Cooperation with Other Jurisdictions on Tax Matters

L.N. 342 of 2019

INCOME TAX ACT

(CAP. 123)

INCOME TAX MANAGEMENT ACT

(CAP. 372)

Cooperation with Other Jurisdictions on Tax Matters

(Amendment) Regulations, 2019

IN EXERCISE of the powers conferred by articles 76 and 96 of

the Income Tax Act and article 10A of the Income Tax Management

Act, the Minister for Finance has made the following regulations:-

The title of these regulations is the Cooperation with Other

Jurisdictions on Tax Matters (Amendment) Regulations, 2019, and

these regulations shall be read and construed as one with the

Cooperation with Other Jurisdictions on Tax Matters Regulations,

hereinafter referred to as "the principal regulations".

In regulation 2 of the principal regulations, the definition

"EU Administrative Cooperation Directive" shall be substituted by

the following

" "EU Administrative Cooperation Directive" means

Council Directive 2011/16/EU of 15 February 2011 on

administrative cooperation in the field of taxation and repealing

Directive 77/799/EEC as amended by EU Council Directives

2014/107/EU, 2015/2376/EU, 2016/881/EU and 2018/822/

EU;".

Regulation 5 of the principal regulations shall be amended

as follows

(a)

sub-regulation (6) thereof shall be substituted by the

following

"(6) In order for the Commissioner to

access information, notice shall be served on a

person either personally or by being sent by

registered post to the last known business or

private address, or through electronic

communication

as

prescribed

through

guidelines published on the website of the

Commissioner for Revenue under the

provisions of article 96(2) of the Income Tax

Act."; and

(b) sub-regulation (7) thereof shall be substituted by the

following

"(7) For

the

purpose

of

the

implementation and enforcement of the laws

giving effect to the EU Administrative

Cooperation Directive and to ensure the

functioning of the administrative cooperation it

establishes, the Commissioner for Revenue

shall have access to the mechanisms,

procedures, documents and information

referred to in regulations 7 and 13 of the

Prevention of Money Laundering and Funding

of Terrorism Regulations, the Companies Act

(Register of Beneficial Owners) Regulations,

and the Trusts and Trustees Act (Register of

Beneficial Owners) Regulations.".

Regulation 6 of the principal regulations shall be Substitutes

regulation 6 of

substituted by the following

the principal

regulations.

"6. (1) Where there is failure to comply with a request

for information made by the Commissioner in relation to a

request made by a requesting authority under the provisions of

an arrangement, the requested person shall be liable to a penalty

(a) one thousand euro (€1,000) where the

information is submitted late, that is not within the time-

limit specified within the Commissioner’s request; and

(b) fifty euro (€50) for every day during which

the default existed

Provided that the penalty under this

paragraph shall not exceed in total nineteen thousand, two

hundred and fifty euro (€19,250).

(2) Notwithstanding the provisions of sub-regulation

(1), where it is shown that the information is not provided

because such information has not been kept or properly updated

as required under these regulations, the person who had the duty

to keep or update such information shall be liable to a penalty of

nineteen thousand, two hundred and fifty euro (€19,250).

(3) Notwithstanding any action that may be taken in

accordance with the provisions of sub-regulations (1) or (2)

where -

(a) failure to comply with a request made by the

Commissioner persists for more than six months from the

date of the original request; or

(b) the requested party refuses to be served with

the notice either personally or through registered mail as

contemplated in regulation 5(6) and the requested party is

the proper addressee of the request; or

(c) the information submitted by the requested

party is found to be incorrect in such a way that it is

misleading, deceitful or false,

the requested party shall be guilty of an offence and shall on

conviction be liable to a fine (multa) of not less than five

thousand euro (€5,000) and not more than thirty thousand euro

(€30,000), or to imprisonment for a period of not exceeding two

years, or to both such fine (multa) and imprisonment.".

Regulation 13 of the principal regulations shall be

amended as follows

(a)

sub-regulations (7), (8), (9) and (10) thereof shall be

re-numbered as sub-regulations (8), (9), (10) and (11)

respectively;

(b) immediately after sub-regulation (6) thereof there

shall be added the following new sub-regulation

" Automatic

(7) (a) Intermediaries shall file information

exchange of

that is within their knowledge, possession

information

or control on reportable cross-border

on reportable

cross-border

arrangements with the Commissioner

arrangements.

within thirty (30) days beginning

(i)

on the day after the reportable

cross-border arrangement is made

available for implementation; or

(ii) on the day after the reportable

cross-border arrangement is ready for

implementation; or

(iii) when the first step in the

implementation of the reportable cross-

border arrangement has been made,

whichever occurs first

Provided that intermediaries referred to

in paragraph (b) of the definition

"intermediary" shall also be required to file

information within thirty (30) days

beginning on the day after they provided,

directly or by means of other persons, aid,

assistance or advice.

