The European Commission has adopted two proposals for new Directives aimed at improving mutual assistance between Member States’ tax authorities in the assessment and the recovery of taxes.

The adoption is in accordance with the framework of the Commission's strategy to better combat tax evasion and fraud.

I. Administrative cooperation in the assessment of taxes

The proposal on improved administrative cooperation in the assessment of taxes is wider in scope, as it covers all taxes except those that are dealt with under a specific European Community legislation, i.e. VAT and Excise duties.

One of the key elements of the proposals is that Member States would no longer be able to invoke bank secrecy in order to refuse cross border co-operation. Based on the OECD Model Convention, the proposal contains a provision by which a requested Member State cannot refuse to supply information concerning a taxpayer of the requesting Member State solely because this information is held by a bank or other financial institution. As such, the proposal abolishes bank secrecy in the relations between tax authorities when a requesting Member State is assessing the tax situation of one of its resident taxpayers.

II. Mutual assistance in the recovery of taxes

The proposal to improve mutual assistance in the recovery of taxes aims at reinforcing and improving recovery assistance between the Member States. The Commission proposes in particular to:

• Cover all taxes and duties levied by the Member States and their administrative subdivisions, as well as compulsory social security contributions;
• Introduce compulsory spontaneous exchange of information concerning refunds of taxes made by national tax authorities to non residents;
• Allow officials of one country to actively participate in administrative enquiries on the territory of another country;
• Allow that recovery assistance is requested in an early stage of the recovery process, if this leads to an increase of the recovery chances;
• Simplify and rationalise the procedures to be used when requesting or providing mutual assistance;

Further information is available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/201&format=HTML&aged=0&language=en&guiLanguage=en.