room document # 4 code of conduct group (business …€¦ · for advance pricing agreements (apas)...

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ROOM DOCUMENT # 4 Code of Conduct Group (Business Taxation)

2 June 2016 ORIGIN: Commission Services

UPDATED QUESTIONNAIRE ON ADMINISTRATIVE PRACTICES MEMBER STATES' REPLIES

In advance of the discussion on the implementation of the Model Instruction on the exchange of

information relating to rulings and unilateral advance pricing agreements at the Code of Conduct

Group meeting on 12th April 2015 the Chair circulated an updated questionnaire on the matter. The

replies from the Member States that responded are now included in the annex to this document. 12

Member States did not reply.

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Annex

Austria

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do not issue such rulings, how do you exclude problems automatically arising in the course of tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?

Binding rulings according to Sec. 118 BAO (Bundesabgabenordnung/Federal Fiscal code) are issued as administrative decisions. They can only cover legal questions regarding reorganizations, group taxation cases and transfer pricing cases.

In addition, Good Faith Rulings are issued (national guidelines). There are no specific area limitations.

2. If you have a parallel system of rulings (1.1, 1.2 and/or 1.3), what is the difference in practice between them (other than whether or not a fee is charged)?

For rulings according to Sec. 118 BAO, the taxpayer has to pay a fee. The taxpayer receives an administrative decision. These rulings are legally binding.

For Good Faith rulings no fee is charged. They are not legally binding, however, if the taxpayer is bona fide, he is usually entitled to rely on this information.

3. How are you made aware of the different types of rulings from your tax authority?

In national guidelines information about the different kind of rulings is given.

4. Is the Model Instruction currently fully implemented in your country? Member States that are of the opinion that the instruction does not apply to them are directed again to the information and clarifications contained in sections 1 and 2. If Member States feel that they need more time to implement the Model Instruction they are requested to explain the reasons for delay in detail and to present a timetable for it.

Yes, the Model Instruction is implemented in national guidelines.

In addition, Austria has already started to implement the provisions on automatic exchange of rulings required in DAC 3. The review process on the draft legislation is in progress.

5. As of when will you exchange (have you already exchanged) information on cross-border rulings?

January 1, 2015.

6. How many cross-border rulings and/or unilateral APAs have you already exchanged?

2015: 20 Rulings according to § 118 BAO

7. How many cross-border rulings and/or unilateral APAs have you already received?

2015: 4 Rulings

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Belgium


BE authorities issue only rulings of type 1.1

2.If you have a parallel system of rulings (1.1, 1.2 and/or 1.3), what is the difference in practice between them (other than whether or not a fee is charged)? /


Belgian rulings are published on the web site of the Finance Ministry


YES


Belgium exchanges information on cross-border rulings since 24 October 2015 (the exchange covers the rulings that are granted as from 1 January 2015).

I take this opportunity to update the Belgian answers to questions 6 and 7 of the same questionnaire:


48


5 spontaneously (+ 13 on request)

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Bulgaria

No response received to the updated questionnaire.

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Cyprus


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Czech Republic


The Czech Republic issues the rulings listed in 1.1


N/A


The Tax Offices are briefed on the obligation to report the cases of rulings to the competent authority by internal methodological recommendations.


The Czech Republic follows the Guidance D – 333 issued by the Ministry of Finance. According to this guidance the Czech tax administration has to notify a ruling to the relevant tax office of the other state through spontaneous exchange of information.


We will follow the DAC III, before we are ready to exchange information according to the above Guidance D – 333.


None


None

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Germany

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do not

issue such rulings, how do you exclude problems automatically arising in the course of tax

audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?

German law provides the possibility to issue the following types of tax rulings:

o Advance Pricing Agreements (APAs)

o Advance Rulings (§ 89 Fiscal Code (Abgabenordnung))

o Advance Rulings on the basis of audits (§ 204 Fiscal Code (Abgabenordnung))

2. If you have a parallel system of rulings (1.1, 1.2 and/or 1.3), what is the difference in practice

between them (other than whether or not a fee is charged)?

Advance Rulings in general may only be issued for future transactions. On the other hand, an

advance ruling on the basis of an audit may cover transactions audited for the past which are

also relevant for tax purposes in future.


The local tax authorities may issue tax rulings in accordance with the law. There is no general

mechanism of notification in place.

4. Is the Model Instruction currently fully implemented in your country? Member States that are of

the opinion that the instruction does not apply to them are directed again to the information and

clarifications contained in sections 1 and 2. If Member States feel that they need more time to

implement the Model Instruction they are requested to explain the reasons for delay in detail

and to present a timetable for it.

