Exchange of Information in Tax Matters: Experiences from Croatia and Slovenia

Keywords: exchange of information, tax transparency, tax evasion, Croatia, Slovenia


Globalisation and cross-border movement of persons and capital have placed new challenges before national tax systems as well as international taxation. Over the past 20 years there has been an unprecedented development of exchange of information, a previously ancillary instrument which has developed into a widely accepted global means of fighting tax evasion. Exchange of information has evolved from an instrument of limited scope used for the implementation of tax treaty provisions to a sophisticated system of automatic information exchange encompassing a vast majority of countries, including infamous tax havens. The notions of tax secrecy and tax transparency have undergone a re-evaluation process, resulting in new global paradigms directed at unveiling previously secret transactions. Banking secrecy has been abolished even in countries with a strong tradition thereof. As some time has passed since the introduction of the latest global standard of the automatic exchange of information, this paper reflects on the most important aspects of exchange of information, regulated by tax treaties: the OECD’s CRS, EU’s DAC, and FATCA. Following a
theoretical introduction, which provides a historical and comparative overview of information exchange instruments, the paper presents the practical results of the implementation. Findings of the evaluation of the instrument conducted by key international stakeholders are accompanied by available statistical information,
depicting to what extent it has been helpful in preventing tax evasion in Croatia and Slovenia and in recovering lost public revenues. The paper results in identifying the shortcomings of national applications, based on best global practices and statistical data as well as providing tax authorities with recommendations
for the improvement of exchanging information. As the system is still in a rather early stage of implementation, the paper presents the current tax administration involvement in exchanging information, which will enable further evaluations in future stages of implementation of the instrument.