The European Commission has launched a consultation on possible regulatory measures that might be introduced in order to disincentivise the use of aggressive tax planning schemes by EU financial advisers and wealth managers.
The “Disincentives for advisers and intermediaries for potentially aggressive tax planning schemes” consultation is described in a statement on the European Commission’s website as “aim[ing] to gather views on whether there is a need for EU action aimed at introducing more effective disincentives for intermediaries or tax payers engaged in operations that facilitate tax evasion and tax avoidance, and in case there is, how it should be designed”.
The EC consultation comes after the UK’s HM Revenue & Customs earlier this year unveiled a consultation on plans to introduce “sanctions for enablers and users of tax avoidance”, which closed on 12 October. The responses to that consultation have yet to be published.
Panama Papers influence
The European Commission’s consultation is, it says, a response to the Panama Papers document leak that occurred in early April, and the subsequent global reaction.
Explaining this in the context of the consultation, the EC noted that “recent public discussions, such as the Mossack Fonseca client data leak, have shown the crucial role that certain intermediaries play in facilitating tax avoidance and tax evasion, and several calls have been made for the EU to take the lead in this field.
“…The Panama Papers have highlighted how certain intermediaries appear to have actively helped their clients to conceal money offshore. Whilst some complex transactions and corporate structures may have entirely legitimate purposes, it is also clear that some activities, including offshore structures, may be less legitimate and in some cases illegal.
“A number of taxpayers use shell companies registered in tax havens and appoint nominee directors to conceal their wealth and income by hiding the identity of the real owners of the companies (beneficial owners).
Different and complex structures are used so as to create distance between the beneficial owners from their wealth also to ensure low or no taxation.
“Taxpayers are rarely experts on company or tax law in the tax jurisdictions used for these structures. They usually rely on intermediaries who assist them in the design of the most appropriate structure.
“These intermediaries include among others consultants, lawyers, financial (investment) advisers, accountants, solicitors, financial institutions, insurance intermediaries, and company-formation agents.”
The consultation closes on 16 February. To see more about it on the EC’s website, click here.