EIB Stakeholder Engagement Meeting

Transcription

1 EIB Stakeholder Engagement Meeting Tax Approach and Revision of NCJ Policy 2 October, 2018 Brussels Office of the Group Chief Compliance Officer

2 AGENDA EIB Stakeholder Engagement Meeting Revision of the EIB Group Policy towards Weakly Regulated, non- transparent and uncooperative jurisdictions ( NCJ Policy ) 9:30 Registration and welcome coffee EIB Brussels office: Rond-point Robert Schuman 6, 1040 Brussels 10:00 Welcome word and introduction of speakers 2 October 2018 Hakan Lucius, Head of Corporate Responsibility and Civil Society Division, EIB Speakers: Gerhard Hütz, Director General and Group Chief Compliance Officer, EIB Branimir Berkovic, Head of Tax Compliance Unit, EIB Vaitiare Constantin, Compliance Officer, EIB Presentation by the Office of the Chief Compliance Officer Setting the stage: Role of the EIB Office of the Chief Compliance Officer Recent regulatory developments in the area of taxation and the designation of non-cooperative jurisdictions for tax purposes Interim approach to the EIB NCJ Policy 10:45 Questions and answers session 11:00 Revision of the EIB Group NCJ Policy & on-going challenges Key features Practical examples 11:30 Questions and answers session 12:00 Lunch and networking 2

3 Part I Setting the stage 3

4 Introduction, EIB at a glance «The EU Bank» Finance and expertise for sound and sustainable projects Since 1958 Circa 90% of lending within the EU Shareholders: 28 Member States +/- 450 projects/year in >160 countries Largest multilateral lender and borrower (78 billion EUR total financing/raised 58 billion EUR on capital markets in 2017) Headquartered in Luxembourg - 40 local offices +/ staff (finance professionals but also engineers, sector economists and socio-environmental experts) One subsidiary: the EIF- Risk financing targeting innovative SMEs via equity and debt financial instruments 4

5 Our priorities Environment Infrastructure Innovation SMEs 5

6 EIB products We help catalyse investment LENDING BLENDING ADVISING Loans But also: Guarantees (trade financing) Equity participation Combining EIB finance with EU budget (Project Bond Initiative) Higher risk projects for innovation (InnovFin) Prepare, evaluate and support the implementation of projects (JASPERS) Support for public/private partnerships (EPEC) Attracting FUNDING for long-term growth 6

7 EIB Group financing in 2017: EUR 78.16bn Signatures EFTA & Enlargement Countries EUR 1.62bn Eastern Neighbours EUR 0.88bn EUR European Union 70.24bn Outside EU EUR 7.91bn Africa, Caribbean, Pacific, South Africa EUR 1.47bn Asia, Central and Latin America Total EUR 78.16bn Mediterranean EUR 1.96bn EUR 1.99bn 7

8 Compliance at the EIB In line with the Basel Committee for Banking Supervision principles and EBA Guidelines on Internal Governance Independent function reporting directly to the EIB President Under the guidance and responsibility of the EIB's Group Chief Compliance Officer (GCCO) Compliance/ reputational risk managed at the EIB Group level (EIB and EIF) by the GCCO OCCO Areas of Activity Integrity checks on projects and counterparties Integrity of staff and governing bodies Regulatory compliance 8

9 Compliance framework AML-CFT Framework and procedures NCJ Policy and Addendum Sanctions Internal tax screening tool Tax Good Governance Ethics and Codes of Conduct Compliance risk methodology Regulatory Data Protection Procurement compliance 9

10 Compliance and Business Ethics EIB Compliance Culture Change Programme Revision of Codes of Conduct (CoCs) and Whistleblowing Policy ongoing Awareness Raising events, inter alia: Seminar with René Brülhart, Vatican (September 2018), Workshop with OECD (October 2018), Meetings with World Bank (October 2018). Ethics Network: EIB recently admitted as member to the UN driven Ethics Network of Multilateral Organisations (ENMO). GCCO participation at the 10th conference, in July OCCO has an advisory role on Ethics issues 10

