REPORT on the draft Council decision on the conclusion, on behalf of the European Union, of the Amending Protocol to the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

29.9.2015 - (08266/1/2015 – C8‑0169/2015 – 2015/0076(NLE)) - *

Committee on Economic and Monetary Affairs
Rapporteur: Jeppe Kofod

Amendments

• 001-002 (PDF - 191 KB)
• 001-002 (DOC - 42 KB)

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the draft Council decision on the conclusion, on behalf of the European Union, of the Amending Protocol to the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

(08266/1/2015 – C8‑0169/2015 – 2015/0076(NLE))

(Consultation)

The European Parliament,

–  having regard to the draft Council decision (08266/1/2015),

–  having regard to the draft agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments (08297/2015),

–  having regard to Article 115 and Article 218(6), second subparagraph, point (b), and paragraph (8), second subparagraph, of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C8‑0169/2015),

–  having regard to Rules 59 and 108(7) of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8-0271/2015),

1.  Approves the draft Council decision as amended and approves conclusion of the agreement;

2.  Regrets that no improvements can be made, particularly regarding information provided and the automatic, binding and unrestricted nature of exchanges of information;

3.  Calls upon the Commission to keep the Parliament informed in case of any change or new development in the final steps of the conclusion of this agreement;

4.  Reminds the Council of its obligation to consult the Parliament once more should it modify its draft decision;

5.  Stresses the importance of taking effective action against fraud and tax avoidance and in particular tax evasion and tax avoidance by natural and legal persons based in the Union with the involvement of financial institutions based in third countries;

6.  Calls upon the Commission to assess, 18 months after the date of entry into force of this Agreement, the application of this Agreement and its outcome, and present a report to the European Parliament and the Council, accompanied where appropriate by proposals for its review;

7.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Swiss Confederation.

Amendment    1 Draft decision Article 2 – paragraph 1
Draft decision	Amendment
1. The President of the Council shall, on behalf of the Union, give the notification provided for in Article 2(1) of the Amending Protocol4 .	1. The President of the Council shall, on behalf of the Union, give the notification provided for in Article 2(1) and Article 4 of the Amending Protocol4 in order to ensure that the rules on automatic exchange of information with respect to reportable accounts are being followed and collaboration on compliance and enforcement is enabled.
__________________	__________________
4 The date of entry into force of the Amending Protocol will be published in the Official Journal of the European Union by the General Secretariat of the Council.	4 The date of entry into force of the Amending Protocol will be published in the Official Journal of the European Union by the General Secretariat of the Council.
Amendment    2 Draft decision Article 2 – paragraph 2
Draft decision	Amendment
2. The Commission shall inform the Swiss Confederation and the Member States of the notifications given in accordance with point (d) of Article 1(1) of the Agreement between the European Union and the Swiss Confederation on the automatic exchange of financial account information to improve international tax compliance as resulting from the Amending Protocol.	2. The Commission shall inform the Swiss Confederation and the Member States of the notifications given in accordance with point (d) of Article 1(1) of the Agreement between the European Union and the Swiss Confederation on the automatic exchange of financial account information to improve international tax compliance as following from the Amending Protocol.

EXPLANATORY STATEMENT

Introduction

The European Union and Switzerland signed an agreement on 27 May 2015 on the automatic exchange of financial account information, aimed at improving international tax cooperation and compliance.

The agreement represents an important step in ongoing efforts to clamp down on tax fraud and tax evasion and upgrades the 2004 agreement that ensured that Switzerland applied measures equivalent to those in an EU directive on the taxation of savings income.

Under the agreement, the EU and Switzerland will automatically exchange information on the financial accounts of each other's residents, starting in 2018. The aim is to address situations where a taxpayer seeks to hide capital representing income or assets for which taxes have not been paid.

The agreement aims at ensuring that Switzerland applies strengthened measures that are equivalent to the EU directive, as upgraded in March 2014 (amending the Directive on Administrative Cooperation, "DAC2") and that it complies with the automatic exchange of financial account information promoted by the 2014 OECD global standards.

There are furthermore provisions intended to limit the opportunities for taxpayers to avoid being reported to the tax authorities by shifting assets or investing in products that are outside the scope of the agreement. Information to be exchanged concerns not only income such as interest and dividends, but also account balances and proceeds from the sale of financial assets.

Tax administrations in the member states and in Switzerland will be able to

- identify correctly and unequivocally the taxpayers concerned;

- administer and enforce their tax laws in cross-border situations;

- assess the likelihood of tax evasion being perpetrated;

- avoid unnecessary further investigations.

Your rapporteur welcomes the agreement, but also believes that there would be room for improvement. As this procedure does not allow for amendments to the proposed international agreement, these should be reflected in future similar agreements currently under negotiation with other third countries, and close to finalisation:

Article 2 - Automatic Exchange of information with respect to reportable accounts

•  Point 2 a). Addition of full mandatory disclosure of full name and identification number - The proposal does not require full and detailed information on the account owners, namely their full name and a mandatory disclosure of their tax identification number. In line with the effort to achieve absolute transparency and full disclosure of information, this should be a compulsory requirement.

