EC launches worldwide probe into 'enablers' of aggressive tax planning  

The European Commission (EC) has initiated a public consultation on a new draft directive against 'enablers' who facilitate tax evasion and ‘aggressive tax planning'.

The EC says some enablers ‘design, market and help set up structures in non-EU countries which may use entities without minimal substance in order to take advantage of differences between national tax systems or tax treaties. 

The proposed new directive will aim to step up the fight against tax evasion and aggressive tax planning by addressing the role of enablers who create these complex and non-transparent structures. 

It will also provide the Member States with appropriate mechanisms, including cooperation in monitoring and enforcement, that are essential in ensuring effective application of the rules.

According to STEP, which will be responding to the consultation, it is intended to generate a range of policy options that may include one of three requirements. 

The first would be for all enablers to carry out dedicated due-diligence procedures to check whether the arrangement or scheme they are facilitating leads to tax evasion or aggressive tax planning. 

Enablers would be prohibited from assisting in the creation of arrangements abroad that facilitate tax evasion or aggressive tax planning. They would also have to maintain records of these due-diligence procedures in all cases.

The second possible option is for the directive to include a prohibition on facilitating tax evasion and aggressive tax planning combined with due-diligence procedures as in the first option, but with an additional requirement for enablers who provide advice or services of a tax nature to EU taxpayers or residents to register in an EU Member State.

The third option suggested by the consultation is the requirement that all enablers follow a code of conduct obliging them to ensure that they do not facilitate tax evasion or aggressive tax planning.

As well as these options, the EC wants to develop new measures to boost transparency and combat possible tax evasion and aggressive tax planning related to EU investments abroad. EU individuals and legal persons would be required to declare in their annual tax returns any participation above 25 per cent of shares, voting rights, ownership interest, bearer shareholdings or control via other means in a non-listed company located outside of the EU.

The EC, which is already consulting on a new directive to combat the misuse of shell companies, plans to adopt the directive in the first quarter of 2023.