After a year-long investigation, the European Union (EU) identified seven countries that it charges are behaving as tax havens. All seven are members of the EU.
The EU Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) presented a robust set of recommendations after the conclusion of its investigation into tax jurisdictions in February of this year.
Some of the outcomes are based on the investigative work of the International Consortium of Investigative Journalists (ICIJ). The ICIJ is the diverse non-profit working group taking a deep dive into a series of ongoing revelations and document leaks related to secrecy jurisdictions and the practices of mostly anonymous wealthy clients. Anonymous that is, until their name shows up in the media or on a subpoena looking into tax fraud and the offshore tax practices of their favorite bank.
The seven EU countries named by the EU as those that “display traits of a tax haven and facilitate aggressive tax planning” include:
- The Netherlands
The inclusion of Luxembourg on the list puts the soon-retiring President of the European Commission, Jean-Claude Juncker, in a bit of touchy spot. Prior to his five-year term as President, Mr. Juncker served as Prime Minister of Luxembourg for almost 20 years. In that time, Mr. Juncker exploited business-biased tax policies to improve the profile and profitability of the fading industrial state.
Investigation revealed that Mr. Juncker may have promoted tax deals that gave big (and secret) tax breaks to companies like Skype, Pepsi, Disney, and Ikea. Some of these “tax rulings,” that came to light as a result of the Lux Leaks, allowed companies to enjoy a less than one percent tax rate. Oddly, the Luxembourg tax rulings were not carefully explored during the EU investigation as tax crime.
As the EU investigation and Mr. Juncker’s tenure wind down, other points of the TAX3 group include:
- Plans to create a “European financial police force,” as well as set up an anti-money laundering oversight committee within the EU
- Recommendation that the UN should establish a “global tax body”
- Eliminate the practice and promise of “Golden visas and passports”
- Better protections and rewards should be provided to investigative journalists and whistleblowers
For those with global wealth, regulations and investigations on the continent have a bearing on investment and tax strategies. Whether you have foreign bank accounts or offshore holdings, speak with an experienced tax lawyer to make sure you and your company stay out of the next financial leak or regional investigation.
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