Mandatory exchange of information in the field of taxation: combatting corporate tax avoidance


The fight against tax avoidance and aggressive tax planning is among the EU's priorities, as confirmed by the European Council conclusions in December 2014. It is also an important issue on which progress is sought at global level.

In this political context the Council agreed to amend the 2011 directive on administrative cooperation in the field of taxation (2011/16/EU). The amendments are expected to address corporate tax avoidance more efficiently.

The amendments will make it mandatory for EU national tax authorities to automatically exchange information on cross-border tax rulings and advance pricing arrangements that they give to companies. The aim is to increase transparency on such rulings and arrangements.

The amended directive also aims to contribute to the international effort, currently led by the G20 and the Organisation for Economic Cooperation and Development (OECD), to prevent tax base erosion and profit shifting.

Why is mandatory and automatic exchange of information on tax rulings needed?

It is common practice in many countries for tax authorities to issue advance tax rulings and advance pricing arrangements to companies so that the companies have legal certainty on how the operations concerned will be taxed.

However, over the years corporations have developed mechanisms that use advance tax rulings and advance pricing arrangements for the purposes of 'aggressive' tax planning, which may lead to profit shifting and considerable erosion of tax bases in member states. In some cases it has therefore become possible for companies to end up paying almost no taxes.

The existing directive from 2011 on administrative cooperation in the field of taxation only provided for spontaneous exchange of information on tax rulings between the tax authorities of the member states. The exchange was not compulsory and the rules did not set the intervals at which such information had to be exchanged.

Introduction of mandatory and automatic (i.e. at regular intervals) exchange of predefined information on advance tax rulings should ultimately lead to more effective revenue collection in member states. Having access to such information should put national tax authorities in a better position to react in certain cases of aggressive tax planning.

Expected benefits

The amended directive is expected to contribute to:

  • preventing tax base erosion and profit shifting from one country to another
  • reducing possibilities for aggressive tax planning and corporate tax avoidance
  • increasing transparency in cross-border corporate taxation practices, and allow the member states to detect possible abuse by companies
  • making the rules on information exchange clearer for the member states
  • ensuring level playing field for companies

In the Council

Taxation is a policy area in which the Council adopts EU legal acts on its own, in consultation with the European Parliament, i.e. the European  Parliament does not act as a legislator in this area. The Council adopts taxation legal acts by unanimous vote.

8 December 2015: the Council adopted the draft directive. The new rules have to be transposed into member states' national law by the end of 2016. They enter into force on 1 January 2017.

October 2015: the Council reached a political agreement on the draft directive. 

June 2015: the Economic and Financial Affairs council exchanged views on the work done by the experts in the Working Party on Tax Questions and provided guidance on remaining open questions.

March-September 2015: the Council's Working Party on Tax Questions carried out technical analysis of the proposed directive.

March 2015: the Commission presented its proposal for the directive on automatic exchange of information in the field of taxation.

December 2014: the European Council concluded there was an urgent need to advance efforts in the fight against tax avoidance and aggressive tax planning.

June 2014: the European Council established fighting tax evasion and tax fraud as policy priorities. 

In detail


The amended rules make it obligatory for all EU member states to exchange information automatically about all advance cross-border tax rulings and advance pricing arrangements that the relevant tax authorities issue to companies and entities in the context of cross-border transactions.

Examples of such transactions are investments, the provision of goods, services or finance, or the use of assets. The transactions do not have to directly involve the person receiving the advance cross-border tax ruling. 

'Automatic exchange' means that the tax authorities have to systematically communicate a defined set of information about their cross-border tax rulings and advance pricing arrangements at established intervals (approximately at least once every 6 months).

The obligatory exchange of information does not apply to:

  • domestic tax rulings, which have no consequences for the EU's internal market or other EU member states
  • tax rulings issued to natural persons

Definitions of tax ruling and advance pricing arrangement

The amended directive introduces broad definitions of advance tax rulings and advance pricing arrangements to make sure different national practices and concepts of what constitutes a tax ruling are covered. 

A cross-border tax ruling, in essence, is an assurance or confirmation that tax authorities give to taxpayers (to companies in particular) on how certain aspects of taxation will be dealt with in specific cases. 

According to the amendments to the directive, a tax ruling can be "any agreement, communication, or any other instrument or action with similar effects".

An advance pricing arrangement is a particular type of tax ruling issued by tax authorities to determine the method and other relevant details of pricing to be applied to the transfer of goods or services between companies.

How does it work?

Information on all advance tax rulings and advance pricing arrangements that are covered by the directive and issued from 1 January 2017 onwards has to be exchanged automatically without exceptions.

The scope of the information exchange also covers rulings issued in the past. Information on all rulings that were issued, renewed or amended during 2012 and 2013  has to be exchanged, if such rulings were valid on 1 January 2014.

Information on all other rulings that were issued, renewed or amended from 1 January 2014 has to be exchanged irrespective of whether they are valid or not.

Information on rulings issued from 1 January 2012 until the end of 2016 will have to be exchanged by 1 January 2018.

However, member states have the option to apply a threshold exemption to rulings issued earlier than 1 April 2016, if companies which receive such rulings satisfy two conditions

  • they do not conduct mainly financial or investment activities
  • they are below a threshold of €40 million net turnover at group level

Common database for information on tax rulings

The directive provides for the creation of a secure central directory to store the exchanged information. The directory will be accessible to all the member states. It will also be accessible to the European Commission, but only insofar as it is necessary for it to monitor the correct application of the new rules by the member states. 

Once the information is uploaded to the database, it will be available for consultation by member states. The member states receiving the information will also be able to request further information under the existing mechanisms of information exchange provided by the current directive. 

The directory should become operational by 1 January 2018, and until that date member states will exchange information using a secure network (the 'CCN network').

The information exchanged

The information exchanged has to be provided in a standard format. The key points that have to be communicated are:

  • the identification of the taxpayer (other than a natural person) concerned or affected by the ruling in question
  • the summary of the content of the advance cross-border tax ruling or advance pricing arrangement 
  • the dates of issuance, amendment or renewal of the advance cross-border ruling or advance pricing arrangement, its type and the period of validity
  • the member state concerned by the ruling

The summary of the content of tax rulings cannot lead to disclosure of a commercial, industrial or professional secret or of a commercial process, or of information whose disclosure would be contrary to public policy.

Consequences for not applying the rules

The European Commission will be able to open an infringement procedure against the member states that fail to comply with the rules.


The proposal is part of a larger package of measures which the European Commission presented the Tax Transparency Package in March 2015. The aim of the package is to contribute to the prevention of corporate tax avoidance and harmful tax competition between member states. It is also in line with international developments at the level of the OECD and its work on a set of measures against tax base erosion and profit shifting.

Entry into force

The amended directive applies from 1 January 2017

The secure central directory to store the exchanged information should become operational by 1 January 2018.