On 19 February 2024, the OECD Council allowed an update to the Commentary 26 of the OECD Model, which relates to the exchange of information, more specifically to the question of administrative assistance.
As a reminder, the exchange of information process was set up in 2009 in order to improve the rules on tax transparency. The aim of the exchange of information is to prevent tax fraud and tax avoidance. However, Article 26 of the OECD Model was considered incomplete regarding the information obtained through administrative assistance.
As a result of the update, it has been specified that information received under administrative assistance may be used in tax matters concerning persons other than those in respect of whom the information was originally received. The requesting State will not be obliged to inform the requested State of such use, or to request its authorization.
In addition, the update provides an interpretative guidance on confidentiality and more precisely regarding the access of taxpayers to information exchanged when such information has a bearing on their tax situation and regarding reflective non-taxpayer specific information, including statistical data, about or generated on the basis of exchanged information.
For example, the update takes the following forms:
“(…) The confidentiality rules also apply to reflective non-taxpayer specific information (…) However, such reflective non-taxpayer specific information may be disclosed to third parties if the information does not, directly or indirectly, reveal the identity of one or more taxpayers and the sending and receiving States have consulted with each other and it is concluded that the disclosure and use of such information would not impair tax administration in either the sending or the receiving State. (…).
As an example, in the context of an exchange of information that contains information with respect to multiple taxpayers, the principle (…) means that a taxpayer is a “person concerned” only to the extent that the information has a bearing on the outcome of a tax matter concerning that particular taxpayer (…)
(…) Such use is not limited to the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1 in respect of the person or persons for which the information was received, but also includes the use for such purposes in respect of any other person. The receiving Contracting State is not required to inform or to request authorisation from the sending Contracting State regarding such use (…)”.
This update of Article 26 of the Model Convention is particularly welcome, as it provides further clarification of the exchange of information, especially regarding administrative assistance.
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