Recent revelations have highlighted how certain intermediaries, such as tax advisers, helped their clients to shift profits offshore for the purposes of avoiding tax. While some complex transactions and the setting up of off-shore companies may be entirely justifiable, it is also clear that other activities may be less legitimate and in some cases illegal. As set out in the recent Communication on further measures to enhance transparency and the fight against tax evasion and avoidance, the Commission wants to shed more light on the activities of tax advisers. We also want to reflect on how to build effective deterrents for promoters and enablers of aggressive tax planning schemes and those who use them.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs Union said: "Complex financial schemes and opaque corporate structures do not happen by accident: some intermediaries have developed these into an art-form. These experts offer their clients the opportunity to aggressively exploit loopholes or to shift their profits so as to substantially reduce their tax bill. The public consultation we're launching today will help us to work out ways to deter intermediaries from designing such schemes and to give our Member States greater insight and information to enable them to put a stop to them."
In particular, the Commission is interested in gathering views on how a mandatory disclosure scheme for tax advisers could be put in place. Such rules would oblige intermediaries to give early information on schemes which could be viewed as aggressive or abusive planning for tax purposes and would reflect the goals of the OECD's non-binding guidelines (BEPS Action 12) for the disclosure of aggressive tax planning strategies. This public consultation will help to decide whether it is appropriate to introduce binding rules at the EU level and, if so, what the most legal suitable legal instrument should be. The public consultation will run until 16 February.
Many companies and individuals rely on intermediaries to design financial structures that help them to avoid paying their fair share of tax. These intermediaries can include consultants, lawyers, financial and investment advisers, accountants, financial institutions, insurance intermediaries, and agents who set up companies ('Trust and Company Service Providers'). Schemes formulated by these intermediaries can often lead to a loss in tax revenues for government coffers.
The European Parliament has called for tougher measures against those intermediaries who assist in aggressive tax planning schemes. The Council has also invited the Commission "to consider legislative initiatives on mandatory disclosure rules inspired by Action 12 of the OECD BEPS project with a view to introducing more effective disincentives for intermediaries who assist in tax evasion or avoidance schemes”.
This consultation will gather views on whether there is a need for EU action aimed at introducing more effective deterrents for tax advisers engaged in operations that facilitate tax evasion and tax avoidance, and how such rules should be designed.