Swedish Initiative

Request for information by the tax investigator under the “Swedish Initiative”: LHP Attorneys inform and advise on the current developments. 

Investigations by tax investigators in EU-member countries have been streamlined in 2012. This will soon apply in non-EU countries who usually adopt the EU-regulation for the Schengen area (such as Switzerland and Liechtenstein). This new development will be gradually implemented by tax investigative authorities and will increase investigative pressure. The rules pertaining to international exchange of information are being tightened.

Background and purpose of the Swedish Initiative

The Swedish Initiative aims at streamlining the exchange of information and investigative insights between the prosecution authorities of EU-member countries. Tax investigation and other investigative authorities stand to benefit.

It would go beyond the scope of this website to discuss the regulations in their entirety. We would like to point to three important principles:

1. The requested country is under no obligation to investigate

This means, that the prosecution authorities throughout the EU are only obligated to exchange information which is readily available. This principle of availability is the central idea of the framework directive and is provided for in § 117a Sec 1 Tax Act (AO), § 92 Sec 3 No. 2 IRG (Act on International Legal Assistance in Criminal Matters). The authorities are under no obligation to investigate. The requested investigative authorities are thus not obligated

• to procure data, which is located in files or databases of other authorities;
• to conduct investigative measures, such as site inspections or interrogations of witnesses;
• They may volunteer to do so, as long as this does not require enforcement measures (§ 117a Sec 6 No. 1 AO, § 29 Sec 4 No 1 IRG). The directives by the federal states must particularly obey the principle of reasonableness (effort/benefit ratio). Enforcement measures are, for example, searches of premises and seizures.

2. Short response deadlines

The framework directive sets out a series of staggered deadlines in Art 4 for the reporting of information, which puts pressure on the requested authority. The information must be reported no later than within two weeks (as far as it must be reported in the first place). These very short deadlines are supposed to significantly expedite the exchange of information.

3. E-mail as a simplified means of communication with foreign countries

The tax inspection authorities must generally communicate with foreign countries via the support of the Authority for Customs Offences in Bergisch Gladbach. This authority will communicate directly with a foreign country. This may be done by e-mail (no specific format required), but must use a secure encryption of data. For simplification purposes, the framework directive provides for two template forms:

• Template form “attachment A” serves the purpose of responding to incoming requests.
• Template form “attachment B” is to be used for outgoing requests.

The directive by the federal states provides for corresponding template forms in German and English. The choice of language is at the tax investigative authority’s discretion and is usually determined by practicality reasons.

Our attorney Dirk Beyer has discussed the practical issues in respect of the Swedish Initiative in the periodical AO-StB 2013, 351.