OECD Convention on Mutual Administrative Assistance in Tax Matters soon to be implemented into German law

On 1 May 2015, the German government submitted a draft bill to the German Bundesrat for the implementation of the OECD Convention on Mutual Administrative Assistance in Tax Matters from 25 January 1988 and the amending protocol from 27 May 2010 into German law (Link). Accordingly, the legislative procedure has been initiated. It is very likely that the convention and the protocol will soon become binding German law, allowing a wide number of states to obtain the benefits of a cross-border cooperation in tax matters.  The draft bill aims at the fight against tax evasion, the avoidance of double taxation and ensures a fair and simplified cooperation regarding cross-border tax collection or enforcement of tax demands. At the same time, the Convention and the Protocol allow for revisions to the standards of local law, especially with regard to data protection rights.

In addition, the draft bill covers administrative assistance, e.g. exchange of information, including simultaneous tax examinations and participation in tax examinations abroad. Article 6 of the Convention allows an automatic exchange of information based on predefined categories which would be determined by mutual agreement between two or more parties. The Competent Authority Agreement, as part of the OECD Common Reporting Standard Initiative, could be such mutual agreement. However, it is yet unclear how this potential new law will interact with other treaties, for example with the FATCA Intergovernmental Agreements, or the EU Directive 2014/107/EU regarding mandatory automatic exchange of information in the field of taxation from 9 December 2014.

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