Tax Authorities to Have Access to Beneficial Ownership Information By 2018!

The EU Council recently agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering. The directive will require EU member states to enable access to information on the beneficial ownership of companies. The effective date will apply from January 1, 2018.
 
On November 8, 2016, the Council agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering. The directive will require member states to enable access to information on the beneficial ownership of companies. Its effective date is January 1, 2018.

The proposal is one of a number of measures set out by the Commission in July 2016, in the wake of the April 2016 Panama Papers revelations.

Challenges

The EU has made significant progress in recent years to enhance tax transparency and strengthen cooperation between the member states' tax authorities.

And recent amendments to anti-money-laundering legislation recognise the links between money laundering and tax evasion, as well as the challenges faced in prevention.

Media leaks such as the Panama Papers, revealing large-scale concealment of offshore funds, have highlighted areas where further measures still need to be taken. The transparency framework must be further reinforced at both EU and international levels.

Automatic exchange of information

In particular, tax authorities need greater access to information on the beneficial ownership of intermediary entities and other relevant customer due diligence information. The directive will enable them to access that information in monitoring the proper application of rules on the automatic exchange of tax information.

Where a financial account holder is an intermediary structure, financial institutions are required by directive 2014/107/EU to look through that entity and report its beneficial ownership. Applying that provision relies on information held by authorities responsible for the prevention of money laundering, pursuant to directive 2015/849/EU.

Access to that information will ensure that tax authorities are better equipped to fulfill their monitoring obligations. It will thus help prevent tax evasion and tax fraud.

Next steps

Agreement was reached at a meeting of the Economic and Financial Affairs Council, without discussion. The Council will adopt the directive once the European Parliament has given its opinion.

The directive requires unanimity within the Council, after consulting the Parliament. (Legal basis: articles 113 and 115 of the Treaty on the Functioning of the European Union.)

 

Giovanni Kessler, Director-General of the European Anti-Fraud Office (OLAF) called for a standardized, interconnected, easy-to-use registry of national bank accounts which would be available to all EU enforcement agencies.

"Knowing Bank Accounts are Traceable would have a powerful Deterrent Effect on Individuals...

Traceability would also Increase Detection Rates of

Fraudulent Activities..." 



 

For more details on this matter click Proposal for a Council Directive on access to anti-money-laundering information by tax authorities.

 

 

 

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