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HMRC internal manual

International Exchange of Information Manual

The DAC: Ruling related to a bilateral APA

A bilateral Advanced Pricing Agreement (APA) is an agreement between HMRC and the tax administration of another jurisdiction under the Mutual Agreement Article of a Double Taxation Agreement (INTM422030).  What should be shared under the DAC in respect of an APA will differ depending on whether the other contracting state is an EU Member State.

Bilateral APAs have to be exchanged under the DAC but not under Action 5 (see IEIM541200).


Different treatments for exchange of bilateral APAs under the DAC

In the course of agreeing the APA, the jurisdictions are required to exchange customer-specific information relating to the parties and transactions.  That information will have been exchanged under a tax instrument.


Bilateral APAs where the counterparty is another EU Member State

Where that exchange was under the DAC itself (i.e. with another EU Member State), the APA itself may be exchanged in accordance with Article 16.3 DAC.  The template at IEIM570900 is to be completed using the information agreed in the MAP (mutual agreement procedure) that forms the basis of the APA.


Bilateral APAs where the counterparty is not another EU Member State

Where the exchanges of information leading to the APA were done under another instrument (for example a Double Taxation Agreement) with a non EU Member State, the APA itself cannot be exchanged.  Instead, the DAC requires the exchange of the information presented in the initial request of the customer provided to HMRC.

This is because, unlike the DAC, most of the UK’s DTAs do not allow for onward exchange of information exchanged under the treaty. If HMRC receives information under a treaty with Jurisdiction A, we cannot necessarily provide that to Jurisdiction B (and certainly not without the consent of Jurisdiction A).


To respect this, only the initial information provided by the customer should be exchanged under the DAC, and not any details of the APA itself.  The template (IEIM570900) must be marked to indicate that the information is from that initial customer request.  This alerts the other EU Member States that the details do not relate to the final agreement.


In no circumstances should the contents of the letter between HMRC and the customer setting out the detail of the APA be exchanged.


Attribution of profits to a permanent establishment

This guidance applies equally to bilateral APAs that concern the attribution of profits to a permanent establishment (see IEIM541320).


Example of a bilateral APA with a third country

HMRC agrees a bilateral APA with the tax administration of Country X, which is not a Member State of the EU.

The information required to complete the template at IEIM570900 is extracted from the original request for the APA submitted by the customer. The final APA is not exchanged.

It is important to indicate on the template that the information is based on the request for an APA.