We are currently working on a legislative proposal to implement the Directive 2015/2376 (DAC

III) in order to be able to begin the automatic exchange on tax rulings as from 1 January 2017.

We understand the Model Instruction mainly as a transitional measure until the DAC III has

been implemented.

Furthermore, we have submitted only recently an instruction to our local tax authorities on the

compulsory spontaneous exchange on tax rulings as from 1 April 2016 according to the

recommendation on Action 5 of the OECD/G20 BEPS project.

Thus, the model instruction is already partially implemented and will be fully implemented by

no later than 1 January 2017.

5. As of when will you exchange (have you already exchanged) information on cross-border

rulings?

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We refer to the answer above (question 4).


None.


Germany has received 79 Rulings in 2015 and so far 43 Rulings in 2016.

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Denmark


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Estonia


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Greece

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue?If you do not issue such rulings, how do you exclude problems automatically arising in the course of tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?

The information provided for the different types of tax rulings (sections 1.1, 1.2 and 1.3) are limited regarding their origin, interpretation and practical application. For this reason, Greece cannot have a final position on the matter. According to our preliminary assessment, subject to possible bias due to the provision of limited information, Greece does not issue any tax rulings that fall in the sections of 1.1, 1.2 and 1.3. The competent central office of the Ministry of Finance provides guidance and clarification on income tax issues that concern all taxpayers or professional organizations. Moreover, Article 9 of the Code of Tax Procedures (n.4174 /2013) states that the State Secretary may issue interpretive circulars and instructions for the application of tax legislation. The interpretative circulars are published on the Finance Ministry website, are valid since their publication and are binding for the Tax Administration until expressly revoked or modified following a change in legislation. The interpretative circulars are not binding for the taxpayers. In the case of an audit in a cross-country oriented taxpayer, the auditor can evaluate the specific situation based on real facts and subsequently formulate its audit opinion.

For Advance Pricing Agreements (APAs) we inform you that according to the provisions of article 22 Law 4174/2013 (Code of Tax Procedure), APAs are valid in Greece since 1.1.2014.Greece may issue unilateral, bilateral and multilateral APAs concerning intragroup invoicing (transfer pricing). The procedure for intercompany pricing methodology preliminary approval, revision, revocation and cancellation, the fees, the conciliation procedure with the competent authorities of other concerned States, the type and content of decisions of the Tax Administration have been established by decision (POL.1284/ 2013) of the General Secretary.


Please see the first paragraph of answer 1.


Please see the first paragraph of answer 1.


Greece is in the process of implementing the Model Instruction for APAs. For tax rulings, please see the first paragraph of answer 1.


The first time that Greece has ever issued a unilateral APA was during 2015. Currently, we are establishing the internal procedure in the tax administration between the Issuing Authority and the Competent Authority for the exchange of information. More specifically, we are in the process of filling the APA’s information in the requested format. For tax rulings, please see the first paragraph of answer 1.

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Not applicable yet.


Not applicable yet.

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Spain


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Finland





Questions 5 to 7 are unchanged from the original questionnaire, however Member States are invited to update their answers in writing (please send your update to the Secretariat), and if possible refer to the different types of rulings separately:




Answer

As we have understood it, the Model Instruction is to be applied to advance rulings by tax administration referred to in RD 8 annex 1 of CoC meeting 12.4.2016, i.e. advance rulings that are binding for tax administration.

Finland applies an advance tax ruling –system which offers taxpayers a possibility to have an advance ruling from the tax administration. An advance ruling delivered within this framework consists of a decision by the tax administration on how to apply certain tax rule in the situation that the taxpayer has described in the application for the ruling. The ruling is binding for tax administration and appealable both for the taxpayer and the fiscus.

In addition to the above Finland applies another advance tax ruling system which offers taxpayers a possibility to have an advance tax ruling from the Central Tax Board. An advance ruling by the Central Tax Board consists of a decision by the board on how to apply certain tax rule in the situation the taxpayer has described in the application for the ruling. A ruling by the Central Tax Board is appealable straight to the Supreme Administrative Court. The Central Tax Board only gives advance rulings in cases that have a significant impact for the applicant or many taxpayers in terms of interpretation of new rules or new situations or value in money.

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In general Finnish tax administration doesn’t publish advance rulings rendered to taxpayers. Nevertheless tax administration publishes actively guidances giving the public and taxpayers information on how certain tax rules are applied in the decisions taken in advance rulings, assessments and tax inspections. On the other hand the decisions by the Central Tax Board are often published in an anonymous form in the tax administration website.

Finnish tax administration have applied the “Model Instruction” since December 2014. Finland has delivered information on three advance rulings to other countries. So far we have no knowledge of receiving information according to the Model Instruction from other countries.