(b) In the case of marketable

arrangements, a periodic report shall be

made by the intermediary every three (3)

months, providing an update which

contains new reportable information as

referred to in sub-paragraphs (i), (iv), (vii)

and (viii) of paragraph (o) that has become

available since the last report was filed.

(c) An intermediary is liable to file

information on reportable cross-border

arrangements with the Commissioner for

Revenue in the following instances, taken

in the following order

(i)

the intermediary is resident in

Malta for tax purposes;

(ii) the intermediary is not

resident for tax purposes in any EU

Member State (including Malta) but has a

permanent establishment in Malta

through which the services with respect

to the arrangement are provided;

(iii) the

intermediary

is

incorporated in Malta or is governed by

the laws of Malta and the provisions of

sub-paragraphs (i) and (ii) do not apply;

(iv) the intermediary is registered

with a professional association related to

legal, taxation or consultancy services

that is established in Malta and sub-

paragraphs (i), (ii) and (iii) do not apply.

(d) Where information is to be filed

with the Commissioner and the same

information is to be filed with any other

competent authority of an EU Member

State, the intermediary shall be exempt

from filing the information in Malta if it

has proof that the same information has

been filed in another EU Member State

Provided that the proof may be in such

form as the Commissioner may determine.

(e) An intermediary whose profession is

referred to in article 3 of the Professional

Secrecy Act has the right to a waiver from

filing information on a reportable cross-

border arrangement where the reporting of

such information would constitute an

offence under article 257 of the Criminal

Code. In such circumstances, the

intermediary must notify, without delay

and in any event no later than seven

working days from the relevant date

established by paragraph (a), any other

intermediary or, if there is no such

intermediary, the relevant taxpayer of their

reporting obligations under sub-regulation

(6)

Provided that intermediaries may only

be entitled to a waiver under this paragraph

to the extent that they operate within the

limits of the relevant national laws that

define their professions

Provided further that where an

intermediary has waived such reporting

obligation, the intermediary shall provide

an annual update to the Commissioner,

consisting of a list of the reportable cross-

border arrangements where the reporting

obligation has been waived on to another

intermediary or the relevant taxpayer. Such

information shall be in such form as the

Commissioner may determine.

(f) Where there is no intermediary or

the intermediary notifies the relevant

taxpayer or another intermediary of the

application of a waiver under paragraph

(e), the obligation to file information on a

reportable cross-border arrangement shall

lie with the other notified intermediary, or,

if there is no such intermediary, with the

relevant taxpayer.

(g) The relevant taxpayer with whom

the reporting obligation lies shall file the

information with the Commissioner within

thirty (30) days, beginning on

(i)

the day after the reportable

cross-border arrangement is made

available for implementation to that

relevant taxpayer, or

(ii) when it is ready for

implementation by the relevant taxpayer,

or

(iii) when the first step in its

implementation has been made in

relation to the relevant taxpayer,

whichever occurs first

(h) A relevant taxpayer has an

obligation to file information on the

reportable cross-border arrangement with

the Commissioner for Revenue, in the

following instances, taken in the following

order

(i)

the relevant taxpayer is

resident in Malta for tax purposes;

(ii) the relevant taxpayer is not

resident for tax purposes in any EU

Member State (including Malta) but has a

permanent establishment in Malta

benefiting from the arrangement;

(iii) the relevant taxpayer receives

income or generates profits in Malta,

although the relevant taxpayer is not

resident for tax purposes and has no

permanent establishment in any EU

Member State and the provisions of sub-

paragraphs (i) and (ii) do not apply;

(iv) the relevant taxpayer carries

on an activity in Malta, although the

relevant taxpayer is not resident for tax

purposes and has no permanent

establishment in any other EU Member

State and sub-paragraphs (i), (ii) and (iii)

do not apply.

(i) Where, pursuant to paragraph (g),

there is a multiple reporting obligation, the

relevant taxpayer shall be exempt from

filing the information if it has proof that

the same information has been filed in

another EU Member State

Provided that the proof may be in such

form as the Commissioner may determine.

