The European Securities and Markets Authority (ESMA) published on Thursday 24 September the results of its inquiry into tax optimisation practices revealed by the ‘Cum/Ex Files’ scandal, as requested by the European Parliament in a resolution of 2018 (see EUROPE 12149/3).
Launched in July 2019 (see EUROPE 12288/11), the inquiry aimed to gather more information from the competent national authorities on how they monitor ‘Cum/Ex’ ‘Cum/Cum’ tax arrangements and, more generally, withholding tax reclaim schemes.
‘Cum/Ex’ dividend arbitrage strategies allow, through rapid share transfers, to be reimbursed several times with tax paid only once. In the ‘Cum/Ex Files’ case, European banks were able to evade tax on share dividends in excess of 55 billion euros over 15 years in 11 Member States.
The report describes the general functioning of these schemes in the Member States as well as the state of ongoing criminal investigations in the EU. The ESMA also analysed these schemes in the light of the obligations of companies under the MiFID II framework.
ESMA concludes that these schemes fall within the remit of EU tax policy and therefore believes that an initial legislative and supervisory response should be sought within the boundaries of the tax legislative and supervisory framework.
Nevertheless, within the limits of its mandate, ESMA assessed several options to better detect such schemes, including the use of CSD data as a source of information or the strengthening of the remit of national authorities to also cover schemes.
Finally, it does not propose either of these two options and concludes that the best solution would be to strengthen cooperation between national competent authorities, tax authorities and other law enforcement bodies.
Thus, the Authority recommends a legislative amendment to remove legal limitations to the exchange of information between competent national authorities and tax authorities.
In addition, a common legal basis should be developed to ensure a consistent and convergent approach on the exchange of information directly acquired by national competent authorities in their supervisory activities with tax authorities, ESMA says.
See report: https://bit.ly/2HlE55G (Original version in French by Marion Fontana)