24 September 2020
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The European Securities and Markets Authority (ESMA) wants securities and tax regulators to be given new powers to share information for cracking down on fraudulent tax reclaim schemes.
ESMA recommended in its final report to the European Parliament that lawmakers make it possible for regulators across the bloc to share information following fraudluent schemes linked to dividend transfers, which have cost the European Union $64bn in lost taxes.
In these WHT reclaim schemes investors engineer share trades to make bogus tax reclaims from phantom dividends.
Increased cooperation between national competent authorities and tax authorities across the EU would be an important step"
Additionally, ESMA has called for a common legal basis should be developed to ensure a consistent and convergent approach on the exchange of information directly acquired by national competent authorities in their supervisory activity with tax authorities.
"While halting these schemes seems to be primarily dependant on changes to tax legislation, ESMA considers that increased cooperation between national competent authorities and tax authorities across the EU would be an important step in identifying and deterring abusive schemes," ESMA Chair Steven Maijoor said in a statement.
ESMA has also considered whether any potential solution to contribute to the detection and prosecution of WHT reclaim schemes could be achieved through an amendment to the Market Abuse Regulation (MAR)
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