Business Irish

Saturday 19 January 2019

EU chief brands tax advisers 'vampires'

Pierre Moscovici
Pierre Moscovici

Francesco Guarascio

The EU needs a quick agreement on proposed rules for lawyers, bankers and other advisers who help devise ways to aggressively cut tax bills, the European Commissioner for Tax has said.

In a speech in the European Parliament in Strasbourg, Pierre Moscovici called on member states and EU legislators to agree "in the next six months" on proposals made by the European Commission in June that would force advisers to report tax-planning schemes devised for their clients.

The appeal for more transparency on tax matters comes after new revelations, known as the Paradise Papers, of widespread use by companies and wealthy individuals of offshore jurisdictions.

"We know that multinationals, wealthy individuals, consultants, banks work hand-in-hand to subtract massive amounts of tax revenues," Mr Moscovici said.

The practices were "systemic," he said, questioning their legality. He compared tax professionals that help evasion to "vampires that fear the light", and against which only transparency can work as a deterrent.

Mr Moscovici also urged member states to agree by the end of the year on an EU blacklist of tax havens, to reduce the appeal of offshore jurisdictions that charge little or no corporate tax.

Unlike tax evasion, aggressive tax planning and tax avoidance are not illegal, but they are controversial and in some cases could hide illicit activities.

The proposal on stricter rules for tax advisers would impose sanctions on lawyers, accountants, banks and other consultants that do not disclose tax arrangements that could help avoidance.

So far, the Commission's proposal has made little progress. On tax matters, all 28 EU states have to agree on reforms, a provision that has allowed smaller, low-tax countries to block several overhauls.

Luxembourg and the Netherlands are the EU countries with the largest volume of assets held in financial vehicles owned by corporations that shift funds within companies across borders, data cited by the European Central Bank in an October report show.

In total, those corporations hold about €10trn in the two countries, ECB data show, making up around one-eighth of the eurozone's entire financial system.

The entities "are mainly set up in Luxembourg for financial engineering and tax-planning purposes," a report prepared for the Grand Duchy's central bank, and cited by the ECB, said in April.

The report on the country's shadow banking system added that most of these companies "have virtually no physical presence in Luxembourg". (Reuters)

Irish Independent

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