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12.12.2012 Official
Journal
of
the
European
Union L
338/37
RECOMMENDATIONS
COMMISSION RECOMMENDATION
of 6 December 2012
regarding measures intended to encourage third countries to apply minimum standards of good
governance in tax matters
(2012/771/EU)
THE EUROPEAN COMMISSION,
2011/16/EU of 15 February 2011 on administrative
cooperation in the field of taxation and repealing
Directive 77/799/EEC
( 1 ). Moreover, there is a
consensus in the Union, expressed in the Code of
Having regard to the Treaty on the Functioning of the European
conduct for business taxation referred to in Annex 1
Union, and in particular Article 292 thereof,
to Conclusions of the Ecofin Council meeting on
1 December 1997 concerning taxation policy ( 2 ), that
harmful tax measures are not acceptable, which makes
Whereas:
it difficult for Member States to maintain or introduce
such measures. In addition, a number of measures poten
tially falling under the Code of conduct are subject to
scrutiny under the rules on State aid set out in the Treaty
(1) In
an
international
context,
the
existence
of
differing
tax
on the Functioning of the European Union (TFEU).
legislation is generally accepted as a consequence of fiscal
sovereignty. In this context, some, typically small, third
countries with limited financial needs have opted for a
low level of income tax which applies generally, both to
(5) In
its
relations
with
third
countries
the
Union
has
sought
individuals and to companies, or even no income tax at
to convince them to subscribe to the Union principles
all. Such tax policies are not necessarily undesirable as
concerning transparency and exchange of information
such, as long as the State participates in international
(similar to the broadly accepted international standards
cooperation in order to allow other States to enforce
for transparency and exchange of information) and the
their tax policy.
abolition of harmful tax measures as described in
Commission Communication on promoting good
governance in tax matters
( 3 ) and Commission
Communication on tax and development cooperation
(2) However,
policies
which
entail
a
low
level
of
income
tax
or none at all often go along with a lack of transparency
with developing countries on promoting good
or exchange of information with other States. The States
governance in tax matters ( 4 ).
concerned attract investment by offering non-residents a
shelter for some types of mobile income or capital and
allowing them to conceal the existence of such income
or capital from the tax administration of their State of
(6) Member
States
whose
tax
base
has
been
negatively
residence.
affected by a lack of transparency or by harmful tax

measures on the part of third countries have taken
steps to remedy that situation. However, taxpayers
respond to such measures by routing business or trans
(3) Various
initiatives
have
been
taken
in
international
actions through another jurisdiction with a lower level of
forums, such as the Organisation for Economic
protection. This risk is particularly relevant within the
Cooperation and Development or G20, to address these
Union given the freedom of economic operators to do
concerns. Moreover, the Global Forum on Transparency
business anywhere in the Union. Consequently, the level
and Exchange of Information for Tax Purposes (here
of protection available within the Union against such
inafter ‘the Global Forum’) has developed standards of
erosion of the tax base tends to correspond to the
transparency and exchange of information for tax
lowest level of protection offered by any Member State.
purposes. In 2009, the Global Forum agreed to review
the implementation of those standards. It has engaged in
a comprehensive peer review process and many tradi
tional low tax jurisdictions have agreed to conclude
(7) The
distortions
that
this
situation
brings
about
within
the
bilateral agreements on exchange of information on tax
Union can lead to artificial capital flows and movements
matters.
of taxpayers within the internal market and thus harm its
( 1 ) OJ L 64, 11.3.2011, p. 1.
( 2 ) OJ C 2, 6.1.1998, p. 1.
(4) Within
the
Union,
issues
of
transparency
and
exchange ( 3 ) COM(2009) 201 final of 28 April 2009.
of information are addressed by Council Directive
( 4 ) COM(2010) 163 final of 21 April 2010.