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France


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Croatia


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Hungary


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Ireland


Ireland does not have a statutory system of binding tax rulings and there is no provision in Irish law for the issuing of such rulings. However, within the general administrative functions vested in them under Irish tax legislation Ireland’s tax authorities, the Revenue Commissioners (Revenue), issue non-binding opinions on the application of tax law to specific transactions or situations. Revenue practice and procedures for providing such opinions are set out in published guidelines that are available on their website www.revenue.ie. We consider these opinions to fall within section 1.2 of the Room Document.

An opinion provides Revenue’s view of the correct application of existing tax law to a particular transction, event or activity. In providing such an opinion, Revenue’s role is to interpret and apply the tax law correctly and consistently so that taxpayers can understand and comply with their tax obligations. The circumstances in which a taxpayer should require an opinion are relatively limited. Opinions are only issued where the matter is complex or where there is genuine uncertainty regarding the applicable tax rules.

In addition, in certain circumstances, advance clearance or approval is required under the governing legislation or published administrative practice for a particular tax relief or tax treatment to apply. These advance clearances or approvals are a particular type of opinion that is provided by Revenue. There are a limited number of activities that are subject to this requirement.

Revenue tries to minimise the need for taxpayers to require opinions by making wide range of information available on the Revenue website. Where Revenue considers that an opinion is likely to have a wider application or set a precedent, it will arrange to publish a practice or guidance note on the matter.


N/A – see reply to question 1 above.


As mentioned in the reply to question 1 above, within the general administrative functions which are vested in them under Irish tax legislation, Revenue issue non-binding opinions on the application of tax law to specific transactions, events or activities. The procedure for obtaining an opinion in respect of a proposed transaction, event or activity is set out in guidelines published on the Revenue website (www.revenue.ie). There are two sets of guidelines – one dealing with opinions issued by Revenue’s Large Cases Division (LCD) (a division that deals with the tax affairs of larger taxpayers) and the other setting out the procedures that apply in non-LCD cases.


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Ireland has put in place the necessary arrangements for implementing the framework for spontaneous exchange of information on cross-border rulings as set out in the Model Instruction. A tax guidance note on the matter was published on the Revenue website (www.revenue.ie) on 12 March 2015 and instructions have been issued to Revenue officials on the operation of the new arrangements. This has facilitated the provision of information by spontaneous exchange in accordance with the Model Instruction.


Ireland has the necessary arrangements in place to facilitate the spontaneous exchange of information on cross-border rulings in accordance with the Model Instruction and we have already exchanged information in line with this framework.


We have exchanged information on one cross-border ruling.


We have received information on seven APAs and six cross-border rulings.

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Italy

No response received to updated questionnaire.

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Lithuania


Lithuanian tax authority issues only 1.1 type of rulings, i.e.:

- a taxpayer may apply to the tax authorities for an individual binding decision to approve application of the tax legislation for individualized perspective transactions. Such legislation may only apply for the individual transaction, clearly described in the taxpayer’s application;

- a taxpayer may submit request for the approval of the principles of pricing of a future controlled transaction (advance pricing agreement (APA)). An application for APA may be submitted only in respect of a future transaction or an operation to be carried out after the application is submitted (if the contract concerning the operation is concluded before submitting the application). It is recommended that APA is to be concluded for the complex and unique transactions, which raise doubts on application of arm’s length principle meaning that the tax authority has a right to refuse to conclude APA for the transactions that are rather simple.

Any optional taxation problems raised during the individual binding decision process are solved in general way by preparing taxation guidelines or submitting proposals to change existing tax legislation.


Not applicable.


Rulings are issued by two special working groups appointed by the Head of State Tax Inspectorate under the Ministry of Finance.


Lithuanian tax authority has taken all necessary measures to implement the Model instruction. In the absence of issued rulings, information exchange has not taken place yet.

Bearing in mind that Directive 2015/2376 has to be implemented since the beginning of 2017, all necessary measures are being taken in order to develop national IT tools as well as to have all internal procedures in place to ensure proper and timely exchange of rulings with other Member States.


Lithuanian tax authority intends to start exchanging information on cross-border rulings since the beginning of 2017.

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Please note that Lithuanian tax authority has not exchanged information about cross-border rulings or unilateral APAs.


Please note that Lithuanian tax authority has received information about cross-border ruling only once.

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Luxembourg

Questions 1 to 3 1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do not issue such rulings, how do you exclude problems automatically arising in the course of tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?



