As you may have recently seen, on 25 May 2018, the Economic and Financial Affairs Council (“ECOFIN”) formally adopted rules regarding the mandatory automatic exchange of information in relation to reportable cross-border arrangements.
These EU mandatory disclosure rules (“EU MDR”) entered into force on 25 June 2018 requiring disclosure to tax authorities of certain cross-border arrangements entered into by taxpayers, which fall within certain broadly-defined hallmarks.
The main purpose of the rules is to strengthen tax transparency and fight against aggressive tax planning. The term aggressive tax planning is not defined, and reference is made instead to a number of pre-determined hallmarks, which are features that could render a cross-border arrangement reportable under this Directive.
The Directive provides for mandatory disclosure of such arrangements by intermediaries or taxpayers (both individual or corporate) to the tax authorities and mandates automatic exchange of this information among EU Member States. EU Member States will be required to transpose the rules into domestic law.
In managing their obligations under these new EU MDR rules, taxpayers will need to understand the likely impact of EU MDR on their business and the key issues they may face in its implementation.