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L 338/38
EN
Official Journal of the European Union
12.12.2012
proper functioning, as well as erode Member States’ tax
standards of good governance in tax matters. It also lists a
bases. Such distortions should be remedied through an
series of actions that Member States may take in relation to
approach shared by all Member States.
third countries that do not meet those standards and in
favour of third countries that do comply with them.
(8) Therefore,
it
is
necessary
to
clearly
spell
out
minimum
standards of good governance in tax matters, both in
This Recommendation concerns income taxation.
regard to transparency and exchange of information
and in regard to harmful tax measures, and a number
of measures to be taken vis-à-vis third countries, with a
2. Definitions
view to encouraging those countries to comply with
those standards.
For the purpose of this Recommendation, the following
definitions apply:
(9) In
regard
to
transparency
and
exchange
of
information,
an internationally recognised standard has been set out in
(a) ‘income tax’ means any tax on income, whether levied
the Terms of Reference agreed by the Global Forum in
from individuals or from legal entities and irrespective
2009. Those terms should therefore form the basis of
of the manner in which it is levied, imposed on behalf
this Recommendation. As far as harmful tax measures are
of a State, its political subdivisions or its local auth
concerned, the Code of conduct for business taxation has
orities;
proven to be a pertinent reference within the Union.
Member States have committed themselves to
promoting principles of that Code in third countries. It
(b) ‘third country’ means any jurisdiction that is not a
is therefore appropriate to refer to the criteria of that
Member State;
Code for the purposes of this Recommendation. In this
regard, it is also appropriate to refer to the work of the
Code of Conduct Group (business taxation), set up within
(c) ‘national blacklist’ means a list adopted by a Member
the framework of the Council to asses the tax measures
State which identifies other jurisdictions in regard to
that may fall within scope of the Code of conduct for
whom the Member State applies predefined tax
business taxation ( 1 ). The cases assessed by this group can
measures or tax policies.
be of assistance when it comes to examine whether a
given measure is to be considered as harmful.
3. Minimum
standards
of
good
governance
in
tax
matters
(10) This
Recommendation
should
indicate
a
set
of
measures
A third country only complies with minimum standards of
to be applied in relation to third countries that do not
good governance in tax matters where:
meet the minimum standards of good governance in tax
matters. By applying these measures together, Member
States would significantly increase the overall effec
(a) it has adopted legal, regulatory and administrative
tiveness of the measures taken by each of them. Losses
measures intended to comply with the standards of
of tax revenues could therefore be reduced, along with
transparency and exchange of information set out in
administrative costs for tax administrations and the
the Annex, and effectively applies those measures;
compliance burden on taxpayers.
(b) it does not operate harmful tax measures in the area of
(11) In order to promote the application of the minimum
standards of good governance in tax matters, it is also
business taxation.
necessary to indicate positive measures to encourage
third countries that meet these standards or that are
Tax measures which provide for a significantly lower
committed to meeting them but need assistance to
effective level of taxation, including zero taxation, than
achieve this.
those levels which generally apply in the third country in
question are to be regarded as potentially harmful. Such a
(12) The
measures
indicated
in
this
Recommendation
and
level of taxation may operate by virtue of the nominal tax
applied by Member States must be compatible with
rate, the tax base or any other relevant factor.
Union law, in particular with the fundamental freedoms
enshrined in the TFEU,
When assessing whether such measures are harmful,
account should be taken of inter alia:
HAS ADOPTED THIS RECOMMENDATION:
(a) whether advantages are accorded only to non-residents
1. Subject
matter
or in respect of transactions carried out with non-resi
dents; or
This Recommendation provides criteria making it possible
to identify third countries which do not meet minimum
(b) whether advantages are ring-fenced from the domestic
( 1 ) OJ C 99, 1.4.1998, p. 1.
market, so they do not affect the national tax base; or