11 OCCO s roles in EIB project cycle Step 1 Proposal Step 7 Repayment Step 2 Appraisal On a risk-based approach, strict due diligence checks carried out by EIB Compliance Step 6 Monitoring and reporting Compliance monitoring at post approval stage Step 5 Disbursement EIB project cycle Step 4 Signature Step 3 Approval Approval documentation to Management Committee and the Board of Directors includes independent Compliance opinion (if required on a riskbased approach) Finance contract is signed (including safeguards against fraud, tax fraud, money laundering and financing of terrorism) 11

12 Before taking a decision to invest INTEGRITY CHECKS ON OPERATIONS AND COUNTERPARTIES Strict due diligence criteria and process Anti-Money Laundering/ Countering Financing of Terrorism Framework and procedures Screening for sanctions Enhanced due diligence on NCJ operations Tax due diligence Compliance risk methodology Compliance opinions on all operations outside EU Approval process Compliance monitoring INDEPENDENT COMPLIANCE OPINIONS 12

13 Dialogue and engagement with IFIs, NGOs and Lead Organisations Ongoing dialogue with IFIs and CSOs On-going dialogue with NGOs on EIB s NCJ Policy Joint submission of CSOs on NCJ policy MDB Private Sector Integrity Conferences Benchmarking exercise with IFIs - taxes and BBP DFI Tax symposium with IFIs and DFIs Ongoing dialogue with Lead Organisations OECD Global Forum EU FATF Engagement with EU institutions Follow-up on relevant EU legislative packages Bilateral contacts with EU Commission Liaison with EP and the Council 13

14 Recent regulatory developments in the area of taxation and the designation of non-cooperative jurisdictions for tax purposes 14

15 Key Developments since last stakeholder engagement seminar (November 2017) Council conclusions on EU list of non-cooperative jurisdictions for tax purposes (5 December 2017), changes January, March and May 2018 Updates of Reference Lists published by Lead Organisations Legal provisions on tax avoidance in EFSI Regulation, EFSD Regulation, ELM Decision, Financial Regulation EC Communication on new requirements against tax avoidance in EU Legislation governing in particular financing and investment operations (March 2018) 15

16 Legal provisions on Tax Avoidance, some examples Article 155, para 2, Financial Regulation When implementing Union funds, persons and entities shall: a. Comply with applicable Union law and agreed international and Union standards and, therefore, not support actions that contribute to money laundering, terrorism financing, tax avoidance, tax fraud or tax evasion; b. when implementing financial instruments and budgetary guarantees in accordance with Title X, not enter into new or renewed operations with entities incorporated or established in jurisdictions listed under the relevant Union policy on noncooperative jurisdictions or that are identified as high-risk third countries pursuant to Article 9(2) of Directive (EU) 2015/849, or that do not effectively comply with Union or internationally agreed tax standards on transparency and exchange of information. Entities may derogate from point (b) of the first subparagraph only if the action is physically implemented in one of those jurisdictions, and does not present any indication that the relevant operation falls under any of the categories listed in point (a) of the first subparagraph. When concluding agreements with financial intermediaries, entities implementing financial instruments and budgetary guarantees in accordance with Title X shall transpose the requirements referred to in this paragraph into the relevant agreements and shall request the financial intermediaries to report on their observance. Article 22, para 1, EFSI Regulation Excluded activities and non-cooperative jurisdictions In their financing and investment operations covered by this Regulation, the EIB and the EIF shall comply with applicable EU legislation and agreed international and EU standards and, therefore, shall not support projects under this Regulation that contribute to money laundering, terrorism financing, tax avoidance, tax fraud and tax evasion. In addition the EIB and the EIF shall not enter into new or renewed operations with entities incorporated or established in jurisdictions listed under the relevant EU policy on non-cooperative jurisdictions, or that are identified as high risk third countries pursuant to article 9.2 of Directive (EU) 2015/849, or that do not effectively comply with EU or internationally agreed tax standards on transparency and exchange of information. When concluding agreements with financial intermediaries, the EIB and the EIF shall transpose the requirements referred to in this Article into the relevant agreements and shall request the financial intermediaries to report on their observance. The EIB and EIF shall review its policy on non-cooperative jurisdictions at the latest following the adoption of the Union list of non-cooperative jurisdictions for tax purposes. Every year thereafter, the EIB and EIF shall submit a report to the EP and to the Council on the implementation of its policy mentioned in the previous paragraph in relation to the EFSI financing and investment operations including country by country information and a list of intermediaries with whom they cooperate. 16

