Legal Alerts/21 Mar 2018

Agreement Reached on EU Proposal Aiming for New Transparency Rules for Intermediaries

The Council of the European Union reached an agreement on 13 March 2018 on a draft Directive proposal for enhancing transparency in order to tackle aggressive cross-border tax planning. The draft Directive would require intermediaries, such as audit firms, lawyers and other tax advisors, to report cross-border schemes that are considered as potentially aggressive tax planning to the authorities.

Key features

Based on the draft Directive, EU-Member-State-based intermediaries would have a reporting obligation if a cross-border arrangement were potentially an aggressive tax planning arrangement. However, if the intermediary is subject to legal professional privilege the reporting obligation is shifted to another intermediary, or if such an intermediary does not exist, to the taxpayer benefiting from the arrangement.

Reportable arrangements are determined by applying features listed in the draft Directive (so-called hallmarks). Most of the listed hallmarks requires that the main benefit, or one of the main benefits that a person may reasonably expect to derive from an arrangement, is obtaining a tax advantage. Potentially aggressive tax planning arrangements could, for example, be cross-border payments to associated recipients, in which case the income is tax exempt or low-taxed, and other tax induced arrangements (i.e. tax induced transfers of intangibles and acquisitions of loss-making companies).

The automatically exchanged information would include, for example:

  • Intermediaries’ and relevant taxpayers’ identification;
  • Details of the hallmarks;
  • A summary of the reportable cross-border arrangement’s content;
  • The date on which the first step to implement the reportable cross-border arrangement has been made or will be made;
  • Details of the national provisions forming the basis of the reportable cross-border arrangement; and
  • Reportable cross-border arrangement’s value.

Implications and further steps

These suggested measures would impose reporting obligations on audit firms, lawyers and other tax advisors in particular. However, the reporting obligation would not be enforceable if national legal professional privileges will be applicable. Yet, it is uncertain how attorneys’ legal professional privilege will affect the implementation of these suggested measures. Attorneys’ reporting obligations will be specified in the course of the Directive’s national implementation.

When the draft Directive has been adopted, each EU Member State has to implement the suggested measures into national law by 31 December 2019. The reporting obligations would apply from 1 July 2020. The first automatic exchange of information would be completed by 31 October 2020.

Borenius’ lawyers are available to assist in addressing any questions you may have regarding this legal alert. Please feel free to contact any of the Borenius’ lawyers listed in this alert or those with whom you usually work.

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Additional information

Heikki Wahlroos



Esa-Pekka Saari

Senior Associate