ECOFIN Has Tax Advisers in Sights Over Mandatory Disclosure Rules

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By Jan Stojaspal and Joe Kirwin

Sept. 7 — Tax advisers, banks and other intermediaries that counsel companies and individuals on tax issues should be required to automatically disclose schemes designed to circumvent newly adopted measures against tax avoidance and bank reporting requirements, according to a note drawn up by European Union presidency holder Slovakia.

Slovakia's “presidency issues note” urges EU finance ministers, who will meet Sept. 9 and 10 in Bratislava, to back mandatory disclosure rules on those “who seek to profit from the promotion, design or implementation of tax evasion and avoidance schemes” consistent with the framework set out in the OECD's anti-tax base erosion Action 12 recomendations on mandatory disclosure.

The taxation discussion is scheduled for Sept. 10, day two of the two-day Economic and Financial Affairs Council (ECOFIN) meeting. The event brings together finance ministers from all European Union countries, as well as central bankers and representatives of the Organization for Economic Cooperation and Development and the International Monetary Fund.

CRS, Offshore Accounts

An EU mandatory disclosure proposal would come in the form of an amendment to the EU Administrative Cooperation Directive that already requires EU member tax authorities to automatically exchange information on bank-interest and other income, including equities. The legislation was recently amended to require the automatic information exchange among tax authorities concerning multinational country-by-country tax and profit reporting that has to be submitted to tax authorities.

Slovakia proposes that the minimum standard in the rules would ensure disclosure of:

  •  schemes designed to circumvent the common reporting standard for automatic exchanges of financial account information;
  •  passive offshore tax avoidance schemes, such as those used in the Panama Papers based on identified “hallmarks.”

Bankers Circumspect

The push to include banks in the mandatory disclosure regime was questioned by Rodolphe de Pierpont, an official with the Belgian Bankers and Stockbrokers Association known by its French acronym Febelfin.

“Bankers are mainly financial advisers, not fiscal advisers,” Pierpont told Bloomberg BNA. “Taxation is a side dish near investment advice and is not a core business. Of course the banker has to be informed about the tax consequences and its own fiscal responsibilities such as a withholding tax.

The Febelfin official added that “Belgian legislation already imposes very strong compliance requirements about taxation. Automatic exchange of information about payments to tax havens is already a reality in Belgium.”

Markus Meinzer, an official with the London-based Tax Justice Network, an advocacy group pushing for transparent taxation around the world, insisted a mandatory disclosure rule as outlined by the Slovak presidency would be “toothless” in countering tax avoidance.

“What would be needed, at the very least, is an additional, explicit reporting requirement by taxpayers to list any tax advisers they obtained tax planning advise, including a model of the purchased schemes,” Meinzer said. “After the tax administration has undertaken a first analysis of the models and it considers any of those not to be sound tax practice or in line with the position of the tax administration, the schemes should be publicly disclosed in anonymous form.”

Apple Ruling

The taxation agenda also includes improving tax certainty in Europe while continuing the fight against financial crimes, particularly through enhanced information exchange.

The European Commission's controversial Apple tax ruling, ordering Ireland to recover up to 13 billion euros ($14.5 billion) from Apple in undue tax benefits, is also likely to come up for discussion (169 TMIN, 8/31/16).

“Last week's Apple ruling is not on the agenda,” Coen Gelinck international spokesperson for the Dutch Ministry of Finance, told Bloomberg BNA in a Sept. 6 e-mail. “Some member states, however, may want to address this issue during the meeting. We don't think it will overshadow the entire meeting.”

David Byrne, press officer for Michael Noonan, Ireland's finance minister, agreed. “I don't know whether outside events will overshadow things, it's a little bit too strong,” he told Bloomberg BNA in a Sept. 6 telephone interview.

He added that the Irish delegation didn't intend to push the issue while in Bratislava.

“We are not going to the informal ECOFIN with an agenda,” he said. “The correct forum for any discussion of this specific case will now be the European Court of Justice.”

The commission, for its part, sees the Apple ruling as a case involving undue state aid—Ireland granting “illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years”—not an issue that potentially undermines tax certainty in Europe.

“We are not changing the goal posts, we are applying rules that have existed for a very long time, in fact, since the Treaty of Rome, since 1958,” a European Commission spokesperson told Bloomberg BNA in a Sept. 6 telephone interview.

“We don't really see this as any kind of change in the rules or anything of this kind. We are simply applying the rules that have always existed.”

Tax Certainty

According to a supplementary note prepared by the OECD and the Slovak presidency, the need to improve tax certainty is key to safeguarding the “EU's attractiveness as a place for business, investment and economic growth.”

And it could be enhanced further, according to the note, through:

  •  cross-border harmonization of tax rules, at the EU or preferably at the global level;
  •  mandatory, effective and swift cross-border dispute resolution mechanisms;
  •  binding tax rulings and advance pricing agreements;
  •  training of tax administration officials enabling them to deal with the new global challenges; and
  •  cooperative compliance programs.

When it comes to continuing the fight against financial crimes, the Slovak presidency sees the need for better inter-agency and international cooperation.

This means improving the information exchange architecture to allow for faster and more effective sharing of information from such sources as leaks and whistle-blowers, according to the supplementary note, in addition to mandatory disclosure rules.

To contact the reporters on this story: Jan Stojaspal in Prague at and Joe Kirwin in Brussels at

To contact the editor responsible for this story: Penny Sukhraj at

For More Information

The meeting's draft schedule is at

The OECD Slovakia supplementary note is at

Slovakia's presidency issues note is at

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