(j) Where there is more than one

intermediary, the obligation to file

information on the reportable cross-border

arrangement

shall

lie

with

all

intermediaries involved in the same

reportable cross-border arrangement. An

intermediary shall be exempt from filing

the information only to the extent that it

has proof that the same information

referred to in paragraph (o) has already

been filed by another intermediary

Provided that the proof may be in such

form as the Commissioner may determine.

(k) (i) Where

the

reporting

obligation lies with the relevant

taxpayer and where there is more than

one relevant taxpayer, the relevant

taxpayer that is to file information in

accordance with paragraph (f) shall be

the one that features first in the list

below

(A) the relevant taxpayer that

agreed the reportable cross-border

arrangement

with

the

intermediary;

(B) the relevant taxpayer that

manages the implementation of

the arrangement.

(ii) Any relevant taxpayer shall

only be exempt from filing the

information to the extent that it has

proof that the same information

referred to in paragraph (o) has

already been filed by another relevant

taxpayer

Provided that the proof may be in

such form as the Commissioner may

determine.

(l) A relevant taxpayer shall file

information as the Commissioner may

determine, about the use of the

arrangement to the tax administration in

each of the years for which they use it.

(m)

Intermediaries and relevant

taxpayers shall file information on

reportable cross-border arrangements the

first step of which was implemented

between 25th June 2018 and 1st July 2020.

Intermediaries and relevant taxpayers, as

appropriate, shall file information on those

reportable cross-border arrangements by

31 August 2020.

(n) The competent authority in Malta

shall, by means of an automatic exchange,

communicate the information specified in

paragraph (o) to the competent authorities

of all other EU Member States.

(o) The

information

to

be

communicated by the competent authority

in Malta pursuant to paragraph (n) shall

contain the following, as applicable

(i)

the

identification

of

intermediaries and relevant taxpayers,

including their name, date and place of

birth (in the case of an individual),

residence for tax purposes, TIN and,

where appropriate, the persons that are

associated enterprises to the relevant

taxpayer;

(ii) details of the hallmarks set

out in Annex IV that make the cross-

border arrangement reportable;

(iii) a summary of the content of

the reportable cross-border arrangement,

including a reference to the name by

which it is commonly known, if any, and

a description in abstract terms of the

relevant

business

activities

or

arrangements, without leading to the

disclosure of a commercial, industrial or

professional secret or of a commercial

process, or of information the disclosure

of which would be contrary to public

policy;

(iv) the date on which the first

step in implementing the reportable

cross-border arrangement has been made

or will be made;

(v) details of the national

provisions that form the basis of the

reportable cross-border arrangement;

(vi) the value of the reportable

cross-border arrangement;

(vii) the identification of the EU

Member State of the relevant taxpayer(s)

and any other EU Member States which

are likely to be concerned by the

reportable cross-border arrangement;

(viii) the identification of any other

person in an EU Member State likely to

be affected by the reportable cross-border

arrangement, indicating to which EU

Member States such person is linked

Provided that information as defined

under sub-paragraphs (i), (iii) and (viii)

shall not be communicated to the European

Commission.

(p) The fact that the Commissioner does

not trigger an enquiry in relation to a

reportable cross-border arrangement shall

not in any way affect any of the powers of

the Commissioner under the provisions of

the Income Tax Management Act.

(c)

immediately after paragraph (d) of sub-regulation

(8) thereof, as re-numbered, there shall be added the following

new paragraph

"(e) for the information laid down in sub-

regulation (7), within one month of the end of the quarter

in which the information was filed. The first information

shall be communicated by 31 October 2020."; and

(d) sub-regulation (9) thereof, as re-numbered, shall be

amended as follows

(i) the definition "automatic exchange

of

information" shall be substituted by the following

" "automatic exchange of information"

means

(a) for the purposes of sub-

regulations (1), (3), (4) and (7), the

systematic communication of pre-defined

information to another EU Member State,

without prior request, at pre-established

regular intervals. For the purposes of sub-

regulation (1), reference to available

information relates to information in the tax

files of Malta, which is retrievable in

accordance with the procedures for gathering

and processing information in Malta;

(b)

for

the

purposes

of

sub-

regulation (2), the systematic communication

of pre-defined information on residents in

other EU Member States to the relevant EU

Member State of residence, without prior

request, at pre-established regular intervals;

