1. Exchange of Information and Mutual Assistance March 3rd 2011

2. Introduction • Information gathering measures • Legal basis for exchange of information • Information exchange based on DTA’s • Double Taxation Agreements with Member states • Double Taxation Agreements with non-Member states • Initialled DTA’s drafts • Nordic Assistance Agreement • Convention on Mutual Assistance in Tax Matters • TIEA’s • Procedures • Conclusion

3. Information gathering measures • Art. 92 of Act No 90/2003 • Basic article for information gathering for tax authorities. • all salary payments, interests, dividends etc. reported to tax authorities once a year. • information from the Icelandic Property Registry on notarised owners of real estate • information from the Road Traffic Directorate on notarised owners of vehicles • this provides the basis for the pre-printed tax return for individuals as well as for verification on behalf of the tax authorities.

4. Art. 94 of Act No 90/2003 • Every individual, legal person and all others are obliged to give information to tax authorities upon request. • The requested information does not have to concern the requested party or it’s customer • Financial institutions, auditors/accountants, lawyers and others are instructed to keep special records of those clients that receive consultancy services regarding control/direct/indirect ownership of companies, funds or institutions registered off-shore • Confidentiality and secrecy provisions of other laws take second place to Art. 94 of Act No 90/2003

5. Legal basis for exchange of information • There are no specific provisions in internal law that relate to exchange of information • A strict confidentiality provisions in internal law • Exchange of information is based on: • provisions in double taxation agreements • provisions in information exchange agreements • provisions in the Nordic Assistance Agreement in Tax Matters • the Convention on Mutual Administrative Assistance in Tax Matters

6. Information exchange based on DTA’s • Generally DTA’s only apply to income and income taxes • VAT or other indirect taxation is not covered • The new Art. 26 of the OECD Model Tax Convention and the commentary • includes information exchange on other taxes not covered by the treaty • Only 10 of Iceland’s DTA’S cover taxes outside the scope of the DTA

7. Nordic Agreement on Assistance in Tax Matters • The multilateral DTA between the Nordic countries does not have an article on exchange of information • A special agreement between the Nordic countries on assistance in tax matters • Exchange of information • All taxes, direct and indirect • Assistance in recovery • transfer of tax • collection of tax

8. Convention on Mutual Administrative Assistance in Tax Matters • Iceland ratified the Convention on Mutual Administrative Assistance in Tax Matters in July 1996. • Iceland has signed the Protocol amending the Convention in May 2010 • the Protocol is awaiting ratification in Iceland • Wide scope – among other: • taxes on income and profit • taxes on capital • social security contributions • inheritance tax • real estate taxes • VAT

9. Belgium Czech Republic Denmark* Estonia Finland* France Greece* Germany Hungary* Ireland Italy* Latvia Lithuania Luxembourg* Netherlands Malta Poland Portugal Romania* Slovakia Spain Sweden* United Kingdom List of DTA´s with EU-Member States

10. Canada China Croatia* Faroe Islands* Greenland* India* Mexico* Norway* Russian Federation South-Korea Switzerland Ukraine* USA* Vietnam List of DTA´S with non EU Member States

11. Member states: Austria Bulgaria Slovenia Non-member states: Albania Qatar Initialled DTA´s drafts

12. TIEA´s Iceland has signed Information Exchange Agreements with 29 jurisdictions • In force: Cayman*, Guernsey*, Jersey*, Isle of Man*, • Waiting ratification: Andorra, Anguilla, Antigua and Barbudas, Aruba*, Bahamas, Belize, Bermuda*, British VirginIslands,Cooks Islands, Dominica, Gibraltar, Grenada, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Netherlands Antilles*, Samoa, San Marino, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Turks and Caicos Islands, Vanuatu,

13. Exchange of information Procedures Automatic exchange of information • Yearly – 6-11 months after the income year ends • OECD standards • CD-ROMS with password protected files • Salary of all kind, pensions and social security payments, interests, dividends, other income To all DTA countries

14. Information upon request • Handled on a case by case basis • No special form – not electronic exchange • Spontaneous exchange of information • Basically the same procedure as for information exchange upon request.

15. Prevention of tax evasion and avoidance • EU-Liechtenstein draft agreement on anti fraud and tax information exchange • Similar agreements with Andorra, Monaco, San Marino and Switzerland • Iceland is interested in entering into such agreements • There are no provisions in our internal legislation that prohibits such agreements • Iceland already has signed TIEA’s with Liechtenstein, Andorra, Monaco and San Marino and has a DTA with Switzerland that needs to be revised.

16. Conclusions • There are no legal constrictions that could prevent effective exchange of information between Iceland and other European Union Member states • Procedures might have to be adapted • Timeframes • Electronic exchange of information