16 August 2019

Directive 2018/822 of 25 May 2018: An increase in the obligation to divulge information in the scope of cross-border taxation.

Published on the 5th June 2018, Directive 2018/822 amends the previous Directive 2011/16/UE in relation to the mandatory and automatic exchange of taxation information. This Directive is to be transposed before the 31st December 2019, coming into force on 1st July 2020.

The mechanisms (also called cross-border operations) mentioned in the Directive can be identified by some distinctive characteristics defined in the Directive, for instance, the potential risk of tax evasion, which justifies the need to communicate information to the relevant Tax Administration.

The Preliminary Draft for the transposition of the Directive introduces new obligations in taxation. Specifically, we note the obligations of the so-called “financial intermediaries”, who take part in the development of “aggressive” cross-border tax planning arrangements for their clients, to inform the Tax Administration about those arrangements. Those intermediaries could be from Lawyers and Tax Advisors to Investment Firms and Banks. The Law will also provide for the details the financial intermediary is not obliged to communicate, as professional confidentiality applies.

Failing to meet these obligations may result in financial sanctions.

In conclusion, Directive 2018/822 obliges the Member states of the European Union to include in their domestic legislations the obligation to formally communicate cross-border tax planning arrangements susceptible to tax evasion, to the Tax Administration.

Written by

José

Castellano Fernández

[email protected]

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