Luxembourg does only issue binding rulings known as individual tax rulings or advance pricing agreements. These individual advance tax rulings or advance pricing agreements are signed by the local tax office after being reviewed by a centralized ruling commission. The Luxembourg tax administration does also publish administrative circulars to explain and give guidance in relation to specific articles of the tax law. This practice could be described as a public ruling. These circulars are binding the tax administration. Question 4 Is the Model Instruction currently fully implemented in your country? Member States that are of the opinion that the instruction does not apply to them are directed again to the information and clarifications contained in sections 1 and 2. If Member States feel that they need more time to implement the Model Instruction they are requested to explain the reasons for delay in detail and to present a timetable for it. Yes Question 5 to 7 5. As of when will you exchange (have you already exchanged) information on cross-border rulings? 6. How many cross-border rulings and/or unilateral APAs have you already exchanged?


Please find hereafter the requested statistics

- Number of exchanges (step 1) :

Country Number Type Germany 5 ATR Germany 6 APA Belgium 1 ATR Belgium 3 APA Cyprus 2 ATR Cyprus 1 APA Spain 4 ATR

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Spain 4 APA Finland 1 APA France 8 ATR France 6 APA Hungary 1 ATR Irland 4 ATR Irland 2 APA Italy 2 APA Netherlands 3 ATR Netherlands 7 APA Poland 3 ATR Poland 1 APA UK 14 ATR UK 12 APA Sweden 1 APA Total 91

- Number of APAs /ATRs received : 1

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Latvia


The Latvian Tax Administration issues the rulings that include acts based on a legislative provision that specifically enables a tax authority to agree the treatment of a future transaction with a taxpayer. Such legislation may apply to any transaction undertaken by a taxpayer (1.1.).


There is no parallel system.


There is no different types of rulings.


After considering the Model Instruction of the Committee on Administration Cooperation for Taxation (CACT 036) and the amendments to the Council Directive 2011/16/EU regarding spontaneous exchange of cross-border rulings and unilateral advance transfer pricing agreements (COUNCIL DIRECTIVE (EU) 2015/2376), the State Revenue Service of the Republic of Latvia has launched the appropriate consultations and analysis of the information at its disposal.


Internally, the situation on particular information classified as cross-border ruling information must be exchanged, is being clarified.


None. 7. How many cross-border rulings and/or unilateral APAs have you already received?

None.

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Malta


Reply: It is possible to issue all three types of rulings.


Reply: In the case of 1.1 the law specifically states in which instances such a ruling may be issued. In the case of 1.2 these would be published when the tax authority receives a number of similar requests for clarification on a legal position. In the case of 1.3, these would be issued in particular cases involving requests for clarification of a particular provision as this would apply to a particular case and that would not fall under 1.2.


A centralised approach is adopted to issuing such rulings and the competent authority is involved in this process.


Reply: Model Instruction is implemented in Malta.



Reply: 18th January 2016.


Reply: 2.


Reply: Nil.

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Netherlands

No response received to revised questionnaire.

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Poland


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Portugal

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do

not issue such rulings, how do you exclude problems automatically arising in the course of

tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?

The Portuguese Tax Authority can only issue rulings from the type identified in point 1.1.

(acts based on a legislative provision).

The interpretation or aplication of a legal provision for a situation or transaction of an

individual taxpayer (on which he is entitled to rely) can only be provide in strict compliance

with the legal provisions laid down on the Portuguese General Tax Law [Decree-Law no.

398/98 of 17 December] and on the Portuguese Corporate Income Tax (IRC) Code [Decree-

Law no. 442-B/88, of 30 November].

Article 67 of the General Tax Law establishes the general right of taxpayers to obtain

information about their specific tax situation within 10 days.

Article 68 of the General Tax Law regulates the binding information that can be provided by

the Tax Authority about the tax situation of taxpayers, including their eligibility, by law, for

tax benefits, if requested by the concerning taxpayers through an application with the

description of the facts which tax treatment is queried (taxpayer-specific rulings).

Article 68-A of the General Tax Law establishes that the Tax Authority shall be bound by the

general guidelines contained in administrative interpretation, regulations or instruments of a

similar nature, in order to standardise the interpretation and application of tax rules (general

rulings).

Article 138 of the IRC Code regulates the terms on which the taxpayers can require the Tax

Authority to establish, by advance, the method or methods capable of ensuring the

determination of terms and conditions that would normally be agreed, accepted or practiced

between independent operations in commercial and financial entities, including services

intragroup and cost-sharing agreements, made with entities which are in a situation of special

relationships or transactions between headquarters and permanent establishments (advance

pricing agreements (APAs))

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The opinion that the Tax Authority can express in a ruling respects exclusively to the

interpretation and application of tax legislation on a specific tax situation and must comply

with the principle of tax legality.