(c) for the purposes of the

provisions of these regulations that

implement

the

EU

Administrative

Cooperation Directive, other than sub-

regulations (1), (2), (3), (4) and (7), the

systematic communication of predefined

information provided in paragraphs (a) and

(b);";

(ii) the following new definitions shall be added

immediately after the definition of "advance pricing

arrangement"

" "arrangement" shall also include a series of

arrangements. An arrangement may comprise more

than one step or part;

"cross-border arrangement" means an

arrangement concerning either more than one EU

Member State or an EU Member State and a third

country where at least one of the following

conditions is met

(a) not all of the participants in the

arrangement are resident for tax purposes in

the same jurisdiction;

(b) one or more of the participants in

the arrangement is simultaneously resident

for tax purposes in more than one

jurisdiction;

(c) one or more of the participants in

the arrangement carries on a business in

another jurisdiction through a permanent

establishment situated in that jurisdiction and

the arrangement forms part or the whole of

the business of that permanent establishment;

(d) one or more of the participants in

the arrangement carries on an activity in

another jurisdiction without being resident

for tax purposes or creating a permanent

establishment situated in that jurisdiction;

(e) such arrangement has a possible

impact on the automatic exchange of

information or the identification of beneficial

ownership;

"reportable cross-border arrangement" means

any cross-border arrangement that contains at least

one of the hallmarks set out in Annex IV;

"hallmark" means a characteristic or feature

of a cross-border arrangement that presents an

indication of a potential risk of tax avoidance, as

listed in Annex IV;

"intermediary" means any person

(a) that designs, markets, organises

or makes available for implementation or

manages the implementation of a reportable

cross-border arrangement;

(b) that, having regard to the

relevant facts and circumstances and based

on available information and the relevant

expertise and understanding required to

provide such services, knows or could be

reasonably expected to know that they have

undertaken to provide, directly or by means

of other persons, aid, assistance or advice

with respect to designing, marketing,

organising,

making

available

for

implementation

or

managing

the

implementation of a reportable cross-border

arrangement

Provided that any person shall have

the right to provide evidence that such person

did not know and could not reasonably be

expected to know that that person was

involved in a reportable cross-border

arrangement. For this purpose, that person

may refer to all relevant facts and

circumstances as well as available

information and their relevant expertise and

understanding.

In addition to the above, in order to be an

intermediary, a person shall meet at least one of the

following additional conditions

(a) be resident for tax purposes in an

EU Member State;

(b) have a permanent establishment

in an EU Member State through which the

services with respect to the arrangement are

provided;

(c) be incorporated in, or governed

by the laws of an EU Member State;

(d) be registered with a professional

association related to legal, taxation or

consultancy services in an EU Member State.

"relevant taxpayer" means any person to whom a

reportable cross-border arrangement is made available for

implementation, or who is ready to implement a reportable

cross-border arrangement or has implemented the first step

of such an arrangement.

For the purposes of sub-regulation (7), "associated

enterprise" means a person who is related to another

person in at least one of the following ways

(a) a person participates in the

management of another person by being in a

position to exercise a significant influence

over the other person;

(b) a person participates in the

control of another person through a holding

that exceeds 25% of the voting rights;

(c) a person participates in the

capital of another person through a right of

ownership that, directly or indirectly, exceeds

25% of the capital;

(d) a person is entitled to 25% or

more of the profits of another person

Provided that

(i) if more than one person

participates, as referred to in paragraphs (a)

to (d), in the management, control, capital or

profits of the same person, all persons

concerned shall be regarded as associated

enterprises;

(ii) if the same persons participate,

as referred to in paragraphs (a) to (d), in the

management, control, capital or profits of

more than one person, all persons concerned

shall be regarded as associated enterprises;

(iii) for the purposes of this

definition, a person who acts together with

another person in respect of the voting rights

or capital ownership of an entity shall be

treated as holding a participation in all of the

voting rights or capital ownership of that

entity that are held by the other person;

(iv) in indirect participations, the

fulfilment of requirements under paragraph

(c) shall be determined by multiplying the

rates of holding through the successive tiers.

A person holding more than 50% of the

voting rights shall be deemed to hold 100%;

(v) an individual, his or her spouse

and his or her lineal ascendants or

descendants shall be treated as a single

person;

"marketable arrangement" means a cross-border

arrangement that is designed, marketed, ready for

implementation or made available for implementation

without a need to be substantially customised;

"bespoke arrangement" means any cross-border

arrangement that is not a marketable arrangement."; and

(e)

immediately after paragraph (d) of sub-regulation

(10) thereof, as re-numbered, there shall be added the following

new paragraph

"(e) the provisions of sub-regulations (7) and

(8)(e) shall be on 1 July 2020.".