17 Tax Lead Organisations Reference Lists EU Council conclusions on EU list of non-cooperative jurisdictions for tax purposes, available: OECD Global Forum EOIR Standard ratings, available: AML EU Art 9.2 of Directive 2015/849, available: FATF High-risk and other monitored jurisdictions, available: 17

18 Designation of Jurisdictions Council Conclusions Council conclusions on EU list of non-cooperative jurisdictions for tax purposes Adopted by the Council of the European Union on 5 December 2017 amended 21 January 2018, 8 jurisdictions were removed from the Annex I list amended 13 March 2018, 3 jurisdictions removed and 3 jurisdictions added to Annex I list amended 25 May 2018, 2 jurisdictions removed from the Annex I list amended 2 October 2018, 1 jurisdiction removed from the Annex I list EU list of non-cooperative jurisdictions for tax purposes set out in Annex I jurisdiction mentioned in Annex II have been determined as co-operative, subject to the successful delivery of commitments Jurisdictions put on hold Defensive measures in both non-tax and tax areas could be applied by the EU and Member States vis-à-vis the non-cooperative jurisdictions, as long as they are part of such list Harmful preferential tax regimes (Annex I and Annex II, Section 2.1), details available: 6 March 2018 Compilation of letters to third country jurisdictions seeking commitments on taxation; and Overview of the preferential tax regimes examined by the Code of Conduct Group (Business Taxation) since its creation in March 1998, available: Current state of play: Annex I: 6 jurisdictions (originally 17) Annex II: 65 jurisdictions (originally 47) 18

19 Designation of Jurisdictions - Council Conclusions EU listing criteria: Tax Transparency Fair Taxation Implementation of anti-beps measures Compliance with international standards on: - automatic exchange of information and - information exchange on request Ratified the OECD's multilateral convention or signed bilateral agreements with all Member States, to facilitate this information exchange No preferential tax measures that could be regarded as harmful and does not facilitate offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity Commitment to implement the OECD's Base Erosion and Profit Shifting (BEPS) minimum standards Jurisdictions chosen for screening 92 third-country jurisdictions 19

20 Designation of Jurisdictions - Council Conclusions As at Listed jurisdictions Committed jurisdictions 65 Annex II jurisdictions 6 jurisdictions Annex I 37 with harmful pref. tax regimes 13 facilitate Offshore structures Defensive measures apply No defensive measures apply 20

21 Designation of jurisdictions Listing of jurisdictions by Lead Organisations - Aggregate overview As at

22 Preferential tax regimes (1) Harmful preferential tax regimes, as per 6 March 2018 Compilation of letters to third country jurisdictions seeking commitments on taxation (as at 1 October 2018) 22

23 Preferential tax regimes (2) Harmful preferential tax regimes, as per 6 March 2018 Compilation of letters to third country jurisdictions seeking commitments on taxation (as at 1 October 2018) 23

24 Public scrutiny The European Investment Bank and tax havens, December 2009, Towards a responsible taxation policy, 2015, The dark side of the EIB funds, September 2016, Investing in Integrity? Transparency & Accountability of the European Investment Bank, October 2016, Going abroad: a critic of the EIB s External Lending Mandate, November 2016, Development finance institutions and responsible corporate tax behaviour, November 2016, Quand l Europe investissait dans les paradis fiscaux, May 2017, European External Investment Plan: Key Issues to Watch During Implementation (Nov, 2017) Civil Society Joint Paper Submission for the EIB s Non-Compliant Jurisdictions (NCJ) Policy review (Jan, 2018) Leading by Example on Responsible Taxation (April 2018) 24

25 Joint CSOs paper Submission for the EIB s Non- Compliant Jurisdictions (NCJ) Policy review (2018) Key recommendations to EIB: stop investing via structures based in tax havens EU list of non-cooperative jurisdictions (Annex I & Annex II) physical implementation clause preferential tax regimes raise the bar on transparency and accountability effective tax rate require clients to have a responsible corporate tax policy develop and strengthen its in-house capacity require public Country by Country Reporting from its clients disclose the beneficial ownership of its clients on the website 25