Thus, a ruling cannot determine the tax base, the applicable tax rate or the amount of tax

payable concerning a specific taxpayer and cannot set a favourable tax treatment or negotiate

any type of tax outcomes that are not already provided by the generally applicable law.



In Portugal there is no parallel system of rulings.


Taxpayer-specific rulings must be requested to the General-Director of the Tax Authority

and the application should be accompanied by a description of the facts which tax treatment is

being queried. The application is made by electronic means and through a form approved by

the Tax Authority. The answer is also delivered by electronic means. While safeguarding the

personal information of the taxpayer, these rulings are published in the Tax Authority website.

General rulings are contained in written instructions, communications or other forms of

notices which are addressed by the General-Director to tax officials performing duties at

various hierarchical and geographical levels, in order to ensure a standard interpretation and

application of tax rules. This type of rulings is published in the Tax Authority website.

Advance price agreement must also be request to the General-Director of the Tax Authority

and any agreement reached between the Tax Authority and the taxpayer is reduced to writing

and must specify the particular method or accepted methods, transactions covered, the

underlying assumptions, the conditions for revision, revocation and renewal and the duration,

which may not exceed three years.

All the procedures, information and documentation related to the conclusion of the

agreements are regulated with strict adherence to the UE and the OECD guidelines by order

of the Minister of Finance (see Ministerial Ordinance [Portaria] no. 620-A/2008, of 16 July).

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4. Is the Model Instruction currently fully implemented in your country? Member States that are

of the opinion that the instruction does not apply to them are directed again to the information

and clarifications contained in sections 1 and 2. If Member States feel that they need more

time to implement the Model Instruction they are requested to explain the reasons for delay in

detail and to present a timetable for it.

We are in the process of fully implement the Model Instruction.

The past rulings that fulfill the conditions to be exchanged have been already identified and a

process is being put in place to mark the future ones that meet the conditions to be exchanged.

5. As of when will you exchange (have you already exchanged) information on cross-border

rulings?

We had already exchanged information concerning unilateral APAs, but not concerning other

type of cross-border rulings.


We have already exchanged information on three unilateral APAs.


In 2015 we received information on two unilateral APAs.

In 2016 we received information on one tax ruling.

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Romania


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Sweden


Advance pricing agreement (1.1): Only the Swedish Tax Agency (STA) can grant an APA. A company can be granted an APA in Sweden only if a mutual agreement has been settled with one or more states with which Sweden has a tax treaty/tax treaties in force. Thus, Sweden does not grant unilateral APAs but only bilateral or multilateral ones. This means that a mutual agreement may be settled only after bilateral or multilateral negotiations between representatives from the STA and the other Contracting state/states of a tax treaty/tax treaties. This ensures that no unilateral, arbitrary and selective assessments are made. The legal base is the Act on Pricing Agreements for International Transactions (2009:1289).

Advance tax rulings (1.1): A tax payer cannot apply for an advance tax ruling, based on a legislative provision, at the STA. A tax payer can however apply for an advance tax ruling at the Swedish National Board of Advance Rulings (Skatterättsnämnden). The Board is an independent public authority and the process before the Board is an inter partes process with the STA as the tax payer’s counterpart. The question posed to the Board has to regard the applicant’s liability to pay tax or his taxation under Swedish tax law. It also has to be of importance to the applicant or to the uniformity of the interpretation of the law. Advance tax rulings mainly concern tax according to the Income Tax Act (1999:1229) and The Value-added Tax Act (1994:200). An advance ruling may only concern the interpretation and application of Swedish tax legislation relative to the question posed by the applicant. Questions regarding valuation or evidence issues may not be handled within the framework of advance tax rulings. The applicant is responsible for providing enough information so that the Board will be able to make a decision. If enough information is not provided - or if any of the other formal conditions mentioned above is not fulfilled - the application will be rejected. The process before the Board is similar to a court proceeding, and an advance tax ruling by the Board may be appealed against directly to the Supreme Administrative Court. No leave of appeal is required.

The rulings are generally made public and can be invoked as precedents by other tax payers. It is, however, confidential who the applicant and the other involved persons are, which sometimes leads to a ruling not being published if the questions answers in the rulings can reveal the applicant. Advance tax rulings that are appealed against and tried by the Supreme Administrative Court are always made public, with a few exceptions.

Advance tax rulings in the form of legal answers (1.2): The STA can assist taxpayers and ensure the smooth functioning of the tax system by answering tax payers’ legal questions. The legal questions are usually divided into dialogue questions and other legal questions.

