EU will pounce on cross-bor­der tax avoid­ance

The Guardian - - FINANCIAL - Juli­ette Gar­side

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.

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