Exchange of information: the OECD Model amendments

On 18 July 2012, the OECD published the updated version of art. 26 of the Model Convention and its Commentary. The changes consist of the inclusion of the most recent developments of the OECD on transparency and exchange of information in tax matters. The document provides for important clarifications and some guidelines about certain doubts that the wording of Article. 26 still raised


  • The main amendments made by the OECD with the document at hand are the following:

  • The inclusion of a new last sentence in paragraph 2 of art. 26;

  • The addition of ten new sections to its commentary; and

  • The inclusion of some new phrases and reformulation of others in certain sections of the existing Commentary.


More generally, the more relevant amendments concern:

The extension of the possibilities of use of the information to be exchanged;

The interpretation of "foreseeably relevant";

The definition of the concept of "fishing expeditions";

The provision of deadlines by which information should be exchanged;

The use of the information exchanged for purposes other than tax assessment or tax collection;

Some clarifications regarding the limits to the exchange of information;

The extension of the powers of collection of the information requested.


The amendments of 2012 make it clear that in the area of exchange of information upon request, the standard of the foreseeably relevance requires the existence of a reasonable possibility that the information sought is relevant at the time of application. However, it is irrelevant that the information, once exchanged, are proven to be relevant in practice. If there are doubts about the existence of the requirement in question, a consultation between the competent authorities is mandatory and if the requesting State has provided its own explanation, the requested State cannot refuse to exchange information because of the lack of such a requirement.


The term "fishing expeditions" is also clarified, specifying that these are speculative requests for information without an apparent connection with an investigation in progress. According to the OECD, there is no fishing expedition prohibited if the request of information does not contain the name or the address (or both) of the taxpayer or the person in possession of information. Similarly, a fishing expedition should not be considered prohibited in the case of transcription errors or if the name or address are indicated with a different format, provided that there are some other elements capable of identifying the taxpayer.


In order to improve the speed and timeliness of information exchange, the Commentary suggests the inclusion of a provision in the text of the Convention under which the competent authorities may agree on the terms within which exchanging information. In the absence of such an agreement, the period within which exchanging information is two months from the receipt of the request, if the requested authority is already in possession of the information, or six months in the opposite case. The authorities in each case can properly negotiate any appropriate time limits. Late exchange, in any case, does not affect the use or the admissibility of the information exchanged.


The information must be kept as secret as that obtained under the domestic laws of the requesting State, and may be disclosed only to persons or authorities involved in the assessment and collection of taxes. Due to the changes, it will be possible to use the data to be exchanged for other purposes, provided that this is permitted by the laws of both States and there is an authorization by the competent authority of the requested State.


Each Contracting State shall use its information gathering powers, regardless of whether that information can be collected or used for the domestic tax purposes of the requested State. Therefore, for example, restrictions to the power of the State to obtain information for its own domestic tax purposes at the time of the request (because, for example, the deadline set by domestic law has expired) must not restrict its power to collect data for exchanging information. In addition, the requested State is not obliged to provide information in those cases where it has attempted to provide the requested information, but the data are no longer available due to the expiry of the retention periods set by its domestic law.


However, if the required information is still available in spite of the expiry of the retention period, the requested State may not refuse to exchange the available information. The Contracting States should ensure that reliable accounting data are kept for at least five years.


#exchangeofinformation #oecdmodelconvention #transparency #oecdmodeltaxconvention #oecdcommentary

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