Regulation 21 of the principal regulations shall be

substituted by the following

" Data

(1) All exchange of information

protection.

made pursuant to these regulations involving

the processing of personal data shall be

conducted in accordance with Regulation (EU)

2016/679 (General Data Protection Regulation)

and the Data Protection Act. Nevertheless, by

application of Article 23(1)(e) of Regulation

(EU) 2016/679, Articles 12 to 22 and Article

34, as well as Article 5, in so far as its

provisions correspond to the rights and

obligations provided for in Articles 12 to 22,

shall not apply, as the provision of information

under this regulation constitutes a necessary

measure in the interest of taxation matters.

(2)

Reporting

Malta

Financial

Institutions and the competent authority in

Malta shall be data controllers for the purpose

of Regulation (EU) 2016/679 and the Data

Protection Act.

(3)

Notwithstanding the provisions of

sub-regulation (1), the Commissioner shall

ensure that each Reporting Malta Financial

Institution informs each individual reportable

person concerned that the information relating

to him referred to in regulation 13(2) will be

collected and transferred in accordance with

these regulations. The Commissioner shall also

ensure that the Reporting Malta Financial

Institution provides to that individual all

information he is entitled to under the

Regulation (EU) 2016/679 and the Data

Protection Act in sufficient time for the

individual to exercise his data protection rights

and, in any case, before the Reporting Malta

Financial Institution concerned reports the

information referred to in regulation 13(2) to

the competent authority in Malta.

(4)

Information

processed

in

accordance with these regulations shall be

retained for no longer than necessary to achieve

the purposes of these regulations, and in any

case no longer than nine years from the end of

the year from when the information was

reported to the Commissioner.".

7. Immediately after sub-regulation (5) of regulation 22 of Amends

the principal regulations there shall be added the following new sub- regulation

the principal

regulation

regulations.

"(6) A standard form, including the linguistic

arrangements, shall be adopted by the EU Commission in

accordance with the procedure referred to in Article 26(2) of the

EU Administrative Cooperation Directive before 30 June 2019.

The automatic exchange of information on reportable cross-

border arrangements pursuant to regulation 13(7) shall be

carried out using this standard form. This standard form shall

not exceed the components for exchange of the information

listed in regulation 13(7)(o) and other relating fields linked to

these components which are necessary to achieve the objectives

of regulation 13(7).".

8. Regulation 33 of the principal regulations shall be Amends

regulation 33 of

amended as follows

the principal

regulations.

(a) immediately after paragraph (e) of sub-regulation

(1) thereof there shall be added the following new paragraph

"(f) where a Reporting Malta Financial Institution

relies on an invalid self-certification, and such Reporting

Malta Financial Institution knows or has reason to know

that this is invalid, to a penalty of five thousand euro

(€5,000). An account holder who provides a false self-

certification, including signing or otherwise positively

affirming a false self-certification, shall also be liable to a

penalty of five thousand euro (€5,000)."; and

(b) sub-regulation (2) thereof shall be substituted by the

following

"(2) In addition and without prejudice to any

penalties incurred in terms of sub-article (1), where a

Reporting Malta Financial Institution is found to have

submitted information that is misleading, deceitful or false,

every director, manager or other principal officer of such

Reporting Malta Financial Institution shall be guilty of an

offence and shall on conviction be liable to a fine (multa)

of not less than ten thousand euro (€10,000) and not more

than thirty thousand euro (€30,000), or to imprisonment

for a period of not exceeding two years, or both such fine

(multa) and imprisonment

Provided that a director, manager or other principal

officer of such Reporting Malta Financial Institution shall

not be guilty of such an offence in virtue of this sub-

regulation if he proves that he was unaware and could not

with reasonable diligence be aware of such act or omission

and that he did everything within his power to prevent that

act or omission.".