26 Interim Approach to the EIB NCJ Policy 26

27 Interim approach to EIB NCJ Policy since January 2017 Expanded scope Operations potentially raising tax concerns, notably those with links to jurisdictions displaying risks of facilitating tax avoidance Extended due diligence Risk-based extended due diligence covering also the identification of potential tax avoidance practices Phasing-in Phased-in implementation of tax avoidance screening tools by testing & further refinement Informing the Board Additional information on the tax aspects of various operations to the Board Tax Integrity Questionnaire & Disclosures Listing of a jurisdiction Hybrid financial arrangements, leverage ratio, multi-jurisdictional structure, recent re-organization Adverse media attention in relation to tax concerns Effective tax rate & applicable tax regime Tax treatment of cash-flows Presence of funds Presence of provisions for disputed tax positions EIB Public Stakeholder disclosure Engagement of statements Meetingon tax compliance / tax integrity, director/executive 27 responsible for tax affairs Justifications / explanations for identified tax risk indicators 27

28 Part II Revision of the EIB Group NCJ Policy and on-going challenges 28

29 General Approach to Revision of NCJ Policy Turn into EIB Group Policy, modernise approach and language Introduce tax avoidance NCJ Policy Review Enhance tax disclosures / measures Develop anti-tax avoidance toolbox 11/06/

30 General Approach (2) Turn into Group Policy, modernise approach and language Develop an EIB Group approach and reinforce already strong EIB Group commitment Expand definitions, better targeted (tailored) approach Reference to the most recent tax developments Introduce tax avoidance Revise current definition of targeted activities Build in additional and tailored checks (due diligence) for tax avoidance risks indicators Take account of EFSI 2 / EFSD, ELM Financial Regulation language Enhance tax disclosures / measures Immediate effect of EU listing (no grace period) Expand scope of disclosures and measures to take account of Interim Approach lessons, EFSI 2 / EFSD, ELM, Financial Regulation language, EC Communication, CSO expectations Develop anti-tax avoidance toolbox EIB s expectations from contracting counterparties Risk assessment tools and measures CP to inform tax authorities of ownership structure Country-related tax risks 11/06/

31 General approach (3) The EIB Group NCJ Policy aims to strike the right balance between: the need to obtain visibility and explanation on certain structures and their tax treatment while not necessarily triggering unwarranted in-depth due diligence for low risk projects, in line with a risk-based approach; focusing resources and taking enhanced measures in situations where the risks are higher and apply simplified measures when risks are lower; the scope of tax integrity checks and operational objectives, allowing the EIB Group to meet applicable requirements without jeopardising deliveries under its mandate. While note is taken of the far-reaching expectations advocated by certain stakeholders, the EIB Group entities cannot replace the work of competent tax authorities. 31

32 PROPOSED AMENDMENTS BY SECTION I. INTRODUCTION 32

33 I. Introduction Subsections I. Introductory Remarks I.1 Preamble I.2 Main Definitions I.3 Reference Lists I.4 Basic Principles I.5 Scope 33

34 Shorten NCJ Policy history I. Introductory Remarks Make reference to the Interim Approach and engagement with stakeholders Emphasise rationale for the 2018 policy review: commitment to remain at the forefront in supporting implementation of international and EU standards in the field of AML-CFT and to promote tax good governance, notably the EC s Anti Tax Avoidance Package regulatory developments of the OECD I.1 Preamble Enrich with references to the following elements: tax good governance principles promoted by the EU, the OECD, the G20 as well as Global Forum Communication from the Commission on new requirements against tax avoidance in EU Legislation governing in particular financing and investment operations of 21 March 2018 ( EC Communication ) EU Council conclusions on The EU list of non-cooperative jurisdictions for tax purposes of 5 December 2017, as amended thereafter ( EU Council Conclusions ) commitment of the EIB Group to enhance due diligence measures in alignment with the developments in the area of tax good governance 34

