European law plays a particular role in combating harmful tax competition by providing for an obligation at Community level for international tax cooperation. Emphasis needs to be given to the status of EU regulation, which is applied directly and, in the event of a collision, takes precedence over national laws.
Community legislation unifies the corresponding legal arrangements in the Member States as they impose uniform implementation obligations on them. Regardless of Community rules, EU Member States are linked by a number of tax agreements guaranteeing the exchange of information on tax and tax matters.
Part of the rules that are of significant practical relevance to international tax cooperation is the result of Community rules aimed at preventing money laundering.
In addition, European law imposes obligations on EU Member States to cooperate in this area, as an example may be Directive 2003/48. Under this Directive, each EU country automatically provides information to another Member State on interest paid from that country to persons resident for tax purposes in that other Member State.
The obligation to cooperate and exchange information on tax matters between individual EU countries has already introduced Directive 77/799, but this cooperation is limited in nature under this Directive, without the obligation to disclose trade, industrial or professional secrecy or a production process, and the exchange of information which would violate public policy.
Scope of international cooperation Directive 77/799 is limited, however, since the Directive does not oblige Member States to conduct investigations or to provide information if the conduct of investigations or the obtaining or use of information by a Member State for its own tax purposes would prevent the legislation or administrative practice.
Member States may also refuse to provide each other with information if the State concerned is unable for legal or factual reasons to provide similar information.
An Unquestionable Success Directive 77/799 it is, however, an obligation for each Member State to provide any information known to it which may be relevant for the correct calculation of the income and capital tax, without prior request by the competent authority of any other Member State concerned.
The above provisions Directive 77/799 are, however, limited by a catalogue of limitations, which makes it impossible to guarantee full cooperation between the tax administrations of the Member States.87 In this context, it should be welcomed that at the time of the release by RE Directive 2003/48 and the entry into force of its obligations[88], EU countries have signed agreements on the taxation of savings income with some of the dependent territories of the United Kingdom and the Netherlands, some of which until recently have been considered to be applying harmful tax competition.
Ensuring the exchange of information with the above-mentioned dependent territories, which are widely recognised as having harmful tax competition, is an important step towards full cooperation in tax and carnoscar matters with all associated and dependent territories of the EU Member States.
Another issue is the effective scope of this cooperation in correlation with the national law of these territories.
Part of the rules that are of significant practical relevance to international tax cooperation is the result of Community rules aimed at preventing money laundering. First and foremost, the requirements for various types of information obligations introduced Directive 91/308, which was subsequently revised by Directive 2001/97.
Directive 91/308 introduce a customer identification obligation for financial and credit institutions when opening bank accounts and transactions exceeding the equivalent 15,000 ECU, as well as all other transactions suspected of money laundering, regardless of their value.
Provision Article 5 Directive 91/308 the obligation on Member States to ensure that credit and financial institutions examine with particular attention any transaction which, by its nature, appears to fulfil to a large extent the characteristics of the money laundering transaction.
In addition, Member States have been required to ensure that credit and financial institutions keep any documents that could be used as evidence in any money laundering investigation.
Directive 91/308 It also introduced an obligation for financial and credit institutions in the Member States to inform the competent authorities of the State of its seat of all the facts that may indicate money laundering, while at the same time prohibiting the reporting of these facts to clients of those institutions concerned.
Member States have also been obliged to make appropriate changes to national law, setting up appropriate procedures to ensure that financial and credit institutions implement the provisions of the Directive, including criminal rules relating to infringements.
Directive 2001/97 upheld the provisions Directive 91/308, updating them in line with the conclusions of the Council and the EP.
First of all, the requirement to identify the client when opening bank accounts and transactions exceeding a certain equivalent 15,000 EUR, not as in the original wording 15,000 In addition, specific requirements for the obligation to identify the customer in the case of transactions involving an increased risk of being used for money laundering have been introduced.89 An important achievement Directive 2001/97 the obligation to establish the identity of the client on auditors, external accountants, tax advisers, real estate brokers, notaries and lawyers performing free trades in the situations specified in the Directive, as well as brokers of high value goods when the payment is made in cash and equivalent 15,000 EUR or that amount exceeds and casinos.
As a result of the introduction of these regulations, the concern to ensure the legality of economic trade in the EU lies with a vastly larger number of operators, which should be assessed positively.
Obtaining the above information after the customer has been identified under the so-called know your client procedure is a valuable mechanism that can be a source of information of a strict tax nature.
First of all, the identification of the actual bank account beneficiary, including in Anglo-Saxon jurisdictions, is a mechanism allowing information on bank accounts to be transmitted in certain cases to the relevant authorities of other countries.
The importance of the KYC procedure is all the more important in the jurisdictions in which the trust institution operates, allowing the legal and commercial shareholder of the company to be separated from its actual owner in an economic sense.