9. Regulation 35 of the principal regulations shall be

amended as follows

(a)

sub-regulation (1) thereof shall be substituted by the

following

"(1) Where a person comes within the scope of the

penalties as set out in these regulations, the Commissioner

shall advise such person by means of a default notice

regarding which penalty the Commissioner intends to

impose and the reason for its imposition

Provided that in such cases, reference to the

specific legal provision would constitute sufficient

notice.";

(b) immediately after sub-regulation (1) thereof, as

substituted, there shall be added the following new sub-

regulation

"(1A) The default notice referred to in sub-

regulation (1) shall inform the defaulter of his rights and

provide a remedy to the defaulter to contest the existence

of the default within ten days from the date of such

notice.";

(c)

in sub-regulation (2) thereof, for the words "to its

registered office informing it of its rights under the provisions

of sub-regulation (3)" there shall be substituted the words "to

the last known business or private address";

(d) immediately after sub-regulation (4) thereof there

shall be added the following new sub-regulation

"(4A) The demand notice referred to in sub-

regulation (4) may be served on the relevant person either

personally or by being sent by registered post to the last

known business or private address."; and

(e)

immediately after sub-regulation (6) thereof there

shall be added the following new sub-regulation

"(7) Where the relevant person refuses to be

served with the notice either personally or through

registered mail as contemplated in sub-regulations (2) and

(4A) and the notice is properly addressed to the relevant

person, the relevant person shall be guilty of an offence

and shall on conviction be liable to a fine (multa) of not

less than five thousand euro (€5,000) and not more than

thirty thousand euro (€30,000), or to imprisonment for a

period not exceeding two years, or to both such fine

(multa) and imprisonment.".

10. Regulation 44 of the principal regulations shall be Amends

regulation 44 of

amended as follows

the principal

regulations.

(a)

paragraph (a) of sub-regulation (1) thereof shall be

substituted by the following

"(a) where a Reporting Malta Financial Institution

relies on an invalid self-certification, and such Reporting

Malta Financial Institution knows or has reason to know

that this is invalid, to a penalty of five thousand euro

(€5,000). An account holder who provides a false self-

certification, including signing or otherwise positively

affirming a false self-certification, shall also be liable to a

penalty of five thousand euro (€5,000);"; and

(b) sub-regulation (2) thereof shall be substituted by the

following

"(2) In addition, and without prejudice to any

penalties incurred in terms of sub-regulation (1), where a

Reporting Malta Financial Institution is found to have

submitted information that is misleading, deceitful or false,

every director, manager or other principal officer of such

Reporting Malta Financial Institution shall be guilty of an

offence and shall on conviction be liable to a fine (multa)

of not less than ten thousand euro (€10,000) and not more

than thirty thousand euro (€30,000), or to imprisonment

for a period of not exceeding two years, or both such fine

(multa) and imprisonment

Provided that a director, manager or other principal

officer of such Reporting Malta Financial Institution shall

not be guilty of such an offence in virtue of this sub-

regulation if he proves that he was unaware and could not

with reasonable diligence be aware of such act or omission

and that he did everything within his power to prevent that

act or omission.".

11. Immediately after regulation 49 of the

principal

regulations there shall be added the following regulation

" Imposition

(1) Where an intermediary or

of penalties.

relevant taxpayer that has an obligation to file

information with the Commissioner fails to

comply with any of the obligations set out in

the EU Administrative Cooperation Directive,

it shall be liable to the following penalties

(a)

where such intermediary or

relevant taxpayer fails to retain the

documentation and information it

collected in the course of meeting its

reporting obligations as provided in

these regulations for a minimum period

of five years starting from the end of the

year to which the information relates, to

a penalty of two thousand five hundred

euro (€2,500);

(b) where such intermediary or

relevant taxpayer fails to report any of

the information required to be reported

in terms of regulation 13(7) within the

time stipulated therein, to a penalty of

(i) two hundred euro

(€200); and

(ii) one hundred euro

(€100) for every day during which

the default existed: provided that

this penalty shall not exceed in total

twenty thousand euro (€20,000).

(2)

Where an intermediary or relevant

taxpayer that has an obligation to file

information with the Commissioner fails to

report the information required to be reported

in terms of regulation 13(7) in a complete and

accurate manner, it shall be liable to a penalty

of

(a)

two hundred euro (€200);

and

(b) one hundred euro (€100) for

every day during which the default

existed: provided that this penalty shall

not exceed in total twenty thousand euro

(€20,000).

(3)

Where an intermediary or relevant

taxpayer that has an obligation to file

information with the Commissioner fails to

comply with a request for information made by

the Commissioner, it shall be liable to a penalty

of

(a)

one thousand euro (€1,000);

and

(b) one hundred euro (€100) for

every day during which the default

existed: provided that this penalty shall

not exceed in total thirty thousand euro

(€30,000).".

12. Section VIII of Annex I to the principal regulations shall Amends Annex

I to the principal

be amended as follows

regulations.

