EU: New Anti-Abuse Initiative Targets Tax Advisors

The Commission of the European Union publishes a new initiative aimed at tax advisors to deal with aggressive tax planning strategies.

On July 6, 2022, the European Commission conducted a public consultation on the proposal set out by the Directive of the Council aimed at tackling tax advisors and other professionals providing tax advice who facilitate tax evasion and aggressive tax planning 

1. European Overview

Following the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting (BEPS) project, the European Commission adopted several EU directives it held to target perceived tax evasion and tax avoidance. 

At the end of 2021, the European Commission published a bill for a directive on the misuse of EU shell entities.  

2. New initiative

The European Commission finds that tax advisors continue to assist in the creation of tax schemes in non-EU countries that erode the tax base of EU member states.   

This initiative aims to establish procedures and compliance measures to be adhered to by tax advisors and other professionals providing tax advisory services to prevent them from setting up complex structures in non-EU countries. 

3. OECD Position

The Transfer Pricing Guidelines include new guidance aimed at aligning transfer pricing results with value creation. It also provides tax authorities with additional scope to question the transfer pricing of intra-group transactions. 

Consequently, the transposition of the anti-tax avoidance directives, the modification of the bilateral tax treaty network, and the revision of the OECD Transfer Pricing Guidelines eliminated the possibility of using aggressive tax planning strategies and, on the other hand, provided tax administrations with powers to challenge taxpayers. 

Source: Bloomberg Tax 13/10/22

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