Dialogue questions are characterized by the fact that they always refer to questions from companies identified by name, and are of such complexity that it requires an increased contact and communication/dialogue between the company and the STA. These matters are always forward-looking i.e. the filing of the tax return for the tax period concerned has not expired. Legal answers to dialogue questions can be published in anonymous form on the STA’s website if the answer is relevant to a larger group of taxpayers. If appropriate the answer is transformed into general guidelines.

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Other legal questions may relate both to questions from individuals and from companies. These questions can be posted by unnamed taxpayers or by intermediaries such as consulting or law firms where the questions usually are of a more general/horizontal nature and applicable to many different clients. The question in those cases can be e.g. how to calculate the taxable income from a sale of certain shares. Legal answers to other legal questions are usually published on the STA’s website, and if appropriate, transformed into general guidelines that can be applied by all taxpayers in relevant circumstances.

According to STAs own guidelines it is not possible to get a legal answer on matters relating to transfer pricing unless under the Act on Pricing Agreements for International Transactions (2009:1289), se above.


Rulings bases on a legislative provision (1.1) are binding to the STA and the Swedish courts, as long as the circumstances remain the same as they are described in the application and no legislative changes have occurred since the issuance of that ruling.

Legal answers concerning dialogue questions (1.2) that a tax payer can receive from the STA are not legally binding for the STA or for the Swedish courts. However the STA’s policy is to apply the principles in the answers they have given and the tax payer is therefore usually entitled to rely on the answers, as long as the circumstances remain the same as they are described in the question and no legislative changes have occurred since the answer was given. Incorrect answers from the STA can also lead to a liability for the STA to pay damages to the tax payer.


Rulings that are based on legislative provisions are regulated by law. Information about this types of rulings can a tax payer read about on the tax authorities’ and the Swedish National Board of Advance Rulings websites.

The circumstances under which the STA can assist a tax payer with certain legal questions (dialogue questions or other legal questions), are posted on the STA’s’ website.


Steps have been taken to inform the STA about the “Model instruction” and the Code of Conduct Group´s agreed guidance on improving the exchange of information on cross border ruling and unilateral advance pricing arrangements. It is already legally possible for the STA to spontaneously exchange information. Since 1 January 2013, Article 9 of the Council Directive 2011/16/EU is implemented into Swedish law through the Tax Act (2012:843) on administrative cooperation in the European Union in the field of taxation (14 §). More information about the STA’s work on implementing the Model Instruction will be provided before the next meeting of the Code of Conduct Group on 2 June.

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Sweden has recently started its work on implementing the provisions on automatic exchange of rulings in DAC3. A public consultation on the draft legislation started in March.



As mentioned under question 4, Sweden has started its work on implementing the provisions on automatic exchange of rulings in DAC 3. Organizational and administrative preparations have started within the STA in order to have the right processes in place for 2017. In connection with these preparations, and as soon as all processes are in place, we will start the spontaneous sending of cross border rulings. The STA have exchanged information spontaneously under Article 9 of the Council Directive 2011/16/EU since January 2013. At this stage, we cannot say whether the STA has exchanged information spontaneously on cross-border rulings. We do know, however, that the STA has spontaneously exchanged information, under article 9:in 229 cases in 2013, in 2 756 cases in 2014 and in 97 cases in 2015.


None that we know of, but see answer to question 5 above regarding spontaneous exchange of information in general.


Up until now, April 2016, Sweden has received three unilateral APAs.

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Slovenia

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do not issue such rulings, how do you exclude problems automatically arising in the course of tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures? Financial Administration of the Republic of Slovenia provides rulings, such as clarifications and binding information, based on the provisions of the Tax Procedure Act taking into account relevant tax legislation. Relevant provisions: Article 13 of the Tax Procedure Act deals with the right of information and provides that taxpayers have the right to be appropriately informed about any changes to tax legislation and to receive clarifications on application of provisions of tax legislation from tax authority. Such clarification should be provided no later than 30 days from the date of submission of such question and all relevant information. Article 14 of the Tax Procedure Act provides that the General Financial Office can provide advanced binding information in written form about the tax treatment of their planned transactions or planned business events. Applications for binding information must be submitted in writing and must comply with the formal requirements defined in paragraph 2 of Article 14 of the Tax Procedure Act. Financial Administration of the Republic of Slovenia does not provide binding information in the following cases: (1) in the case of an activity already carried out, (2) when any issue relating to the request is already subject to tax control, appeals or subject to court procedure, or the planned activity is deemed to be carried out in an unspecified future period of time, or if from the request, no serious attempt to carry out the planned activity can be deducted, (3) when the preparation of binding information would require interpretation of legislation other than binding international treaty, tax legislation, tax procedure legislation, legislation governing financial administration, or legislation governing inspection services, (4) when the preparation of binding information would require the establishment of fact, which cannot be established in the given time-frame, in particular: residency, performance of the activity, status of associated persons, (5) when the issue relates to transfer pricing. Financial Administration of the Republic of Slovenia also publishes administrative practices based on general competence of the tax authority in order to assist taxpayers and ensure the smooth functioning of the tax system by means of brochure, guidance and FAQ which are published on the website of Financial Administration of the Republic of Slovenia. 2. If you have a parallel system of rulings (1.1, 1.2 and/or 1.3), what is the difference in practice between them (other than whether or not a fee is charged)? clarifications binding

