Scope

Evaluation of Directive 2011/16/EU (DAC1) on administrative cooperation in the field of direct taxation and its first 2 amendments i.e. Directive 2014/107/EU (DAC2) and Directive (EU) 2015/2376 (DAC3). The upcoming evaluation of the Directive will also cover more recent amendments to the Directive (DAC 4 and DAC 6).

Evaluation findings

The evaluation concluded in 2019 deemed that the Directive is relevant overall, coherent with other interventions and offers EU added value.

Estimated savings and benefits

The evaluation quantified cumulative costs, mainly related to the automatic exchange of information which took place in the period under examination: for Member States at about EUR 90 million; for financial institutions at about EUR 140 million over time, and overall estimated costs of about EUR 230 million. However, the evaluation was limited by the availability of data on the benefits of interventions by Member States.  The evidence of quantified benefits is therefore very limited. It is not possible to draw a reliable and robust conclusion on this. In a few cases, reported benefits are higher than reported costs for Member States. The overall sum of the very few estimates of (monetised) benefits of interventions amounts to circa EUR 620 million. More in detail:

Reported Benefits		Notes
DAC1 AEOI	€92 m	Information for only 5 MS and not all years 2015-2017
DAC1 non-AEOI	€532 m	Information for only 6 MS and not all years 2013-2017
DAC2 and DAC3	Information not available
Total	€624 million

Reported Costs		Notes
DAC AEOI  -by MS (DAC1, DAC2 and DAC3 )	€90 m	incl. amortisation of €145 million
DAC2 –- by financial institutions	€141 m	10 x amortized DAC2 costs
non-AEOI	no costs reported
Total	€231 m

Which objective(s) does the Commission pursue?

The need for the 2020 Commission proposal arose from the outcome of different assessments, which highlighted the scope for improvement in matters relating to the exchange of information and administrative cooperation. They also demonstrated that the rule for using simultaneous controls and allowing the presence of officials of a Member States during an enquiry in another Member State lacked a legal base in some of the national systems.

The initiative was aimed at ensuring a fair and consistent functioning of the internal market, while safeguarding Member States’ and EU tax revenues. In particular, it would level the playing field, deter and detect non-compliance and support cooperation between tax administrations.

Increase benefits of an EU regulatory framework and reduce associated regulatory costs: the benefits of a level playing field, fairer competition and standardisation, and removing regulatory barriers to expansion across the EU, are expected to offset the costs and contribute to a better business environment for companies (including SMEs) overall.

An EU regulatory intervention would lead to gains in efficiency for tax administrations due to an increased ability to detect tax fraud and enhanced cooperation between tax administrations.

Simplify EU regulatory framework: Platforms operating in the Single Market can deal with one and the same regulatory setting, avoiding issues of differentiated national reporting requirements for platforms operating in different Member States and thus contributing to establishing fair competition and a level playing field for all EU businesses

Maintain EU acquis fit for purpose: the latest amendment covered amendments to the current administrative cooperation framework to ensure it becomes more effective, such as making joint (tax) audits possible under the directive. The proposal adopted by the Commission in 2022 aims at further strengthening the existing provisions, for example in relation to the compliance framework and the use of information.

The proposal extends the scope of the administrative cooperation in direct taxation to income that has not so far been covered at EU level; thereby ensuring the continued effectiveness of the exchange of information and other administrative cooperation in order to ensure fair taxation.

Estimated savings and benefits

Having a harmonized reporting requirement (instead of the current patchwork of national reporting requirements) will create a simplified reporting system for the platforms, and at the same time, ensure reporting of the income regardless of the jurisdiction of the platform’s tax residence. The same line of reasoning applies to extending the reporting obligation to crypto-asset service providers.

The one-off, substantive compliance costs for all platforms operators are estimated around EUR 875 million, while recurrent costs are estimated around EUR 105 million. One-off costs for all tax administrations are estimated at around EUR189 million. These costs estimates are based however on a number of assumptions and extrapolations and should be used with caution.

The tax revenues are estimated at between EUR 2.7 billion and EUR 7.1 billion. In 2025, additional tax revenues are estimated to range approximately between EUR 11 and 33 billion.

For the future reporting of crypto-assets, we estimate a one-off cost for CASPs that will vary between EUR 233.1 million and EUR 284 million, or roughly between EUR 1.4 million and EUR 1.7 million per service provider respectively. The total recurrent costs, on the other hand, are estimated to range between EUR 20.3 million and EUR 24.9 million, or roughly between EUR 120 000 and EUR 150 000 per entity respectively. These estimates cover all CASPs with EU users. Whereas one-off costs by tax administrations in the EU-27 when processing crypto-asset transactions are estimated to range between EUR 500 000 and EUR 64.8 million or between EUR 18 000 and EUR 2.4 million per tax administration on average, depending on the IT solution chosen, the estimated recurrent costs vary approximately between EUR 100 000 and EUR 6 million on a yearly basis, or between EUR 3 700 and EUR 220 000 on average per Member State.

The tax revenues are estimated at a range between EUR 1 and 2.4 billion depending on the different tax rates applied.

Outcome of Legislative Procedure

The purpose of the amendment is to extend the EU tax transparency rules to digital platforms. Member States are required to automatically exchange information on income generated by sellers on digital platforms. These revised rules will allow national authorities to identify situations where tax should be paid, and are intended to reduce the administrative burden placed on platforms, who have to deal with several, different national reporting requirements.

The core elements of the Commission proposal with respect to the digital platforms have been maintained in the final legal act, i.e. the introduction of the reporting obligation on the Platform Operator; wide scope of reporting which includes services and sale of goods; wide territorial scope which includes ‘foreign platforms’ that have to register in one Member State for the purpose of reporting, as well as the content of the information that has to be reported. The Commission agreed to the specific exceptions which have been introduced for both Platform Operators and Sellers, as well as the introduction of tailored and coordinated compliance measures, to address any failure by foreign platforms to register and/or report.

Similarly, the core elements of the Commission proposal have also been maintained in the final legal act with respect to the provisions on strengthening the administrative cooperation and exchange of information: most importantly a legal framework for joint audits; the delineation of foreseeable relevance in case of request for information and group requests, as well as the inclusion of royalties as an additional category of income subject to automatic exchange of information. The provision on joint audits can be transposed one year later than the rest of the directive. A more detailed procedure has been introduced for remedying data breaches. Finally, the date for transposition and implementation has been deferred by one year as a number of Member States considered the initial calendar as too ambitious.

The Commission concludes that the directive will effectively contribute to the achievement of the initially set objectives to improve the effectiveness of national tax authorities in tackling tax evasion and strengthening the framework for administrative cooperation and exchange of information.