(a)

sub-paragraph C(17)(a) thereof shall be substituted

by the following

"(a) a retirement or pension account that satisfies

the following requirements

(i) the account is subject to regulation as a

personal retirement account or is part of a

registered or regulated retirement or pension plan

for the provision of retirement or pension benefits

(including disability or death benefits);

(ii) the account is tax-favoured (that is,

contributions to the account that would otherwise

be subject to tax are deductible or excluded from

the gross income of the Account Holder or taxed at

a reduced rate, or taxation of investment income

from the account is deferred or taxed at a reduced

rate);

(iii) information reporting is required to the

tax authorities with respect to the account;

(iv) withdrawals are conditioned on

reaching a specified retirement age, disability, or

death, or penalties apply to withdrawals made

before such specified events; and

(v) either (i) annual contributions are

limited to an amount denominated in Euro that

corresponds to USD 50 000 or less; or (ii) there is a

maximum lifetime contribution limit to the account

of an amount denominated in Euro that

corresponds to USD 1 000 000 or less, in each case

applying the rules set forth in paragraph C of

Section VII for account aggregation currency

translation.

A Financial Account that otherwise satisfies the

requirement of sub-paragraph C(17)(a)(v) will not fail to

satisfy such requirement solely because such Financial

Account may receive assets or funds transferred from one

or more Financial Accounts that meet the requirements of

sub-paragraph C(17)(a) or (b) or from one or more

retirement or pension funds that meet the requirements of

any of sub-paragraphs B(5) to (7);"; and

(b) paragraph D(5) thereof shall be substituted by the

"5. The term "Controlling Persons" means the

natural persons who exercise control over an entity. In the

case of a trust, that term means the settlor(s), the trustee(s),

the protector(s) (if any), the beneficiary(ies) or class(es) of

beneficiaries, and any other natural person(s) exercising

ultimate effective control over the trust, and in the case of

a legal arrangement other than a trust, such term means

persons in equivalent or similar positions.

The term "Controlling Persons" must be interpreted

in a manner consistent with the definition of "Beneficial

Owner" contained in regulation 2 of the Regulations as

well as that contained in regulation 2 of the Prevention of

Money Laundering and Funding of Terrorism Regulations

(S.L. 373.01), and the level of control must also be

determined in line with such definitions.".

13. Immediately after Annex III of the principal regulations Adds new

Annex to the

there shall be added the following new Annex

principal

regulations.

"Annex IV

HALLMARKS

In the context of Annex IV, any capitalised term shall have the

meaning that it has under the corresponding definitions set out in

Annex I of these Regulations.

Part I.

Main benefit test

Generic hallmarks under category A and specific hallmarks

under category B and under sub-paragraphs (b)(i), (c) and (d) of

paragraph 1 of category C may only be taken into account where they

fulfil the "main benefit test".

That test will be satisfied if it can be established that the main

benefit or one of the main benefits which, having regard to all

relevant facts and circumstances, a person may reasonably expect to

derive from an arrangement, is the obtaining of a tax advantage.

In the context of hallmark under paragraph 1 of category C, the

presence of conditions set out in sub-paragraphs (b)(i), (c) or (d) of

paragraph 1 of category C cannot alone be a reason for concluding

that an arrangement satisfies the main benefit test.

Part II.

Categories of hallmarks

A.

Generic hallmarks linked to the main benefit test

1. An arrangement where the relevant taxpayer or a

participant in the arrangement undertakes to comply with a condition

of confidentiality which may require them not to disclose how the

arrangement could secure a tax advantage vis-à-vis other

intermediaries or the tax authorities.

2. An arrangement where the intermediary is entitled to

receive a fee (or interest, remuneration for finance costs and other

charges) for the arrangement and that fee is fixed by reference to

(a)

the amount of the tax advantage derived from the

arrangement; or

(b) whether or not a tax advantage is actually derived

from the arrangement. This would include an obligation on the

intermediary to partially or fully refund the fees where the

intended tax advantage derived from the arrangement was not

partially or fully achieved.

3. An arrangement that has substantially standardised

documentation and, or structure and is available to more than one

relevant taxpayer without a need to be substantially customised for

implementation.

B.

Specific hallmarks linked to the main benefit test

1. An arrangement whereby a participant in the arrangement

takes contrived steps which consist in acquiring a loss-making

company, discontinuing the main activity of such company and using

its losses in order to reduce its tax liability, including through a

transfer of those losses to another jurisdiction or by the acceleration

of the use of those losses.

