On 6 July 2022, the European Commission (the “Commission”) announced a public consultation on tackling the role of intermediaries (referred to as "Enablers") in facilitating complex tax schemes. The consultation period runs from 6 July through 12 October 2022 and aims at collecting feedback on possible measures to tackle the role of Enablers, including non-EU based enablers that provide tax advisory services on tax arrangements that could lead to tax evasion or an aggressive tax structure.
This initiative will interact with existing regulations adopted to fight tax evasion and aggressive tax planning such as the Council Directive (EU) 2018/822 amending the Directive on Administrative Cooperation in the field of (direct) taxation (“DAC6”) which already requires EU intermediaries to report to the tax administrations of Member States information on reportable cross-border arrangements that could potentially lead to aggressive tax planning.
Commission proposals
The Commission underlines that the purpose of these measures “is to prohibit enablers who design, market and/or assist in the creation of tax arrangements or schemes in non-EU countries that lead to tax evasion or aggressive tax planning for the EU Member States”. To achieve this objective, the contemplated options are threefold and can be summarized as follows:
Option 1: Requirement for all Enablers to carry out dedicated due diligence procedures
Pursuant to this option, Enablers would be prohibited from assisting with the creation of arrangements abroad that lead to tax evasion or aggressive tax planning. This option foresees the requirement for all Enablers to carry out beforehand a test to check whether the arrangement or scheme they are facilitating should lead to tax evasion or aggressive tax planning. It also requires the Enablers to maintain records of these due diligence procedures in all cases.
Option 2: Prohibition to facilitate tax evasion and aggressive tax planning combined with due diligence procedures and a requirement for Enablers to register in the EU
Under this second option, the Enablers would be required to carry out enhanced due diligence procedures as outlined under Option 1. In addition, non-EU based Enablers that provide advice or services of a tax nature to EU taxpayers or residents would be required to register in an EU Member State. Meaning that only registered Enablers should be allowed to provide advice or services of a tax nature to EU taxpayers or residents.
Option 3: Code of conduct for all Enablers
Under this option, it is proposed to implement the requirement for all Enablers to follow a code of conduct that obliges Enablers to ensure that they do not facilitate tax evasion or aggressive tax planning.
Additional measures on taxpayers
EU taxpayers (individuals or legal persons) would be required to declare in their tax returns any participation over 25% in any non-listed company located outside the EU.
The public consultation opens the discussion about the potential sanctions such as a monetary sanction to prevent Enablers from providing further services. It does however not provide for any details on e.g. the content and implementation of the proposed code of conduct, the types of structures targeted, the retained criteria, and how this type of reporting will interact with existing regulations and/or the professional secrecy privilege.
As the Commission's ambition is to have a reporting regime implemented by first quarter 2023, additional information should be available shortly. Finally, the most appropriate legal basis for this initiative is still under consideration. In the event Article 115 of the Treaty on the Functioning of the European Union (TFEU) is to be followed, any proposal could only be adopted by unanimity of the EU Member States.
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