PURPOSE: to conclude, on behalf of the European Union, the Amending Protocol to the Agreement between the European Community and San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments.

NON-LEGISLATIVE ACT: Council Decision (EU) 2016/828 on the conclusion, on behalf of the Union, of the Amending Protocol to the Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments.

CONTENT: by this Decision, the Council approved, on behalf of the European Union, the Amending Protocol to the Agreement between the European Community and San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments is hereby approved on behalf of the Union.

The Amending Protocol to the Agreement between the European Community and San Marino was signed on 8 December 2015, subject to its conclusion at a later date.

The text of the Protocol enables the Agreement to be adapted to the latest developments at international level concerning automatic exchange of information, namely, with the Global Standard for automatic exchange of financial account information in tax matters developed by the Organisation for Economic Cooperation and Development (OECD).

The text of the Agreement, as amended by this Amending Protocol, is to be the legal basis for implementing the Global Standard in the relations between the Union and San Marino.

ENTRY INTO FORCE: 21.4.2016.

The European Parliament adopted by 602 votes to 22, with 18 abstentions, a legislative resolution on the proposal for a Council decision on the conclusion, on behalf of the European Union, of the Amending Protocol to the Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments.

Parliament approved the conclusion of the amending protocol to the agreement.

To recall, the European Union and San Marino signed an agreement on 8 December 2015 on the automatic exchange of financial account information, aimed at improving international tax cooperation and compliance.

Under the new agreement, the EU and San Marino will automatically exchange information on the financial accounts of each other's residents, starting in 2017. The agreement aims to ensure that San Marino applies strengthened measures that are equivalent to the EU legal framework and that comply with the procedures for automatic exchange of financial account information promoted by the 2014 OECD Global standard.

The Committee on Economic and Monetary Affairs adopted the report by Cora van NIEUWENHUIZEN (ADLE, NL) on the proposal for a Council decision on the conclusion, on behalf of the European Union, of the Amending Protocol to the Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments.

The committee recommended the European Parliament to approve the conclusion of the amending protocol to the agreement .

To recall, the European Union and San Marino signed an agreement on 8 December 2015 on the automatic exchange of financial account information, aimed at improving international tax cooperation and compliance.

Under the new agreement, the EU and San Marino will automatically exchange information on the financial accounts of each other's residents, starting in 2017. The aim is to address situations where a taxpayer seeks to hide capital representing income or assets for which taxes have not been paid.

The agreement aims at ensuring that San Marino applies strengthened measures that are equivalent to the EU legal framework and that comply with the procedures for automatic exchange of financial account information promoted by the 2014 OECD Global standard. It shall have a provisional entry into application on 1 January 2016, pending the completion of their respective internal procedures for its formal entry into force. The rapporteur strongly urged that the agreement is concluded and ratified as soon as possible thereafter in order to keep the transitional phase as short as possible.

PURPOSE: to conclude, on behalf of the European Union, the Amending Protocol to the Agreement between the European Community and San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

PROPOSED ACT: Council Decision.

ROLEOF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion.

BACKGROUND: following the adoption of Council Directive 2003/48/EC (the Savings Directive), and in order to preserve the level playing field of economic operators, the EU signed an Agreement with San Marino providing for measures equivalent to those laid down in the Directive.

The importance of automatic exchange of information as a means to combat cross-border tax fraud and tax evasion has also been recognised at the international level. The Organisation for Economic Cooperation and Development (OECD) was mandated by the G20 to develop a single global standard for automatic exchange of financial account information (Global Standard). The OECD Council released the Global Standard in July 2014.

Following the adoption of a proposal to update the Savings Directive, the Commission adopted on 17 June 2011 a recommendation for a mandate to initiate negotiations with several countries, including San Marino, in order to upgrade the EU’s Agreements with those countries in line with international developments and to ensure that those countries continue to apply measures equivalent to those in the EU. On 14 May 2013, the Council reached an agreement on the Negotiating Mandate.

On the basis of a proposal presented by the Commission in June 2013, the Council adopted Directive 2014/107/EU amending Directive 2011/16/EU and extending the mandatory automatic exchange of information between EU tax authorities to a full range of financial items in accordance with the Global Standard.

As Directive 2014/107/EU is generally broader in scope than Directive 2003/48/EC and provides that in cases of overlap of scope, Directive 2014/107/EU prevails, the Commission adopted a proposal to repeal Directive 2003/48/EC.

The Commission considers it crucial to ensure that the amendment of the existing

Savings Agreement with San Marino is in line with EU and international developments. This will be the legal basis for implementing the OCDE Global Standard on automatic exchange of information between San Marino and the EU.

CONTENT: with this proposal, the Council is called upon to approve, on behalf of the EU, the Protocol amending the Agreement between the European Community and San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments. The Amending Protocol implements the OECD Global Standard between EU Member States and San Marino . It contains a new set of provisions comprising 10 Articles, an Annex I that reflects the OECD Common Reporting Standard which is part of the Global Standard, an Annex II that reflects important parts of the OECD Commentaries to the Global Standard, an Annex III that reflects the additional data protection safeguards to be put in place as regards data collection and exchanges under the Agreement, and an Annex IV that lists the Competent Authorities of San Marino and of each Member State.

The new Articles reflect the articles of the OECD Model Competent Authority agreement for the implementation of the Global Standard . It includes, inter alia:

a full set of provisions on exchange of information upon request that follows the latest text of the OECD Model Tax Convention; a more detailed set of provisions on data protection; provisions on amendments to the Agreement, including a quick mechanism for provisional application by one of the Contracting Parties of amendments to the Global Standard, on the condition of consent by the other Party

The Amending Protocol includes provisions on the entry into force and application. First exchanges in 2017 for information collected in 2016 (with the exception of Austria, which will undertake such exchanges one year later).

The Amending Protocol also deals with issues on the transition from the existing Agreement to the amended Agreement, with regard to requests for information, credits available to beneficial owners for withholding tax, final payments of withholding tax by San Marino to Member States and final exchanges of information under the voluntary disclosure mechanism.