information

general guidance,

FAQs

fee no yes no

subject is only planned transactions no yes no

formal requirements when apply for no yes no

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limited subject no yes no

publication on the website no no yes

3. How are you made aware of the different types of rulings from your tax authority? Ministry of Finance is not involved in preparation of clarifications and binding information, since they pertain to specific taxpayer and the treatment of his income or capital. General guidance and FAQs are published on the website. 4. Is the Model Instruction currently fully implemented in your country? Member States that are of the opinion that the instruction does not apply to them are directed again to the information and clarifications contained in sections 1 and 2. If Member States feel that they need more time to implement the Model Instruction they are requested to explain the reasons for delay in detail and to present a timetable for it. In 2014 the Model Instruction for cross-border rulings has been disseminated to the organisational units of Financial Administration of the Republic of Slovenia that are responsible to issue cross-border tax rulings. Currently, past rulings are being prepared for spontaneous exchange, and they are to be exchanged by the end of May 2016. Unfortunately work is progressing slower than anticipated since we had to implement manual search thru files. Questions 5 to 7 are unchanged from the original questionnaire, however Member States are invited to update their answers in writing (please send your update to the Secretariat), and if possible refer to the different types of rulings separately: 5. As of when will you exchange (have you already exchanged) information on cross-border rulings? Financial Administration of the Republic of Slovenia is in the process of general overview of all past rulings in order to determine if there is an obligation for spontaneous exchange. Identified rulings are being prepared for spontaneous exchange; first package will be exchanged by the end of May 2016. It has come to our attention that in many cases, where request for ruling is submitted, tax payer is not disclosed. Such requests are submitted by tax advisers. In order to fully exchange all rulings, we would have to change legislation and administrative practice in order to prevent such anonymous requests. Amendments to the Tax procedure Act are planned in this year already. Slovenia does not have an APA programme and has not issued any unilateral APA. 6. How many cross-border rulings and/or unilateral APAs have you already exchanged? So far, Financial Administration of the Republic of Slovenia has not exchanged any cross-border rulings and/or unilateral APAs. Past rulings are being prepared for spontaneous exchange and will be exchanged by end of May 2016. 7. How many cross-border rulings and/or unilateral APAs have you already received? So far, Financial Administration of the Republic of Slovenia has not received any cross-border rulings and/or unilateral APAs.

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Slovak Republic


Tax authority in the Slovak Republic deals with 1.1 type of rulings.


n.a.


n.a.


Yes. As it was pointed out on several occasions, Slovakia implemented Model Instruction as of 1 March 2015 in the form of administrative guidance binding for financial administration.



Slovakia exchanged covered information as of 1 March 2015.


1


0

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United Kingdom

1. Which types of rulings (see section 1, 1.1, 1.2, 1.3) does your tax authority issue? If you do

not issue such rulings, how do you exclude problems automatically arising in the course of

tax audits of a cross-country-oriented taxpayer or of horizontal monitoring procedures?

Under UK law it is possible for the tax administration to issue rulings, including Advanced Pricing Agreements (APAs) and Advanced Thin Capitalisation Agreements (ATCAs), as well as Statutory and Non-Statutory Clearances. Further details are provided in the annex to this paper. Rulings issued by the UK do not provide for preferential treatment; they provide clarification on how existing UK law or OECD rules will be applied in the specific circumstances of the taxpayer. All arrangements can be audited, and include cancellation provisions that can be invoked if a business breaches the terms of the agreement or provides false or misleading information to HM Revenue & Customs (HMRC) as the tax authority.

HMRC will not give a ruling where the business is asking for tax planning advice or to approve tax planning products or arrangements. Neither will it give a ruling where in HMRC’s view the ruling would be about transactions which are for the purposes of avoiding tax .



See the summary paper below. The UK does not charge fees for providing rulings of any kind.


HMRC have been working for over a year to implement the Model Instruction. This has required the development of new procedures, new guidance, and training. Following the successful conclusion of a Test and Learn pilot in 2015, these procedures have been rolled out across the tax authority and now cover all operational teams identified as issuing rulings.

