The definition of ‘enablers’ will be at the heart of the SAFE initiative on aggressive tax planning, according to experts at a conference organised by the European Tax Adviser Federation (ETAF) on Wednesday 28 June.
This initiative, which focuses on the role of intermediaries in tax avoidance and aggressive tax planning, was originally due to be presented by the European Commission in June. It is now scheduled for September.
Although the Commission did not provide an explanation for this delay (see EUROPE 13190/29), the experts suggested one hypothesis: the complexity of defining ‘enablers’. “We need to show some sympathy for the Commission, because this is not an easy job”, stressed Paul Tang (S&D, Dutch), MEP and chairman of the European Parliament’s Subcommittee on Fiscal Affairs. “It takes time because of the technical difficulties and the need to find political support”, he added.
As Manon François, a researcher at the EU Tax Observatory, pointed out, aggressive tax planning is usually legal and is de facto in a legislative grey zone. “Enablers are playing with the tax rules, using them in ways they were not intended to be used and taking advantage of tax loopholes”, she said.
The SAFE initiative goes hand in hand with the UNSHELL Directive, which sets out rules to prevent the abuse of shell companies for tax purposes. This proposal, currently blocked by the EU Council (13194/18), is intended to establish economic substance in order to better identify shell companies used for aggressive tax planning or tax evasion. “Substance is a very strong argument to define tax planning”, said Ms François.
She therefore recommended reviewing the legislation and filling in the gaps, but also broadening the scope of the country-by-country reporting (CbCR) to better declare tax arrangements.
For Andrea Rabb, a registered tax expert, ETAF Board member and Vice-president of international affairs at Moklasz, “indicators of substance are a good basis” and the Commission should adopt “a targeted approach” to ‘SAFE’. She would like the scope to cover unregulated tax service providers in order to establish minimum compromise standards. She believes that tax advisers tend to be “preventers” rather than “enablers”. She called for caution and for avoiding over-regulation. “Better regulation is necessary, but we mustn’t overburden the profession and taxpayers”, she argued.
She would also like to see a register of service providers in third countries and the possibility of applying sanctions.
“Regulation of tax advisers, as exists in the Member States, does not mean that there are no bad apples”, retorted Mr Tang. (Original version in French by Anne Damiani)