35 I.2 Main Definitions (1) Introduce new definitions: AML Directive, Beneficial Owner, BEPS, FATF, NCJ Policy, Global Forum, OECD, Prohibited Conduct Revise definitions: EU Legal Framework Lead Organisations - further clarify reference to the Global Forum, G20 and the Inclusive Framework on BEPS Reference Lists - further clarify reference to AML/CFT and tax good governance standards Targeted Activities - expand to include tax avoidance NCJ Operation - clarify that it refers to a lending (including equity investments), borrowing, treasury or guarantee operation with an NCJ Location Link 35

36 I.2 Main Definitions (2) Revise NCJ definitions to clarify distinction between Restricted and Prohibited Jurisdictions: Restricted Jurisdiction classified by one or more Lead Organisations as non-compliant, partially compliant, noncooperative or equivalent in connection with the above mentioned international and/or EU standards (e.g. jurisdictions listed in Annex I to EU Council Conclusions) Prohibited Jurisdiction classified by one or more Lead Organisations as presenting ongoing and substantial AML-CFT risks, having repeatedly failed to address and/or remedy (as the case may be) identified strategic deficiencies in its AML-CFT framework and for which call for action on members of the classifying Lead Organisation applies; or Listed as non-cooperative jurisdiction for tax purposes by the EU Council Conclusions (Annex I) and classified as a Restricted Jurisdiction for AML-CFT purposes 36

37 Revise NCJ Link definitions: I.2 Main Definitions (3) Location Link where the contracting counterparty is established or incorporated in an NCJ Ownership Link where the contracting counterparty is owned (as per the meaning of AML Directive) by a legal or natural person established or incorporated in an NCJ Control Link where the contracting counterparty is controlled (as per the meaning of AML Directive) by a legal or natural person established or incorporated in an NCJ 37

38 I.3 Reference Lists Revise sub-section Reference Lists Modernise and update language (where necessary) Reinforce risk-based approach due diligence measures in consideration of Reference Lists In the event of conflict between ratings/lists provided in different Reference Lists, any Reference List published by the EU shall prevail 38

39 I.4 Basic Principles Modernise language, revise Policy goals, reinforce a risk-based approach ( RBA ) Explain approach: assessment of all operations in line with RBA standards of the due diligence process promoted by the EIB Group AML-CFT Framework and revised NCJ Policy Revise and update language of basic/core principles. Prohibition: Prohibition to enter into new or renewed operation with any material NCJ Link (location, ownership, control) to a Prohibited Jurisdictions Prohibition to enter into new or renewed NCJ Operation in a Restricted Jurisdiction (see practical examples) Exception: if the operation is physically implemented in the relevant Restricted Jurisdiction and the risk (if any) that the operation could be misused for Targeted Activities can be mitigated Reporting obligations to the Board of Directors 39

40 I.5 Scope Revise sub-section Scope to clarify that the Policy applies to: all operations, including EIB Group-financed structures implemented on behalf or for the account of other bodies within or outside the EU, in which the EIB Group participates in the course of its financing and investment activities as detailed in operational procedures, and all borrowing and treasury activities of the EIB Group with an NCJ Location Link. 40

41 PROPOSED AMENDMENTS BY SECTION II. POLICY GUIDELINES 41

42 II. Policy Guidelines Subsections II.A Prohibition II.B Enhanced Vigilance II.C Informing the Board of Directors 42

43 II. Policy Guidelines Sub-section II.A Prohibition Clarify measures applicable to operations with links to Prohibited Jurisdictions Clarify measures applicable to NCJ Operations in Restricted Jurisdictions Sub-section II.B Enhanced Vigilance Include reference to Appendix I Anti-Tax Avoidance Toolbox Reiterate existing measures Introduce possibility to extend enhanced vigilance measures to contracting counterparties incorporated or established in cooperative jurisdiction that have not yet solved tax good governance deficiencies so called committed jurisdictions Sub-section II.C rename into Reporting obligations to the BoD Revise reporting obligations to the Board of Directors 43

44 PROPOSED AMENDMENTS BY SECTION III. MEASURES IMPLEMENTED BY BANK 44

45 III. Measures Implemented by the EIB Group Subsections III.1 Integrity due diligence extended to all NCJ Operations III.2 Tax Disclosure III.3 Relocation requirements III.4 Integrity covenant in the Bank s contracts, Counterparty s declarations and undertakings Add: Additional measures 45

