Tax Research UK

From the Jersey Evening Post:

Jersey has plans to move to automatic exchange of tax information by 2011.

Treasury Minister Philip Ozouf has revealed that Jersey is already committed to the introduction of automatic information exchange mechanisms by January 2011.

Excellent.

Pity it’s taken so long and that so much effort had to be expended, but we’ve won.

Now it’s on to extending the directive and to shattering corporate and trust secrecy in these places.

Richard Murphy EU STD, Jersey

Finance Minister Hans-Rudolf Merz says new tax regime will not lead to a lot of money to flow to Germany. - swissinfo.

[The Swiss finance minister] speaking in an interview with the Frankfurter Allgemeine Zeitung, said his German colleague, Peer Steinbrück, was “dreaming” if he expected “hundreds of millions of francs” in tax money to come pouring in.

Merz was responding to Steinbrück’s comments earlier this year that German taxpayers have deposited €200-300 billion (SFr130–196 billion) in Swiss bank accounts, and that Berlin loses €1 billion annually through tax evasion.

The Swiss finance minister said last year, for example, SFr137 million in taxes was sent to Germany, a figure Steinbrück called a “joke”.

“According to the latest figures, there is approximately SFr5.4 trillion in total assets invested in Switzerland,” Merz told the German newspaper. “Half of this is from institutional investors who have no grounds to evade taxes or commit fraud.”

As ever the Swiss tell less of the story than actually exists.

Half that institutional money is structured through companies, foundations and other arrangemnts precisely to remain out of view under the European Union Savings Tax Directive.

Sure, a DTA won’t uncover this. A smoking gun is still needed under a DTA. But then the European Union Savings Tax Directive is extended to privately controlled institutions, then watch the money come home.

Richard Murphy EU STD, Switzerland

Tax Evasion Row Gets Ugly - Forbes.com.

Forbes notes:

[T]actless Peer Steinbrueck has a reason for his rhetoric. Luxembourg’s Juncker is one of the 27 E.U. finance ministers who are expected to vote on changes to the E.U. Savings Tax Directive next month, a law which could help Germany claw back the 100 billion euros ($135.9 billion) that it claims to lose each year as tax evaders put their income in countries like Luxembourg and Switzerland.

A spokesman for ECOFIN, the council of 27 E.U. finance ministers that will ultimately decide on the directive, told Forbes that he expected it would come up for a vote at its next meeting on June 9 in Luxembourg. “I haven’t seen an agenda, but I personally expect it to come up for discussion,” Francois Head said. The proposals need unanimous consent to become law, and such legislation would affect Luxembourg the most, said Richard Murphy, founder of consultancy Tax Research.

I admit I don’t recall saying ‘most’ but it sure as heck will hit it hard.

But what is it’s counter argument to these necessary reforms? That it wants to harbour tax evaders? What else can it say?

Richard Murphy EU STD

The European Commission today has adopted a Communication identifying actions that EU Member States should take to promote "good governance" in the tax area (i.e. more transparency, exchange of information and fair tax competition). The Communication identifies how good governance could be improved within the EU. It also lists the tools the EU and its Member States have at their disposal to ensure that good governance principles are applied at international level. Finally, it calls on Member States to adopt an approach that is more coherent with good governance principles in their bilateral relations with third countries and in international fora. The Communication builds on the existing EU policy on good governance and the recent G20 conclusions concerning uncooperative tax jurisdictions.

László Kovács, Commissioner for Taxation and Customs, said: ”EU Member States cannot afford to act alone when designing policies to prevent their tax revenues disappearing to tax havens or non cooperative jurisdictions If they do not cooperate with each other, including in international fora, their actions to protect their revenues will not produce effective results’

Improve good governance within the EU

Improving good governance within the EU would reinforce the argument for other jurisdictions to take similar steps.

The Commission therefore calls on the Member States of the Union to adopt as soon as possible its recent proposals to:

• Ensure effective administrative cooperation in the assessment of taxes which would, in particular, prohibit Member States in future from invoking bank secrecy laws as a justification for not assisting the tax authorities of other Member States (IP/09/201);
• Ensure administrative cooperation in the recovery of tax claims;
• Improve the functioning of the Savings Tax Directive (IP/08/1697). There is a need to extend the scope of the Directive to intermediate tax-exempted structures (trust, foundations…) and to income equivalent to interest obtained through investments in some innovative financial products.