Article 3 - Time and manner of automatic exchange of information

•  Point 3. Reporting lapse from yearly basis to a quarterly basis - According to the present agreement, information is to be exchanged upon request from the competent authorities on a yearly basis. In the spirit of expeditious and efficient relay of information, the rapporteur finds the original timeframe to be too constrictive and prodigal and consequently suggests tightening the reporting cycle from a yearly basis to a quarterly basis.

Article 5 - Exchange of information upon request

•  Point 1. Unconditional exchange of information - In line with the effort to achieve absolute transparency and full disclosure of information between the parties, highlighting the unconditional and mandatory surrender of information should be required in order to safeguard the present agreement from legal constraints and the unilateral declaration from Switzerland to withhold any information which may be obtained illegally (read whistleblower findings).

AND

•  Point 2 c). The rapporteur suggests to delete the exemption of disclosure of information that is "contrary to the ordre public". - In the same spirit as the former amendment, the exemption of disclosure of information that may be contrary to public policy ('ordre public') is a too broad and ambiguous conditionality and should therefore be deleted accordingly.

Article 6 - Confidentiality and protection of personal data

•  Point 3. The rapporteur suggests to delete the condition for exchange of information based on the previous approval of the competent authorities - Upholding the spirit of full and unconditional exchange of information, the rapporteur suggests to remove the conditionality which required Member States or Switzerland to request consent to use the information exchanged and/or to share it with a third jurisdiction.

Article 7 - Consultations and suspension of the agreement

•  Point 1. Commission as binding mediator for disputes - In the matter of disputes over interpretation of the present agreement, the rapporteur finds the present proposal to be too lenient to the parties involved. In order to promote a smooth implementation and execution of the present agreement, the rapporteur believes that the European Commission' binding arbitration for any disputes to be a clear and certain solution.

Article 8 - Amendments

•  Point 1. Flexibility to adjust to relevant EU legislation (not only OECD standards) - Notwithstanding the present agreement safeguard for consultations when relevant changes on regulation at the OECD level occur, given that the European legal framework is in constant evolution the rapporteur has contemplated in the present agreement for the same consultations to occur when relevant European-level regulation/legislation is adopted.

Article 9 - Dividends, interest and royalty payments between companies

•  Point 2. Removal of exemptions. Emulated interest and royalty directive for coherence and consistency with EU legislation - Having reviewed the Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payment, the rapporteur finds that the present agreement has added further conditionality which is counterproductive and reduces the scope of the information to be disclosed. In light of this, the scope for dividends, interests and royalty payments should be aligned with the current European legislation as a matter of coherence and consistency.

Article 10 - Termination of agreement

•  Same issue as article 7. Termination should be determined after binding mediation by the Commission - In consistence with the amendments carried out on article 7, the termination of the present agreement must not be called unilaterally and should be subjected to approval by the European Commission binding mediation.

Addition of:

Article 12 - Taken from the Declaration so to reinforce the binding implementation deadlines - The current proposal misses a binding target for the implementation of the present agreement, as its implementation framework only consists of a non-binding declaration. In line with the fight that this body is carrying out against tax evasion and aggressive tax planning, a binding implementation target would be utmost required.

The EU and Switzerland have agreed to conclude the agreement in time to enable entry into force on 1 January 2017, and your rapporteur very much urges that this deadline is respected.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	23.9.2015
Result of final vote	+: –: 0:	46 0 3
Members present for the final vote	Burkhard Balz, Hugues Bayet, Udo Bullmann, Fabio De Masi, Anneliese Dodds, Jonás Fernández, Elisa Ferreira, Sven Giegold, Neena Gill, Sylvie Goulard, Roberto Gualtieri, Brian Hayes, Gunnar Hökmark, Danuta Maria Hübner, Alain Lamassoure, Philippe Lamberts, Sander Loones, Olle Ludvigsson, Ivana Maletić, Notis Marias, Fulvio Martusciello, Costas Mavrides, Bernard Monot, Luděk Niedermayer, Stanisław Ożóg, Dimitrios Papadimoulis, Sirpa Pietikäinen, Dariusz Rosati, Alfred Sant, Molly Scott Cato, Peter Simon, Renato Soru, Theodor Dumitru Stolojan, Kay Swinburne, Paul Tang, Marco Valli, Jakob von Weizsäcker, Pablo Zalba Bidegain
Substitutes present for the final vote	Philippe De Backer, Ildikó Gáll-Pelcz, Marian Harkin, Ramón Jáuregui Atondo, Eva Joly, Jeppe Kofod, Thomas Mann, Andreas Schwab, Antonio Tajani, Beatrix von Storch
Substitutes under Rule 200(2) present for the final vote	Joachim Starbatty