When the EU rules, which force offshore EU tax havens to pass on details of
accounts held by residents of other states to their relevant tax authorities,
were introduced, they were pitched as a new hard-hitting crackdown on tax
Those spiriting away assets to Jersey, to Guernsey and to Luxembourg, would
now be found out, it was thought.
But in the last few weeks, the scale of the loopholes has become clear, with
havens reporting the amount of the tax charged from the moves, and the EU tax
commissioner ordering a review of its operation.
The rules mean the havens have to either disclose information or charge the
account holder a withholding charge.
The amount of tax withheld suggests there are still problems. New numbers
show Switzerland raised e100m (£69.25m) from the directive, a pitiful return
given the amount of savings held there (it is the world’s leading offshore
financial centre). Luxembourg raised e48m, Jersey e13m, Belgium e9.7m, Guernsey
e4.5m and Liechtenstein e2.5m.
The Tax Justice Network last month raised one particular issue in relation to
Jersey, that of trusts. Jersey and the UK maintain that trusts are exempt, and
tax campaigner Richard Murphy has calculated that a large proportion of tax is
still being evaded as a result.
Jersey disputes the calculations, but any analysis would have to conclude
that there is at least a question mark over how effective the system can be
without full disclosure.
Laslo Kovacs, the EU tax commissioner, is looking at it again. ‘The
commission is aware of causes for concern relating to the interpretation of the
directive, mainly on defining what is an investment fund and on the treatment of
interest payments made to trusts,’ a spokesman for Kovacs said.
The directive, and the future of attempts to drag tax evaders back within the
tax net, looks to be up for debate.
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