In a consultation paper published on Thursday, the EU said it was looking at introducing a ‘mandatory disclosure scheme’ that would require intermediaries such as tax accountants and financial advisers to red flag schemes that facilitate tax evasion and tax avoidance.
Pierre Moscovici, taxation commissioner at the EU, accused advisers of developing “complex financial schemes and opaque corporate structures” into an “art-form”.
“These experts offer their clients the opportunity to aggressively exploit loopholes or to shift their profits so as to substantially reduce their tax bill,” he said.
Brussels added that the European Parliament – representing the 28 EU member states – has called for tougher measures against intermediaries who assist in aggressive tax planning schemes since the Panama Papers revelations surfaced in April.
More than 11 million documents, leaked from Panamanian law firm Mossack Fonseca, lifted the lid on how the rich and powerful around the world use offshore tax havens to hide their wealth.
“Recent revelations have highlighted how certain intermediaries, such as tax advisers, helped their clients to shift profits offshore for the purposes of avoiding tax,” explained the EC.
The EC said it wanted to “shed more light on the activities of tax advisers” in a bid to deter “promoters and enablers of aggressive tax planning schemes”.
A similar move was unveiled by the UK’s HM Revenue & Customs (HMRC) in August, where advisers found guilty of helping their clients dodge tax – including via offshore tax havens – could face hefty fines of up to 100% of tax avoided.
“Many companies and individuals rely on intermediaries to design financial structures that help them to avoid paying their fair share of tax.
“These intermediaries can include consultants, lawyers, financial and investment advisers, accountants, financial institutions, insurance intermediaries, and agents who set up companies.
“Schemes formulated by these intermediaries can often lead to a loss in tax revenues for government coffers,” the EC said in a statement on its website.
Tax evasion measures
The mandatory disclosure facility is the latest move announced as a part of the EU’s crackdown on tax evasion.
Following the Panama Paper scandal, more than 25 EU-member countries and the offshore centres of the Isle of Man and Gibraltar also signed a deal setting up a confidential beneficial ownership register which would automatically share information on the ultimate owners of companies.
However, not all of the Commission’s transparency measures have proved popular.
Earlier this week, The Guardian reported that UK government is fighting to keep Guernsey, Jersey and other British overseas territories off the EU’s planned blacklist of offshore tax havens, arguing that it has no right to penalise outside jurisdictions for setting zero rate corporation tax.
Former Isle of Man chief minister Allan Bell has previously slammed the blacklist, accusing the move of being a data-gathering exercise on non-EU tax regimes rather than about improving transparency.
Bell also questioned the hypocrisy of the EU list, which fails to include EU countries such as Luxembourg and Germany, which have previously ranked higher on the Financial Secrecy Index ahead of countries like Panama.