Guide

Taxation law in Europe

Co-operation on taxation between member states in Europe

The current basis for tax co-operation and control was set out in Council Directive 77/799/EEC. This law requires the tax authorities of member states to exchange tax information on request as quickly as possible. It also requires them to agree on the automatic exchange of information whether requested or not.

The Directive defines the relevant taxes as:

  • Income Tax
  • Corporation Tax
  • Capital Gains Tax
  • Petroleum Revenue Tax
  • Development Land Tax

The law was amended by Council Directive 2004/56/EC, which aimed to increase co-operation concerning:

  • the exchange of information about direct taxation, including the investigation of suspected fraud
  • excise duties
  • the taxation of insurance premiums

Council Directive 77/799/EC requires Member states to co-operate on indirect tax by exchanging information enabling them to raise the correct tax on cross-border trades. A series of later Directives provided a framework that requires tax authorities to co-operate on:

  • VAT excise duty on alcohol and alcoholic beverages
  • excise duty on manufactured tobacco

More recently, the Commission's efforts have been focused on amending the law to deal with increases in tax fraud, smuggling, and counterfeiting. Directive 2004/56/EC speeds up the flow of information between member states, and allows them to co-ordinate investigation of suspected fraud as well as investigate on each others' behalf.

VAT Information Exchange System

The VAT Information Exchange System (VIES) is an automated system allowing businesses to check any VAT registration number in the European Union (EU). It allows:

  • anyone to confirm an EU trader's VAT number
  • tax authorities to monitor trade and detect irregularities

VIES VAT number validation.