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Exchange of tax information between national administrations

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News related to exchange of tax information among national authorities


On 01-12-2010 a new international agreement concerning the exchange of tax information between state authorities came into force in Spain. This Agreement, made in Strasbourg on 25-01-1988 has been signed by very few states to date. The main signatories are some Scandinavian countries, in addition to France, Italy, Belgium, Great Britain and the United States. Neither Switzerland nor other countries regarded as tax havens have signed the Agreement.

Its validity is limited to the signatory states, and its purpose is to allow national tax authorities to obtain information on the income obtained by taxpayers in other states and to execute tax debts incurred in other states, as well as to enable them to send notifications and be in coordination in the event of tax inspections taking place in several countries simultaneously.

In short, the target is to overcome restrictions that are not set forth in the current information exchange clause, which is usually regulated under Art. 26 of Double Taxation Agreements based on the OECD model which, as we already know, has very limited effectiveness to avoid tax fraud.

An important development is that, thanks to this Agreement, automatic and spontaneous exchange of tax information between states is allowed. Until now, conventions on this matter only allowed the exchange of information following a prior request from a state, and this greatly restricted the work of national tax authorities (and, in line with Directive 2003/48 regarding the exchange of information on bank interest of non-residents.)

In order to allow its application and avoid doubts between state parties, an official commentary has been approved. The practical efficiency of this new convention is yet to be seen, together with its relationship with the information exchange clause regulated under Double Taxation Agreements and EU regulations, especially Directive 77/799.

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