EU rules could see intermediaries aiding ‘tax dodging’ fined

15 Mar 18

Accountants who companies dodge tax by shifting profits to low-tax countries could risk fines, under new European proposals to tackle avoidance and improve transparency. 

This comes as European finance ministers added the Bahamas, the US Virgin Islands and Saint Kitts and Nevis to the bloc’s tax haven blacklist, while removing Bahrain, the Marshall Islands and Saint Lucia.

The European Commission on Tuesday announced the new political agreement reached by member states on transparency rules for tax advisers, accountants, banks and lawyers, who promote tax planning schemes.

Following the agreement, Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: “The new rules agreed today confirm the EU as the world leader in tax transparency.

“In future, intermediaries will have to share with tax administrations the schemes they sell to their clients.’

He added: “Tax administrations will then have access to the information they need to put an end to the aggressive tax planning schemes eroding their tax bases.

“This agreement is a further step towards more openness and better cooperation, facilitating fairer and more effective taxation throughout the EU." 

Once the measure is in force, tax intermediaries will be obliged to report any complex cross-border financial schemes, used to avoid tax, to their tax authorities.

The union published their blacklist of countries classified as tax havens in December, but was criticised for not including member states.  

The bloc’s member states will share this information with each other to increase scrutiny of tax planners and advisers.

The new reporting requirements will enter into force on 1 July 2020, with member states obliged to exchange information every three months after that.

The first exchange of information will take place by 31 October 2020. This will be done through a centralised database, giving states early warning on new risks of avoidance and enabling them to take measures to block the arrangements and carry out effective audits.

Member states have also agreed to implement “effective and dissuasive penalties” for those who do not comply, the Commission said.

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