The legal transfer price reporting due by the international businesses is changing in a growing number of countries significantly. Automatic exchange of information between tax administrations and cooperation are set up accordingly (1). This should not mask the similar trend that has developed at the level of the European Union in the VAT field.

The wish of the European Commission to create tools for exchanging VAT information between Member States is not new. Indeed, the directive of 6 December 1979 (2) provides that “In accordance with the provisions of this Directive the competent authorities of the Member States shall exchange any information that may enable them to effect a correct assessment of taxes on income and capital and also of value added tax”.

This led thereafter to the introduction of exchange of information on request or automatic and the implementation of a network for the swift exchange of targeted information called “Eurofisc” (3)

In its communication of 7 April 2016 to the European parliament (4), the Commission accelerated, underlining the necessity among urgent measures to act beyond the mere exchange of information between Member States. The idea is to use new cooperation models “of sharing and jointly analyzing information and acting together”. The program is ambitious as the aim of this is also to improve cooperation between tax administrations and Customs as well as with international organizations and non-EU countries

How will this political will be translated into practice? The legal basis does exist and the technical tools as well even if they can be further improved.  Are  the administrations ready to change their practices to play cooperation and trust. This will take time but there is an emerging trend in this sense.

Future events in this field  at both European Union and OECD level should call for attention of the people liable for managing VAT within the companies. No doubt that the improvement of the information available to the administrations  in term of level and quality as well as the joint actions will lead to more and more demanding VAT audits that the businesses will have to anticipate and run efficiently.


(1) The OECD Base Erosion and Profit Shifting (BEPS) Action Plan a part of which is dedicated to Transfer Pricing Documentation and Country by Country reporting (Action 13)

(2) Council Directive 79/1070/EEC of 6 December 1979 amending Directive 77/799/EEC concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation

(3) Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax.

(4) Communication from the Commission to the European parliament, the Council and the European Economic and Social Committee on an action plan on VAT. Towards a single EU VAT area – Time to decide.