2. An arrangement that has the effect of converting income

into capital, gifts or other categories of revenue which are taxed at a

lower level or exempt from tax.

3. An arrangement which includes circular transactions

resulting in the round-tripping of funds, namely through involving

interposed entities without other primary commercial function or

transactions that offset or cancel each other or that have other similar

features.

C.

Specific hallmarks related to cross-border transactions

1. An arrangement that involves deductible cross-border

payments made between two or more associated enterprises where at

least one of the following conditions occurs

(a)

the recipient is not resident for tax purposes in any

tax jurisdiction;

(b) although the recipient is resident for tax purposes in

a jurisdiction, that jurisdiction either

(i) does not impose any corporate tax or imposes

corporate tax at the rate of zero or almost zero; or

(ii)

is included in a list of third-country

jurisdictions which have been assessed by EU Member

States collectively or within the framework of the OECD

as being non-cooperative;

(c)

the payment benefits from a full exemption from tax

in the jurisdiction where the recipient is resident for tax

purposes;

(d) the payment benefits from a preferential tax regime

in the jurisdiction where the recipient is resident for tax

purposes.

2. Deductions for the same depreciation on the asset are

claimed in more than one jurisdiction.

3. Relief from double taxation in respect of the same item of

income or capital is claimed in more than one jurisdiction.

4. There is an arrangement that includes transfers of assets

and where there is a material difference in the amount being treated as

payable in consideration for the assets in those jurisdictions involved.

D.

Specific hallmarks concerning automatic exchange of

information and beneficial ownership

1. An arrangement which may have the effect of undermining

the reporting obligation under the laws implementing Union

legislation or any equivalent agreements on the automatic exchange

of Financial Account information, including agreements with third

countries, or which takes advantage of the absence of such legislation

or agreements. Such arrangements include at least the following

(a)

the use of an account, product or investment that is

not, or purports not to be, a Financial Account, but has features

that are substantially similar to those of a Financial Account;

(b) the transfer of Financial Accounts or assets to, or the

use of jurisdictions that are not bound by the automatic

exchange of Financial Account information with the State of

residence of the relevant taxpayer;

(c)

the re-classification of income and capital into

products or payments that are not subject to the automatic

exchange of Financial Account information;

(d) the transfer or conversion of a Financial Institution

or a Financial Account or the assets therein into a Financial

Institution or a Financial Account or assets not subject to

reporting under the automatic exchange of Financial Account

information;

(e)

the use of legal entities, arrangements or structures

that eliminate or purport to eliminate reporting of one or more

Account Holders or Controlling Persons under the automatic

exchange of Financial Account information;

(f)

arrangements that undermine, or exploit weaknesses

in, the due diligence procedures used by Financial Institutions

to comply with their obligations to report Financial Account

information, including the use of jurisdictions with inadequate

or weak regimes of enforcement of anti-money-laundering

legislation or with weak transparency requirements for legal

persons or legal arrangements.

2. An arrangement involving a non-transparent legal or

beneficial ownership chain with the use of persons, legal

arrangements or structures

(a)

that do not carry on a substantive economic activity

supported by adequate staff, equipment, assets and premises;

and

(b) that are incorporated, managed, resident, controlled

or established in any jurisdiction other than the jurisdiction of

residence of one or more of the beneficial owners of the assets

held by such persons, legal arrangements or structures; and

(c)

where the beneficial owners of such persons, legal

arrangements or structures, as defined in Directive (EU) 2015/

849, are made unidentifiable.

E.

Specific hallmarks concerning transfer pricing

1. An arrangement which involves the use of unilateral safe

harbour rules.

2. An arrangement involving the transfer of hard-to-value

intangibles. The term "hard-to-value intangibles" covers intangibles

or rights in intangibles for which, at the time of their transfer between

associated enterprises

(a)

no reliable comparables exist; and

(b) at the time the transaction was entered into, the

projections of future cash flows or income expected to be

derived from the transferred intangible, or the assumptions used

in valuing the intangible are highly uncertain, making it difficult

to predict the level of ultimate success of the intangible at the

time of the transfer.

3. An arrangement involving an intra-group cross-border

transfer of functions and, or risks and, or assets, if the projected

annual earnings before interest and taxes (EBIT), during the three-

year period after the transfer, of the transferor or transferors, are less

than 50% of the projected annual EBIT of such transferor or

transferors if the transfer had not been made.

€2.43