European Commission Action Plan to combat Tax Evasion

The European Commission will present today a Communication to the European Council and Parliament titled Action Plan to Strengthen the Fight against Tax Fraud and Tax Evasion. The Communication, sets out the practical steps to be followed the next couple of years by all involved institutions including EU member countries to battle tax evasion. In short, the measures outlined in the communication will be the following:

Old resurfaced initiatives or policies

  1. New framework for administrative cooperation, mainly enhancing exchange of information between member states;
  2. Amendment of the Savings Taxation Directive mainly to close loopholes of the system;
  3. Adoption of an Anti-fraud and tax cooperation agreement;
  4. Adoption of a Quick Reaction Mechanism for VAT fraud, mainly allowing a member state to deviate from the Directives in case an abuse of the system creates a massive VAT fraud issue;
  5. Wider adoption of optional application of VAT reversed charge mechanism;
  6. Adoption of a forum for streamlining the EU Vat system to battle fraud.

New Immediate Initiatives

  1. Common EU - wide definition of Tax Heavens and the adoption of a common "toolbox" of coordinated measures towards third countries;
  2. Recommendation for adopting a general anti-avoidance clause in all double tax treaties between member states and third countries;
  3. Improving the effectiveness and applicability of the Code of Conduct on Business Taxation;
  4. Adoption of a central Tax Identification Number (TIN) repository called "TIN on Europa";
  5. Adoption of Standard form for exchange of information on taxation issues;

New Initiatives for December 2013

  1. Revision of the Parent - Subsidiary Directive;
  2. Promote the standard for automatic exchange of information on tax issues;
  3. Implementation of a European Taxpayer Charter;
  4. Reinforcement of cooperation with law enforcement units to battle tax evasion;
  5. Promote simultaneous controls ("common raids");

New Initiatives for December 2014

  1. Development of a computerised format for automatic exchange of information; 
  2. Full implementation and use of TIN;
  3. Implementation of EU-wide information technology tools for administrative cooperation;
  4. Reinforcing the ability of tax administrators to trace money flows;
  5. Extend EUROFISC to direct taxation;
  6. Create a one stop shop in every country for matters relating taxation;
  7. Develop motivational incentives and voluntary disclosure programmes;
  8. Develop a web tax portal;
  9. Promote alignement of EU-wide common administrative and criminal sanctions;
  10. Develop an EU- standard audit file (SAF-T);
  11. Start negotiation with third parties for administrative cooperation on VAT issues.

Longer term Initiatives

  1. Central Joint Audits (joint raids);
  2. Develop mutual direct access to national databases;
  3. Propose a single legal basis for administrative cooperation of all taxes.
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