the context of the inquiry committee. Essentially, it shows that an information exchange obligation on tax rulings (which Juncker “proposed” in response to Lux Leaks) already existed but was just ignored/not implemented. There is a legal provision on spontaneous information exchange on problematic tax rulings (and the like), which exists since a 1977 Council directive, and which was reaffirmed in a new Council directive in 2011. The leaked code of conduct document from 2012 (attached) is important because it recognises that member states were clearly not abiding by the exchange obligation. It provides further clarification. Based on this we will of course propose to expand the mandate of the proposed inquiry committee, as it would appear that it represents maladministration and breach of EU tax law (rather than just competition law and the sincere cooperation principle).
COUNCIL DIRECTIVE 2011/16/EU
of 15 February 2011
Spontaneous exchange of information
Scope and conditions of spontaneous exchange of information
- The competent authority of each Member State shall communicate the information referred to in Article 1(1) to the competent authority of any other Member State concerned, in any of the following circumstances:
(a) the competent authority of one Member State has grounds for supposing that there may be a loss of tax in the other Member State;
(b) a person liable to tax obtains a reduction in, or an exemption from, tax in one Member State which would give rise to an increase in tax or to liability to tax in the other Member State;
(c) business dealings between a person liable to tax in one Member State and a person liable to tax in the other Member State are conducted through one or more countries in such a way that a saving in tax may result in one or the other Member State or in both;
(d) the competent authority of a Member State has grounds for supposing that a saving of tax may result from artificial transfers of profits within groups of enterprises;
(e) information forwarded to one Member State by the competent authority of the other Member State has enabled information to be obtained which may be relevant in assessing liability to tax in the latter Member State.
This provision exists since 1977 (Council directive 77/799/EEC article 4 a) and d)) http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31977L0799&from=EN
So Member States are obliged since 1977 to spontaneously exchange information on problematic cross-border tax rulings.
What is the role of the code of conduct document from 2012?
It provides a further clarification by naming the rulings as such. And it constitutes an implicit recognition that EU law has not been implemented.
Furthermore, we found ECJ jurisprudence from 1998 on the matter, confirming that MS have to exchange this information without prior request:
Article 4(1)(a) of Directive 77/799 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation, which obliges the competent authority of a Member State without prior request to forward to the competent authority of any other Member State the information which may enable a correct assessment of, in particular, taxes on income and on capital to be effected where it has grounds for supposing that there may be a loss of tax in that other Member State, must be interpreted as meaning that it is not necessary for the loss of tax referred to therein to be covered by an express measure on the part of the competent authority of the latter Member State.