The European Commission is considering a mandatory disclosure scheme for tax advisors to crack down on those that facilitate tax avoidance and evasion.
Under the proposals, intermediaries would be required to give information on schemes which could be viewed as aggressive or abusive planning for tax purposes.
The rules are effectively a binding version of Article 12 of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting guidelines, which is non-binding.
“Recent revelations have highlighted how certain intermediaries, such as tax advisors, helped their clients to shift profits offshore for the purposes of avoiding tax. While some complex transactions and the setting up of offshore companies may be entirely justifiable, it is also clear that other activities may be less legitimate and in some cases illegal,” the Commission said.
A public consultation will run until February 16, and can be found here.
The UK has already run a consultation on plans for a similar compulsory regime of its own, but concerns have been raised that the proposals could capture traditionally accepted tax planning as well as genuinely abusive arrangements.
“The UK proposals have been criticised because the definition of ‘enabler’ and tax avoidance [within the document] are too widely drawn,” Catherine Robins, tax expert at Pinsent Masons, said.
“A particular concern is that under the current proposals advisors could be penalized even if they have advised in good faith on a transaction that falls foul of a targeted anti-avoidance rule, or unallowable purpose rule,” she said.
Stakeholders have called for the rules to be amended because they will make it difficult for businesses to get tax advice on normal commercial arrangements.