EU will pounce on cross-border tax avoidance
Banks, accountants and law firms that facilitate offshore tax schemes face a Europe-wide crackdown, according to a leak of draft legislation.
Brussels will this Wednesday publish proposals to force financial intermediaries to automatically disclose new crossborder tax schemes offered to clients.
Those designing and promoting aggressive avoidance structures will have five working days to file details with their local tax authority, according to a leaked version of the proposals, drawn up by the European commission.
Where there are several intermediaries in the chain, one will be made to take responsibility for disclosure. And where all intermediaries in the chain are based outside European member states, the obligation to disclose will fall to the client.
“The ultimate objective,” according to the Commission, “is to design a mechanism … that will dissuade intermediaries from designing and marketing such arrangements.”
The new rules will come into force in 2019. Since 2004, UK statute books have had legislation forcing those who market tax schemes to report them to HM Revenue and Customs. Portugal and Ireland have similar rules.
However, the commission’s proposals would further tighten the screw on British-based intermediaries. “If we go for a softer Brexit, as now seems more likely, these rules would apply in the UK,” said Green MEP Molly Scott Cato.