Aligning the Convention to the internationally agreed standard for information exchange (Articles 4, 21 and 22) The amending Protocol adds new paragraphs 3 and 4 to Article 21 of the Convention. The language of these paragraphs is based on paragraphs 4 and 5 of Article 26 of the OECD Model Tax Convention. These additional paragraphs ensure that domestic bank secrecy and the lack of a domestic tax interest will not impede the exchange of information under the Convention, and are intended to override the domestic laws of the Parties in these respects. The Protocol provides for the deletion of Article 19 so as to have all the limitations to the obligation to provide administrative assistance consolidated in Article 21 of the Convention. Article 21(1), which states that the rights and safeguards secured to persons by the laws or administrative practice of the requested state are not affected by the Convention, remains unchanged. Nonetheless, additional language is included in the revised Explanatory Report to make it clear that domestic law rights and safeguards shall not, however, unduly delay or prevent effective administrative assistance. A number of other changes to Article 21 have been to better align it to the Internally agreed standard. Amendments have also been made to fully align Articles 4 and 22 of the Convention to Article 26 of the OECD Model Tax Convention, with for example the insertion of a provision expressly covering the protection of personal data, as mentioned in para. 10 the Commentary to Article 26 Opening the Convention to countries which are not members of the OECD or of the CoE (Article 28 paragraph 5). new paragraph 5 of Article 28 of the amended Convention states that any State which is not a member of the Council of Europe or of the OECD may request to be invited to adhere to the Convention as amended by the 2010 Protocol. Any request to this effect shall be addressed to one of the Depositaries, who shall transmit it to the Parties. The Depositary shall also inform the Committee of Ministers of the Council of Europe and the OECD Council. The decision to invite States which so request to become Party to the Convention shall be taken by consensus by the Parties to the Convention through the Coordinating Body.
Relationship between the amended Convention and EU law instruments (Article 27 paragraph 2), The Protocol includes an amendment to make it clear that the Parties to the Convention that are also EU member States will apply the provisions contained in the Convention only where they allow for cooperation which is broader than that provided for under EC Law instruments. Level of detail to be provided in a request for information (Article 18 paragraph 1). Under the new version of Article 18, the more details the applicant State can provide, the better the information received is likely to be. The paragraph asks the applicant State to provide the requested State with all the available information which can assist in identifying the person, or an ascertainable group or category of persons, concerned. Relationship between the Protocol and Convention According to the new Article 28 (4), Member States of the Council of Europe or of the OECD, which are not yet Parties to the original Convention, have the option of becoming a Party either to the existing, unamended, Convention or to the Convention as amended by the Protocol. In line with Article 40 (5) of the Vienna Convention on the Law of Treaties, the Protocol creates a presumption that these countries will become Parties to the Convention as amended by the Protocol. If they wish to become a Party to the unamended Convention, they will need to express this intention in writing. Entry into force and date of effect of the amendments The Protocol enters into force three months after the ratification by five Parties to the Convention. A Party which ratifies the Protocol after it has entered into force will be bound by it after three months from the ratification. Once the Protocol enters into force, it amends the existing Convention. As regards the dates on which the changes shall have effect, for civil tax matters, unless agreed otherwise by the Parties, the amended Convention will have effect only in relation to future tax periods; for criminal tax matters, it will have effect as soon as it enters into force, and therefore also in relation to past tax periods, unless a State puts forward a reservation that this does not apply in relation to tax periods beyond the fourth. Finally, a number of consequential changes have been made to Explanatory Report of the Convention.
Compared to bilateral tax treaties, the Convention offers a range of benefits: the reduction of the resources needed to enter into a number of bilateral agreements, the uniformity in the applicable rules among a wide range of countries, its wide scope together with its flexibility, and the true multilateral nature of the instrument, which will provide foster true multilateral cooperation in tax matters. Responding to the G20 requests, the Convention has been updated in a relatively short timeframe. It is hoped that a large number of countries will become Parties to the amended Convention so as to make it the “gold standard” for administrative assistance in tax matters.