The European Commission announces a new plan against international tax fraud
On December 6, 2012, the European Commission published a Communication addressed to the European Parliament and the Council setting forth a series of proposals which, in the short-, medium- and long-term, should help improve the fight against tax fraud and tax evasion both nationally and at European level Action Plan Against International Tax Fraud).
The range of measures included in the Communication is extremely broad, although one can highlight the strengthening of existing mechanisms for the exchange of information (within the EU and with third countries), a review of the direct taxation Directives to prevent cases of non-taxation, the identification of and coordinated action against uncooperative jurisdictions (tax havens) and, in step with the work done by the OECD, the adoption of measures against so-called “aggressive tax planning”. In the longer run, it is envisaged that common tax management instruments will be developed in the EU, both at the level of taxpayer compliance and at the level of control by the national authorities (for instance, the creation of a European taxpayer’s code/charter and an EU Tax Identification Number, the creation of common web portals and IT applications, the development of uniform standards for tax audits and penalties, etc.).
The Communication is accompanied by two Recommendations addressed to the Member States for them to specifically (subject to follow-up and scrutiny by the Commission):
- draw up or complete their lists of tax havens using uniform criteria, adding as a criterion (additional to the lack of tax transparency) the existence in those countries of tax measures that are harmful to legitimate tax competition (offshore regimes, tax advantages that are not transparent or linked to the existence of economic substance, etc.) (Recommendation on Good Governance and Tax Havens))
- establish legislative measures domestically or by treaty to limit “aggressive tax planning” opportunities, understood to mean taxpayers taking advantage of legislative loopholes or mismatches between the laws of different countries to achieve zero taxation overall (or the double deduction of losses). The proposed measures most notably include a review of the mechanisms for sharing tax powers or for eliminating double taxation in international tax treaties (so as to ensure that items are taxed in one of the jurisdictions), and the common adoption in the EU of a general anti-abuse rule which, while respecting EU law (and, in particular, the freedoms of establishment and movement) permits the pursuit of artificial arrangements which have been put into place for the essential purpose of avoiding taxation and are devoid of economic substance (Recommendation on Aggressive Tax Planning”)
This initiative from the European Commission reflects a clear international trend towards greater corporate responsibility (also in the field of taxation), which is also being followed by Spain (see the press release from the Spanish Ministry of Finance and Public Administration dated November 20, 2012) and which confirms the need for the corporate and investment structures of companies operating on the international stage to be based on sound legal and economic fundamentals.