Action plan on tax fraud and tax evasion due this year
By Tanguy Verhoosel | Wednesday 20 June 2012
The European Commission will announce, on 27 June, its intention to propose a detailed action plan, by the end of 2012, designed to scale up the fight against tax fraud and tax evasion in the Union and in relation to non-EU countries.
The Commission presents the outlines of this plan in a communication drafted at the request of the European Council, which will meet on 28-29 June. In parallel, the Danish EU Presidency has also drafted a grim report on tax issues for submission to the 27 heads of state and government (see
The executive’s communication, seen by
Europolitics, is both very political and very technical.
With the black economy making up 19.2% of the Union’s GDP and member states desperately seeking new tax revenues in the context of the economic crisis, the Commission insists on the pressing need to combat tax fraud and tax evasion energetically. It suggests three lines of action: improved tax collection (especially for VAT); enhanced administrative cooperation between member state tax authorities; and adoption of a “clear and coherent” policy towards third countries.
The Commission considers it “vital” for the 27 to agree without delay to extend the scope of the Savings Taxation Directive. It is extremely determined: the Union must make the automatic exchange of tax information the general rule on its territory and “promote” this model outside its borders so as to contribute to the development of the OECD’s international standards on transparency, based today on the model of exchange of information on request. The US Foreign Account Tax Compliance Act (FATCA) “opens new perspectives” in this respect, it adds.
In parallel, “it is essential to improve the identification of taxpayers” in the EU. The Commission will therefore conduct an impact study on the possible creation of a European “tax identification number” (TIN).
Other initiatives are also announced. The Commission wishes to extend Eurofisc to direct taxation, will propose (in July) a quick reaction mechanism on VAT fraud, intends to develop a strategy for tackling “artificial tax planning” and is considering the creation of a European “taxpayers’ charter” and an EU “minimum level of sanctions” against tax fraudsters and evaders.
The EU executive also calls on member states to apply “a coherent policy” towards third countries in general and tax havens in particular.
Offshore financial centres with banking secrecy laws continue to dominate the international cross-border deposits market, notes the Commission. Switzerland and the Cayman Islands alone, with a total of US$1,352 billion in non-bank deposits, represent almost 20% of all worldwide non-bank deposits. The report adds that the sums held indirectly by EU investors through tax havens in Switzerland alone is 4.5 times as much as money held directly by such investors.
Another indication of the “magnitude of the problem” that Switzerland represents for the EU as a whole: the United Kingdom hopes to recover GBP4-7 billion from the regularisation of assets hidden from UK tax collectors, via the Rubik agreement concluded by London and Berne.
For the Commission, it is urgent for the Council to give its green light to the renegotiation of the EU-Switzerland agreements on savings taxation and combating fraud.
The Commission’s communication notes that with a view to building a “favourable tax environment” for the EU, the problem of unfair tax competition also needs to be addressed in the context of business taxation.
The executive intends to present a communication on this subject towards the end of the year, it notes. Its aim is “to establish a set of measures, procedures and tools for coordinated action,” which could include “a combination of defensive measures or sanctions” against countries that practice unfair taxation.