Automatic exchange of information

Council Directive 2014/107/EU adopted on 9 December 2014 significantly extends the scope of the automatic exchange of information for tax purposes among EU Member States. The proposal is based on the Common Reporting Standard developed by the OECD, which draws in many aspects on FATCA, and shall become effective as early as 1 January 2016, with a view of performing the first exchange of information between tax authorities in 2017.

The said directive brings interests, dividends, as well as account balances and sales proceeds from financial assets within the scope of the automatic exchange of information by way of amendment of Directive 2011/16/EU on administrative cooperation in the field of direct taxation.

In the meantime, the Council has invited the European Commission to present a proposal for the repeal of the European Savings Directive (2003/48/EC), as amended, and to coordinate the repealing of that directive with the date of application of the revised Directive on administrative cooperation.

From a Luxembourg perspective, this means that the mandatory automatic exchange of information under European Savings Directive will be in effect with respect to the year 2015 only and shall be superseded as of 1 January 2016 by the revised Directive on administrative cooperation.

Besides these developments at EU level, 51 jurisdictions, including Luxembourg, agreed to automatically exchange information for tax purposes on the basis of OECD Common Reporting Standard. The overwhelming majority of the signatories, including Luxembourg, has committed to perform the first exchange of information between tax authorities in 2017.

This means, from a Luxembourg perspective, that the global automatic exchange of information will apply, in addition to the other EU jurisdictions, vis-à-vis a sensible number of non-EU jurisdictions as early as 1 January 2016 as well. The number of non-EU jurisdictions effectively involved in the scheme is likely to further expand in the near future, as a significant number of additional jurisdictions have committed to perform a first exchange of information by 2018.