HMRC have instituted a system whereby the operational teams that issue rulings submit summaries based on the current EU/OECD schema to the Competent Authority within HMRC, which is responsible for exchanging rulings with other Member States. HMRC will look to integrate this process through IT once the EU system is ready.

4. Is the Model Instruction currently fully implemented in your country? Member States that are

of the opinion that the instruction does not apply to them are directed again to the information

and clarifications contained in sections 1 and 2. If Member States feel that they need more

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time to implement the Model Instruction they are requested to explain the reasons for delay in

detail and to present a timetable for it.

Yes.


A number of the exchanges HMRC has made following the completion of the test and learn mentioned above are cross-border rulings. The first exchanges were made on 19 October 2015 relating to a case where HMRC had refused to give a ruling. One of the recipients of the information has already fed back that they found it very useful.


The UK has exchanged 12 rulings (not including information exchanged where the ruling was refused) or unilateral APAs, while of the other cases reviewed 40 will be exchanged as part of the work for DAC3, and other rulings are currently being processed and will be exchanged in due course.


31

Tax Rulings Provided by the UK – A Summary Paper Introduction

• UK provides certain types of rulings – properly used, these have advantages for the tax authority and taxpayer as they provide clarification and certainty about the tax treatment of arrangements and transactions.

• Rulings do not provide for preferential treatment – they provide clarification as to how existing UK law or OECD rules will be applied in the specific circumstances of the taxpayer.

• Arrangements agreed [will/can] be subject to audit, and have cancellation provisions to prevent abuse. So HMRC will revoke APAs and ATCAs where the business has breached any of the terms of the agreement. And where HMRC discovers that the business has provided false or misleading information in connection with an APA or ATCA it will nullify the agreement and charge penalties.

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• In each ruling HMRC makes clear that the ruling is given on the basis of the facts as presented by the business where those facts, differ from those stated, change or the law changes the ruling given cannot be relied upon.

• HMRC will not give a ruling where the business is asking for tax planning advice or to approve tax planning products or arrangements. Neither will it give a ruling where in HMRC’s view the ruling would be about transactions which in HMRC’s view are for the purposes of avoiding tax .

Advanced Pricing Agreements What Is It?

• Written agreement between HMRC and a business determining a method for resolving transfer pricing issues in advance of a return being made. Where it is adhered to provide a business with certainty on the treatment of those transfer pricing issues for the length of the agreement.

• An APA can also be bilateral or multilateral to allow other tax administrations at the other end of the transaction/s to provide similar assurance.

• Agreed by HMRC officials with the company, and subject to internal review by the Transfer Pricing Board and HMRC Tax Commissioners before it is approved and can enter into force.

What Does an APA Apply To? • Transfer pricing between separate business enterprises where issues in relation to the

operation of the arm’s length provisions.

• Attribution of income/profit between parts of a business that operate in more than one country.

• Attribution of profit across a UK oil-related ring fence.

Who Can Apply? • UK business (including partnerships)

• Any non-resident trading through a UK permanent establishment

• Any UK resident trading through a non-UK permanent establishment

• HMRC can refuse an APA where none of the following are apparent

The transfer pricing issues is not straight forward i.e. doubt about how the arm’s length provision operates or comparables not readily available.

Without an APA there is a likelihood of double taxation or the business would not be regarded as ‘low risk’.

The business is seeking to implement a bespoke method.HMRC can cancel an APA at any time if it believes circumstances have materially changed.

Advanced Thin Capitalisation Agreements – subset of APA What Is It?

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• Written agreement between HMRC and a business on transfer pricing as it effects lending. Covers but is not limited to intra-group funding, quoted Eurobonds and indirect participation.

• Covers future/current periods may cover earlier periods.

• Usually covers a 3 to 5 year period.

Statutory Clearances

• A statutory clearance is one where the UK’s tax legislation specifically sets out that a clearance can be requested from HMRC.

• Relates to certain (but not all) anti-avoidance provisions. So for instance HMRC will not give an opinion on whether or not its General Anti-Abuse Rule will apply.

• HMRC will give clearance by confirming whether or not the anti-avoidance applies.

Non-Statutory Clearances

• HMRC will, where it aids the efficient management of the UK tax system, give a view on how it sees the tax law applying to the specific circumstances set out by the taxpayer in the clearance application.

• HMRC will only provide non-statutory clearances where there is either genuine uncertainty about the interpretation of the tax legislation and the transactions are not being undertaken for tax avoidance purposes.

room document # 4 code of conduct group (business …€¦ · for advance pricing agreements (apas)...

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