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EN
12.12.2012 Official
Journal
of
the
European
Union L
338/39
(c) whether advantages are granted even without any real
5.3. Member States should consider initiating bilateral negoti
economic activity and substantial economic presence
ations for the conclusion of double tax conventions with
within the third country offering such tax advantages;
third countries which comply with minimum standards set
or
out in point 3.
(d) whether the rules for profit determination in respect of
6. Measures
in
favour
of
third
countries
which
are
committed
activities within a multinational group of companies
to comply with minimum standards set out in point 3.
departs from internationally accepted principles,
notably the rules agreed upon within the Organisation
6.1. Member States should consider offering closer cooperation
for Economic Cooperation and Development; or
and assistance to third countries, especially developing
ones, which are committed to complying with minimum
standards set out in point 3, in order to assist those third
(e) whether the tax measures lack transparency, including
countries in fighting effectively against tax evasion and
where legal provisions are relaxed at administrative
aggressive tax planning. To this end, they could second
level in a non-transparent way.
tax experts to such countries for a limited period of time.
When applying those criteria, Member States should take
account of the conclusions reached in the Code of Conduct
When judging third countries’ commitment to complying
Group (business taxation) in regard to tax measures it has
with those minimum standards, Member States should take
assessed as harmful.
into account all concrete indications to this effect, in
particular steps towards compliance already taken by the
third country concerned.
4. Measures
directed
against
third
countries
not
complying
with minimum standards set out in point 3
6.2. As long as a third country benefits from assistance in
4.1. Member States should publish blacklists of third countries
accordance with point 6.1 and accomplishes the expected
not complying with minimum standards set out in point 3,
progress towards compliance with the said minimum stan
with a view to the application of point 4.3. Those
dards, Member States should abstain from applying the
blacklists should make reference to this Recommendation.
measures referred to in point 4, except for the
renegotiation of double tax conventions.
4.2. Member States that have adopted national blacklists should
include in such lists third countries not complying with
7. Follow-up
minimum standards set out in point 3.
Member States should inform the Commission on the
measures taken in order to comply with the present
4.3. Each Member State having concluded a double taxation
Recommendation, as well as any changes made to such
convention with a third country not complying with
measures.
minimum standards as set out in point 3 should, as
most appropriate with a view to improve compliance by
that third country with these standards, either seek to
The Commission will publish a report on the application
renegotiate the convention, suspend or terminate the
this Recommendation within three years after its adoption.
convention.
8. Addressees
5. Measures
in favour
of third countries
complying with
minimum standards set out in point 3
This Recommendation is addressed to the Member States.
5.1. Member States should remove third countries which
comply with minimum standards set out in point 3
from the blacklists referred to in point 4.1.
Done at Brussels, 6 December 2012.
5.2. Member States should consider removing third countries
For the Commission
which comply with minimum standards set out in point 3
from any existing national blacklists referred to in
Algirdas EMETA
point 4.2.
Member of the Commission

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L 338/40
EN
Official Journal of the European Union
12.12.2012
ANNEX
STANDARDS OF TRANSPARENCY AND EXCHANGE OF INFORMATION
A. AVAILABILITY
OF
INFORMATION
A.1. The third country concerned ensures that ownership and identity information for all relevant entities and
arrangements is available to its competent authorities.
A.2. The third country concerned ensures that reliable accounting records are kept for all relevant entities and arrange
ments.
A.3. Banking information is available for all account holders.
B. ACCESS
TO
INFORMATION
B.1. Competent authorities of the third country concerned have the power to obtain and provide information that is the
subject of a request under an agreement on exchange of information, from any person within their territorial
jurisdiction who is in possession or control of such information.
B.2. The rights and safeguards that apply to persons in the requested third country concerned are compatible with
effective exchange of information.
C. EXCHANGING
INFORMATION
C.1. Mechanisms for the exchange of information with Member States are such that this exchange is carried out in an
effective manner.
C.2. The network of information exchange mechanisms of the third country concerned covers all Member States.
C.3. The mechanisms for exchange of information of the third country concerned contain adequate provisions to ensure
the confidentiality of information received from Member States.
C.4. The exchange of information mechanisms of the third country concerned respect the rights and safeguards of
taxpayers and third parties.
C.5. The third country concerned provides information under its network of agreements with Member States in a timely
manner.

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Document Outline

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