Reportable Cross Border Arrangements

Published / Last Updated on 12/06/2018

The EU Directive on Administrative Co-Operation – must be reported by any intermediary that designs, markets, organises, make available “Reportable Cross Border Arrangements” to local tax authorities every quarter (HMRC for UK) who then exchange information overseas authorities.

  • If you have a UK/EU Intermediary they must report the following Reportable Cross Border Arrangements to the local tax authority.
  • If your intermediary is non-UK/EU then you, the tax payer must report any Reportable Cross Border Arrangements.

What is reportable?

Any reportable cross-border arrangements that affect are affect direct taxes usually have the following traits or hallmarks:

Generic Hallmarks

  1. Confidentially to secure a tax advantage
  2. Intermediary fee linked to tax advantage
  3. Packaged product that does this

Specific Hallmarks – main benefits

  1. Contrived steps to invest in a loss making company to reduce tax
  2. Arrangement that coverts income into capital, gifts or other revenue which are then taxed a lower rates
  3. Circular transactions resulting in recycling/round tripping funds through interposed entities to technically cancel/offset each other

Specific Hallmarks – cross border

Investments that involve deductible cross border payments if

  1. Not resident for tax purposes in any tax jurisdiction
  2. Resident in a jurisdiction for tax but the other investment jurisdiction does not tax such investment
  3. Resident in one jurisdiction for tax but invests in other jurisdiction that has been assess OECD as non-cooperative (Organisation for Economic Co-operation and Development)
  4. Invests in another jurisdiction that is not then taxable in jurisdiction where resident
  5. Deductions and double taxation where expenses are allowed in both countries

Specific Hallmarks – automatic exchange of information and beneficial ownership

  1. Investment in other jurisdictions that do not have exchange of information procedures
  2. Investment in other jurisdictions that are non-transparent legal or beneficial ownership

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