Economic and Financial Affairs Council, 14/10/2014, 14 October 2014

Combating tax evasion: Council agrees rules on automatic exchange of information

The Economic and Financial Affairs Council on 14 October 2014 reached an agreement on a directive aimed at strengthening the fight against fraud and tax evasion.

The Council reached an agreement on a directive that amends the existing EU rules for the exchange of information between the tax administrations of the member states. This information is related to certain categories of income that taxpayers hold in a member state other than their state of residence.

The newly agreed directive will enable the EU countries to strengthen the combat against tax fraud and tax evasion and to increase the efficiency and effectiveness of tax collection.

"Today we took a major step towards greater transparency marking the end of bank secrecy in tax matters in the European Union", said Pier Carlo Padoan, Italy's Minister for Economy and Finance, who chaired the meeting. 

Next steps

The text of the new directive will be adopted without further discussion at a forthcoming Council meeting, once the text has been finalised in all official EU languages. 

Key elements of the agreed rules

According to the newly agreed rules, the tax authorities in the EU will have an obligation to exchange automatically information on all relevant income (interests, dividends and similar types of income) but also account balances and sale proceeds from financial assets . 

The current rules that have been in force since 2013 (Directive 2011/16 on administrative cooperation in the field of taxation) covered the mandatory automatic exchange of information on employment, director's fees, life insurance products, pensions and immovable property on condition that such information was available.

The exchange of information on the newly added categories of financial income will take place without the condition of availability of information.

The directive also provides a framework for mutual assistance between member states, which allows them to better assess taxes due.

Other topics on the agenda

Support for investment

The Council adopted conclusions on measures in support of investment.

Research and innovation as sources for growth

The ministers discussed a communication by the Commission on research and innovation as sources of renewed growth.

Banking union: contributions by banks to resolution funds

The Commission informed the Council about the preparations for implementing legislation that will determine contributions to be paid by banks to resolution funds established under the bank recovery and resolution directive and the regulation on the single resolution fund. Contributions will be calculated on the basis of the banks' liabilities, excluding own funds and covered deposits, and adjusted for risk.

Energy taxation

The Council held an orientation debate on a proposal to restructure the taxation of energy products and electricity. The proposal aims to restructure energy taxation to bring it in line with EU policy objectives in the field of climate change. As there are a number of issues that remain to be resolved, the Council will continue working on the proposal to find an agreement.