The spontaneous exchange of information – Part 1: What is it about?

As of January 1, 2017, the legal basis has come into effect, which enables the spontaneous exchange of information. By introducing a global standard for handling the spontaneous exchange of tax-relevant information, the fight against cross-border tax evasion is to be further advanced. Findea explains in a four-part series of articles what exactly this means. In this first part, it is explained how this spontaneous exchange of information came about and what the objectives behind it are.

How did the spontaneous exchange of information originate?

The spontaneous exchange of information can be traced back to the financial crisis of 2008. It shook the world and posed great challenges for many countries. More tax revenue was needed to stabilize the ailing state budgets. In this context, multinational companies, or their tax practices, came into the center of discussion. Many of these companies used country-specific tax law peculiarities to keep their tax burden as low as possible. Under the leadership of the OECD and the G20, global efforts began to put an end to this practice. This led to the creation of spontaneous information exchange.

What are the objectives of the spontaneous information exchange?

Since 2008, global efforts to combat tax evasion and fraud have steadily increased. Transparency was particularly used as a means to this end. Greater transparency in tax matters is intended to make it impossible to hide money from the tax authorities. The spontaneous exchange of information also relies on transparency. It involves the exchange of tax rulings concerning multinational companies among the contracting states without a prior request for administrative assistance.

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