Accountants to Face Penalties for Failing to Report ‘Aggressive’ Tax Avoidance
Incoming EU rules will mean that accountants will face financial penalties for failing to report instances of aggressive tax avoidance on the part of individuals or businesses they work with.
Finance ministers from EU countries have agreed to introduce a new set of laws relating to the issue with the aim being to clamp down on the use of tax havens as a means of tax avoidance.
Despite the UK being poised to officially begin transitioning its way out of the EU from next year, accountants throughout the country are still expected to be subject to the new laws at least until the Brexit process has been completed.
The terms of a Brexit transition deal are yet to be fully agreed upon but expectations are that the UK will be obliged to follow EU laws during its transition period, which could continue well into the next decade.
The new tax avoidance reporting requirements are set to be introduced from July 2020 and will apply to lawyers and bankers, as well as to accountants.
Among the relevant lawmakers at the EU, the hope is that legally obliging accountants, lawyers and bankers to flag up instances of aggressive tax avoidance will make tax systems throughout Europe considerably more transparent while also serving to swell the coffers of national governments.
The laws will place responsibility on accountants and others to inform relevant parties in their own countries of money transfers made to low-tax or no-tax jurisdictions, as well as to countries where money laundering measures are known to be particularly weak.
Individual nations will subsequently be required to contribute the information they receive on aggressive tax avoidance to a central EU database.
Valdis Dombrovskis, vice-president of the European Commission, said as the new laws were being announced that they would effectively “hold responsible the go-betweens who create and sell tax avoidance schemes”.
“Today the European Union has reiterated its commitment to bring more transparency to the world of aggressive tax planning,” he said.
“We are global frontrunners in this field. And the European Union will of course use its political influence to push for similar action at the international level.”