TAX ADVISORS NEED TO COMPLY WITH NEW TRANSPARENCY RULES IN CONNECTION WITH CROSS-BORDER TRANSACTIONS

Following the successful public consultation launched by the European Commission in November 2016, the European Commission has proposed new transparency rules and penalties for intermediaries (for example tax advisors, accountants, banks and lawyers) providing services in connection with tax planning schemes. The goal is to fight against aggressive tax planning by increasing control over the concealed activities of tax planners.

According to the proposal, cross-border tax planning schemes bearing certain ‘hallmarks’ will now have to be automatically reported to the tax authorities before they are used. The proposal identifies key hallmarks such as involving a cross-border payment which is deductible at source to a recipient resident in a no-or low-tax country, or involving a jurisdiction with inadequate or weakly enforced anti-money laundering legislation.

The obligation to report a cross-border scheme having one or more of these hallmarks will be borne by, inter alia, the intermediary who prepared the cross-border scheme, or the individual or the company receiving the advice, when the intermediary does not have a seat in the EU or such cross-border scheme is developed by in-house tax consultants or lawyers.

The Member State in which the cross-border scheme are reported shall automatically share this information with all other Member States in a standard format. All Member States are obliged to implement dissuasive sanctions for those companies that do not comply with the transparency measures.