EU-San Marino taxation agreement signed in joint effort to improve tax compliance

On 8 December 2015, the European Union and San Marino signed an agreement aimed at improving tax compliance by private savers.
The agreement will contribute to efforts to clamp down on tax evasion, by requiring the EU member states and San Marino to exchange information automatically.
This will allow their tax administrations improved cross-border access to information on the financial accounts of each other’s residents.

Upgrade
The agreement upgrades a 2004 agreement that ensured that San Marino applied measures equivalent to those in an EU directive on the taxation of savings income. The aim is to extend the automatic exchange of information on financial accounts in order to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid.
The text was signed in Brussels:
on behalf of the EU, by Pierre Gramegna, minister for finance of Luxembourg and president of the Council;
on behalf of San Marino, by Antonella Benedettini, ambassador, head of mission.
The signature took place in the presence of Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, who also signed the document.

Decision
The Council adopted a decision on 8 December 2015 to authorise the signature on behalf of the EU.
“The sharing of information between national tax authorities remains one of the fundamental elements of an effective fight against tax fraud and tax evasion”, Mr Gramegna said. “The EU is undoubtedly a leader in this field.”

The EU and the OECD
The agreement ensures that San Marino applies strengthened measures that are equivalent to measures in force in the EU. However, whereas the 2004 agreement was based on the EU’s taxation savings directive, that directive has now been repealed. Directive 2003/48/EC was repealed on 10 November 2015 in order to eliminate an overlap with directive 2014/107/EU, which includes strengthened provisions to prevent tax evasion.
The agreement also complies with the automatic exchange of financial account information promoted by a 2014 OECD global standard.
The EU signed similar agreements with Switzerland, on 27 May 2015, and with Liechtenstein on 28 October 2015. It approved the conclusion of those agreements on 8 December 2015.

Coverage
It sets out to limit the opportunities for taxpayers to avoid being reported to the tax authorities by shifting assets. 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 San Marino 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.
The EU and San Marino must now ratify or approve the agreement in time to enable its entry into force. Provisional application is scheduled for 1 January 2016.
EU-San Marino agreement on the automatic exchange of financial account information
Savings taxation directive repealed
OECD global standard for the automatic exchange of financial account information

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