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EU Formally Adopts Mandatory Disclosure Requirements

EU Formally Adopts Mandatory Disclosure Requirements

The EU's mandatory disclosure rules will enter into force on June 25, 2018.


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The EU is moving quickly with new rules targeting intermediaries who offer complex cross-border tax planning arrangements that involve more than one EU member state or a member state and a third country, and has formally adopted new mandatory disclosure rules. These rules will require tax intermediaries in the EU—such as tax advisers, accountants, banks, and lawyers—to alert their tax authorities to any potentially aggressive tax planning arrangements in which they are involved.

Intermediaries won't be affected if they have legal professional privilege (or if they are located outside the EU or if the tax-planning arrangement is developed in-house). However, in the absence of an intermediary, the requirements state that EU taxpayers themselves must disclose any potentially aggressive cross-border tax planning. These new rules will enter into force on June 25, 2018. EU member states have until December 31, 2019 to update their domestic laws, which will be applicable in EU member states as of July 1, 2020. Despite the July 1, 2020 application date, intermediaries and relevant taxpayers will also have to disclose information on reportable cross-border arrangements where the first step of the arrangement is implemented between June 25, 2018 and July 1, 2020. These arrangements will need to be disclosed by August 31, 2020.

New rules
Under the new rules, EU intermediaries or taxpayers must disclose qualifying cross-border arrangements within 30 days of the earlier of when the arrangement is made available, when it is ready for implementation, or when the first step of implementation has been made. These rules may apply to arrangements that have certain "hallmarks" that the European Commission believes strongly indicate tax avoidance or abuse, including, among others:

  • Confidentiality conditions
  • Contingency fees 
  • An acquisition of a loss-making company, so that an entity can use losses to reduce their tax liability 
  • Circular transactions
  • Deductible cross-border payments that benefit from a full exemption or from a preferential tax regime.

Intermediaries and relevant taxpayers who fail to disclose reportable arrangements would be subject to penalties, as determined by the Member States. After being reported, this information will be automatically exchanged each quarter by the competent authorities of each Member State via a central directory on administrative cooperation, starting as of October 31, 2020.

Although the reporting requirements should not apply to Canadian intermediaries or taxpayers with no presence in the EU, there may be an obligation for EU intermediaries or EU-based members of a corporate group to report certain arrangements under these rules.

For more information, contact your KPMG adviser.

Information is current to June 05, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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