Cross-border tax collection

Abstract

According to the Commission: "International tax evasion and avoidance unquestionably have implications for the Community and increasingly demand a Community approach, as economic and financial integration advances. It is obvious that when taxpayers escape their tax obligations distortions of competition and capital movements can arise at the Community level." Provisions for mutual cooperation and assistance between national tax authorities have been a regular feature of bilateral double tax treaties, at least since the adoption of the OECD Model Treaty in 1963. Useful as these provisions have been, they are not sufficiently extensive to deal with the types of situations that arise in an integrated market such as the European Community, where a multilateral approach seems more appropriate. Moreover, the network of bilateral treaties among Member States is still not complete. As of 1990, Greece had no treaty with Denmark, Ireland, Luxembourg, Portugal or Spain; Portugal had no treaty with Ireland, Luxembourg or the Netherlands; and Ireland had no treaty with Spain. One of the situations which most double taxation treaties do not cater for is that of cross-border tax collection, which involves the collection of one State's taxes in another State, from a person who could be a resident of either one of the States involved in the issue or not a resident of either one of them. In the following Chapters I shall be reviewing the measures available to States, both within the Community and outside it, to aid them in the collection of their taxes extraterritorially.