46 III.1 Due diligence on NCJ operations Modernise language (where necessary) Reinforce commitment to carry out due diligence on operations to assess that: the contracting counterparties are not incorporated in an NCJ (exception: physical implementation) no support to financial sector in an NCJ (exception: financial intermediary for EIB Group s investments in the relevant NCJ) the beneficial owners of contracting counterparties are identified additional information for operations with NCJ Links is collected NCJ Operations are possible only where: the contracting counterparty/ies and the operation s physical implementation location are in the same jurisdiction AND the risk (if any) of the operation being misused for Targeted Activities can be mitigated. 46

47 III.2 Tax Disclosure Reinforce requirement for contracting counterparties to provide for NCJ Operations and controlling shareholders established in an NCJ: the economic rationale of the structure and the specific economic requirements that make recourse to the relevant structure necessary AND a description of the tax regime applicable to the proceeds of the operation. Collect information on the commitment of an NCJ to tax good governance standards (e.g. reasons for listing under the Council Conclusions, membership of the Global Forum and the Inclusive Framework on BEPS, implementation of internationally agreed standards and etc.) 47

48 III.3 Relocation requirements Deletion of Grace Period is proposed in view of requirement for direct applicability of the EU list of non-cooperative jurisdictions for tax purposes Clarify that the relocation provision is applicable to new Cross-border operations with contracting counterparties incorporated or established in NCJs prior to signature of the contract Physical implementation exception will not apply where it is specifically excluded in the applicable mandates/ legislation III.4 Integrity covenant in the Bank s contracts, Counterparty s declarations and undertakings Revise integrity covenants 48

49 Additional measures Reinforce the possibility to adopt additional measures to address certain risk factors identified in the course of the due diligence performed on the NCJ Operation which may be perceived as being misused by the contracting counterparty for Targeted Activities Introduce reference to the catalogue of measures included in the proposed Appendix 1 Anti-Tax Avoidance Toolbox Reinforce reference to the extension on risk sensitive basis of NCJ Policy measures also to operations without NCJ Links 49

50 PROPOSED AMENDMENTS BY SECTION IV. POLICY ADMINISTRATION 50

51 IV. Policy Administration Rename section heading into: Ongoing Review and Application Confirm commitment to remain ambitious by always keeping the NCJ Policy at the forefront and updated taking all relevant EU and international regulatory developments into account Reinforce commitment to transpose the new requirements ensuing from the revised Policy in the detailed operational procedures and due diligence measures tailored in consideration of each EIB Group s institution s specificities and following specific requests from the decision-making bodies 51

52 PROPOSED AMENDMENTS BY SECTION APPENDIX I ANTI-TAX AVOIDANCE TOOLBOX 52

53 Appendix I Anti-Tax Avoidance Toolbox (1) 1 2 Tax good governance expected from contracting counterparties compliance with applicable national, European and/or international laws and to that extent refrain from artificial arrangements aimed at tax avoidance hold and provide adequate, accurate and current beneficial ownership information awareness of expectations highlighted in the EIB Group NCJ Policy refrain from: cross-border ownership structures involving jurisdictions with identified tax good governance deficiencies by Lead Organisations which are exclusively motivated by tax reasons and do not have any economic substance proactively take account of their exposure to national, European and international tax risks arising from their ownership/control structure endorse the arm s length principle for transactions with related parties Tax avoidance risk assessment tools and measures May seek confirmation from contracting counterparties that they do not benefit from preferential tax regimes Possibility to request, on a risk-sensitive basis, contracting counterparties to provide: ownership structure chart, economic rationale and tax regime applicable to major shareholders upstream the project ownership structure information on statutory and effective tax rates and explanation in differences (if any) explanation on tax adverse media reports explanation on disputed tax positions confirmation that their intra-group transactions (if any) are compliant with the arm s length principle and/or whether any transfer pricing documentation was prepared and provided to relevant tax authorities CRS / FATCA classification of entities an independent tax opinion a document from competent tax authorities on tax good standing (if available) 53

