EU ministers have agreed to a new deal which will enable more information to be shared between member states to prevent cross-border tax fraud.
As part of the new regime, bank secrecy will no longer be able to be used as a reason for blocking information sharing. The new measures also set out a common set of procedures for requesting taxpayers’ information.
EU tax commissioner Algirdas Sementa said the rules would send “a strong signal to the world that the EU is serious about the fight against tax fraud and evasion”.
The agreement will introduce time limits for national tax authorities to answer requests for information on citizens or businesses and parameters for the ‘automatic’ exchange of information.
The deal covers income from employment, directors’ fees, dividends, capital gains, royalties, certain life insurance products, pensions, and ownership of income from immovable property.
“To some extent these measures foretell the closure of European tax havens,” said Richard Murphy, director of Tax Research UK.
“It doesn’t mean they’ll go straight away because there are timescales on the disclosure of information, but the degree of international co-operation to ensure the right tax is paid in the right place by the right person is increasing dramatically”.
The UK loses £25bn to tax avoidance and £70bn to tax evasion every year, according to Tax Research UK.
“Of these numbers, it’s obvious which is the more important and these new measures are by and large intended to tackle evasion. It will significantly increase the obstacles for people in the EU who are abusing tax, and that’s good news for UK taxpayers,” said Murphy.
The European Commission will release a report assessing the effectiveness of these measures by 2017, which may pave the way for an expansion to the new rules later on.
I've been a journalist for four years, writing on a wide variety of topics from business and finance to travel, culture and celebrities. I began my career as an editorial assistant for Palladian Publications, a B2B publisher specialising in technical magazines for professionals in primary industries. I later moved into consumer magazines as a...