The Commission also calls on Member States to continue the work to eliminate harmful business tax measures under the Code of Conduct for Business Taxation.

Promote good governance in the relations with third countries

The European Commission proposes to improve the particular tools that the European Community and EU Member States may have at their disposal to promote good governance internationally:

• it identifies ways to ensure better coherence between EU policies in general, so that EU partners would commit to good governance principles. This includes enhancing good governance principles in relevant EU-level agreements with third countries as well as through development cooperation incentives;
• it calls on the EU Member States to adopt a coordinated and coherent approach in the promotion of good governance principles towards third countries, including, where appropriate, coordinated action against jurisdictions that refuse to apply good governance principles.

Some of the concrete actions proposed are:

• To invite the Council to give the appropriate political priority to the mandate given to the Commission to include good governance principles in relevant EU agreements with third countries.;
• To discuss with Member States possible counter-measures towards non cooperative jurisdictions in the tax area (the OECD Secretariat has suggested a list of measures. These will need to be examined together with the Member States);
• To promote more cooperation with third countries in the framework of the Savings Tax Directive;
• To conclude specific agreements in the tax area containing, if appropriate, provisions on transparency and exchange of information for tax purposes at EU level to accelerate the process of implementing commitments to greater transparency and exchange of information made by certain jurisdictions;
• To consider a reallocation of funds towards developing countries that are implementing satisfactorily their commitments; and, conversely, considering a cancellation of funds earmarked for those countries that did not implement their commitments;
• More coherence between Member States’ own bilateral tax policies towards third countries and the principles of good governance in the tax area.

Background

With the financial crisis, the need for national governments to safeguard their tax revenues is more acute than ever.

The need to promote international tax cooperation and common standards has now become a regular item on the agenda of discussions, both within the EU and in international fora. Most recently, the G20 Leaders agreed at their summit in London (April 2, 2009), "to take action against non-cooperative jurisdictions, including tax havens".

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All I can add to the above is “hear, hear”. There is much in here which is incredibly good news.

Richard Murphy EU STD, Ethics, Europe, Tax management

It is reported that:

All EU Member States should agree to exchange full information on interest earned on saving accounts by July 2014, says MEPs in a report adopted on Friday (25m April). Members also called for an end to tax havens.

In approving by 351 votes in favour, 27 against and 20 abstentions, the report by Benoit HAMON (PES, FR), the EP called for the end of the withholding tax option for certain Member States and asked the Council to take action to put an end to so-called tax havens. The aim of the draft legislation under consideration is to improve action against tax fraud.

Under current EU legislation, Belgium, Austria and Luxembourg benefit from a transitional period during which they are not required to automatically exchange information on tax matters and can instead apply a withholding tax to savings accounts of non-residents as an alternative. The approved report calls for an end of this transitional period at the latest by July 2014.

Moreover, Members agreed to call on the Community to "take appropriate action" to improve transparency of so-called tax havens. This would mean, for jurisdictions large and small, including the Monaco, Andorra and Liechtenstein, Switzerland and the US, agreeing to apply the OECD standards in the field of transparency and exchange of information on tax matters.

According to the rapporteur, tax fraud in the European Union amounts to more than EUR 200 billion a year, which represents more than 2% of its GDP.

As is usual with taxation issues, Parliament’s views are advisory rather than binding and the final decision is for the Council, acting unanimously.

Excellent news.

The vote was so clear: the message is emphatic, the withholding option has to go.

Richard Murphy EU STD, Secrecy jurisdictions, Tax Havens, Tax evasion

Curious that Michael Foot seems to have utterly missed the economic tsunami heading in the direction of the British tax havens in the form of the revised EU Savings Tax Directive.

Under the revised STD, which is expected to receive Commission approval very soon, all offshore trusts and companies created for tax planning purposes in these locations simply be ‘looked through’ for the purposes of the STD and tax be withheld on the basis of the identity and residence of the beneficial owner or controller, or tax data will be exchanged on that basis.

This is going to put these places in a very different position from all other tax havens. Of course that is very welcome – they will be cleaner than most. But it is also bound to have economic impact.

Michael Foot seems not to have noticed.

Why is that?

Richard Murphy EU STD, Secrecy jurisdictions, Tax Havens