54 Appendix I Anti-Tax Avoidance Toolbox (2) 3 Relationship with competent tax authorities When necessary, EIB Group may encourage dialogue between the Contracting Counterparties with competent tax authorities, with a view to being informed about certain tax aspects of the them Contracting Counterparty s structure and/or arrangements, such as the multijurisdictional ownership structure and/or the classification of financial instruments/entities, and/or information on direct or indirect shareholders. 4 Country-related tax risks EIB Group will take into account the tax integrity risks stemming from the presence of the contracting counterparties in certain jurisdictions. This assessment may consider inter alia: jurisdiction s tax good governance deficiencies identified by Lead Organisations membership of a country / jurisdiction in the Global Forum membership of a country / jurisdiction in the Inclusive Framework on BEPS adherence to the Multilateral Convention on Administrative Assistance in Tax Matters and/or existence of bilateral exchange of information instruments and/or existence of EU legislation providing for exchange of information adherence to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS 5 Simplified approach where contracting counterparties are: public companies listed on a stock exchange and subject to disclosure requirements; public administration (sovereigns, sub-sovereigns), state owned enterprises or international financial institutions; Contracting Counterparties which are subject to country-by-country reporting; or in the absence of cross-border elements. 54

55 Designation of jurisdictions Council conclusions Lead Organisations FATF Art 9(2) 4th AMLD OECD Global Forum Annex I Annex II Put on hold NCJ LIST Prohibited Restricted Interim Approach Tax Sensitive Jurisdictions Preferential Tax Regimes IQ TIQ 18/09/

56 Overview of key features draft proposal Jurisdictions Classification criteria Lead Organisation Prohibition Enhanced vigilance Reporting to Board Relocation requirement Restricted Jurisdictions Prohibited Jurisdictions Tax OR AML-CFT AML-CFT (strategic deficiency) EU (Tax List Annex I) / OECD Global Forum / FATF / EU (AMLD) FATF/ EU (AMLD) (strategic deficiency) Yes: Location Link. Operation possible only if physically implemented in the relevant Restricted Jurisdiction Yes: any NCJ Link (location/ownership/control). Yes, any NCJ Link Yes Yes: new Crossborder operations with Contracting Counterparties incorporated or established in NCJs prior to signature of the contract AND AML-CFT (Restricted) + Tax (EU list, Annex I) AND FATF/EU (AMLD) + EU (Tax List, Annex I) Operation possible only if physically implemented in the relevant Prohibited Jurisdiction Jurisdictions Tax Sensitive Jurisdictions Classification criteria Tax on risksensitive basis Lead Organisation Prohibition Enhanced vigilance EU (Tax List, Annex II) / OECD Global Forum No Yes, any NCJ Link Reporting to Board Yes Relocation requirement No 56

57 Practical examples of draft proposal Parent Co. Parent Co. Parent Co. Parent Co. Legend: Type of jurisdiction: Prohibited jurisdiction EIB Contracting Counterparty EIB Contracting Counterparty Restricted jurisdiction Not an NCJ Parent Co. Parent Co. Parent Co. Parent Co. >10% >10% Applicable measures: EIB Contracting Counterparty EIB Contracting Counterparty Prohibition to enter into operation* Parent Co. Parent Co. Parent Co. Parent Co. Enhanced vigilance and information to the Board Parent Co. >10% Parent Co. Parent Co. >10% Parent Co. * Save for physical implementation exception where applicable EIB Contracting Counterparty EIB Contracting Counterparty 18/09/

58 Tax Integrity Due Diligence Scope Contracting counterparty meets regulatory requirement which states: shall not enter into new or renewed operations with entities incorporated or established in Major or controlling shareholder follows AML-CFT principles Materiality threshold as per AML/CFT Directive > 25%, Possibility for EIB to calibrate risk-sensitivity Simplified tax integrity due diligence where Contracting counterparties are: (i) public companies listed on a stock exchange, (ii) public administration (sovereigns and sub-sovereigns), state owned enterprises or IFIs, (iii) contracting counterparties subject to country-by-country reporting, or in absence of cross-border elements. 58

59 Tax Integrity Due Diligence Tools General tax disclosures TIQ Package Tax Integrity Questionnaire (TIQ) Specific tax disclosures Summary information in the approval documents Harmful preferential tax regimes 18/09/

60 Q&A Session 60