Recovering Taxes and Duties

Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures

SUMMARY

Background

Arrangements for mutual recovery assistance were first set out back in 1976 in Council Directive 1976/308/EEC (as codified by Council Directive 2008/55/EC) on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures. This instrument, however, has proved insufficient to meet the requirements of the internal market as it has evolved over the last 30 years. At the same time mobility of persons and capital is increasing, but national tax authorities still cannot forcefully recover taxes out with their own territory, meaning fraudsters can still take advantage of these limitations by organizing insolvencies in other countries.

A legal framework was required to make provisions for an improved recovery assistance system within the internal market which will guarantee swift, efficient and uniform recovery assistance procedures among Member States.

The Scope of the New Directive

The new Directive does not apply to compulsory social security contributions, but does apply to:

a) All taxes and duties of any kind

b) Refunds, interventions and other measures forming part of the system of total or partial financing of the European Agriculture Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD);

c) Levies and other duties provided for under the common organisation of the market for the sugar sector.

Improving Tax Collection Efficiency

The new Directive was designed with a view to establishing a more efficient assistance system involving rules that are more easily applied. Each national authority will offer ‘mutual assistance’ which can take different forms; ranging from a mere supply of information to actual assistance in recovery.  This mutual assistance principle will not be mandatory for claims more than 5 years old nor for claims below 1,500 Euros.

The main features of the new Directive are as follows:

1) Establishment of a central office in each country (Article 4)

Each country has identified a competent authority for which mutual assistance is to be dealt with and the list of authorities has been published in the Official Journal (in the UK this will most likely be through HMRC). The competent authority shall designate a central liaison office which shall have principal responsibility for contacts with other countries in the field of mutual assistance covered by this Directive. The requested authority shall inform the applicant authority of the grounds for refusing a request for information.

2) Request for information (Article 5)

At the request of the applicant authority, the requested authority shall provide any information which is foreseeably relevant to the applicant authority in the recovery of its claims. The requested authority shall not be obliged to supply information:

a) which it would not be able to obtain for the purpose of recovering similar claims arising in the requested Member State;

b) which would disclose any commercial, industrial or professional secrets;

c) the disclosure of which would be liable to prejudice the security of or be contrary to the public policy of the requested Member State.

3) Exchange of information Without Prior Request(Article 6)

Where a refund of taxes or duties (excluding VAT) relates to a person established or resident in another country, the authority from which the refund is to be made may inform the host authority of the upcoming refund.

4) Direct Participation in Administrative Enquiries (Article 7)

By agreement officials authorised by the applicant authority, with a view to promoting mutual assistance provided for in the Directive, may:

a) Be present in the offices where the administrative authorities of the requested Member State carry out their duties;

b) Be present during administrative enquiries carried out in the territory of the requested Member State;

c) Assist the competent officials of the requested Member State during court proceedings in that Member State.

5) Request for Notification of Certain Documents Relating to Claims (Article 8)

at the request of the applicant authority, the requested authority shall notify to the addressee all documents, including those of a judicial nature, which emanate from the applicant Member State and which relate to a claim or to its recovery. The request for notification shall be accompanied by a standard form containing certain minimum information.

6) Recovery or Precautionary Measures (Preamble)

The Directive provides for one uniform instrument to be used for enforcement measures, as well as the adoption of a uniform standard form for notification of instruments and decisions relating to the claim. This should resolve the problems of recognition and translation of instruments emanating from another Member State.

7) Disputes (Article 14)

The relevant authority in the country where the dispute is made shall have competence over disputes and national rules of that country will apply, but if a claim is contested it will be up to the relevant authority of where the disputed party resides to inform them of the procedure.

IMPLEMENTATION

The new Directive entered into force on 20 April 2010 but each country will have till 31 December 2011 to implement the terms which will then apply from 1 January 2012.