A new report
from the European Commission has just been published. It contains many things of interest, such as this clear statement of some of the harm that tax havens can cause:
"Tax havens, also sometimes referred to as 'non-cooperative jurisdictions' are commonly understood to be jurisdictions which are able to finance their public services with no or nominal income taxes and offer themselves as places to be used by non-residents to escape taxation in their country of residence. The OECD has identified three typical 'confirming' features of a tax haven: (i) lack of effective exchange of information, (ii) lack of transparency, and (iii) no requirement for substantial activities. In addition they often offer preferential tax treatment to non-residents in order to attract investment from other countries. Tax havens therefore compete unfairly and make it difficult for 'non' tax havens to collect a fair amount of taxation from their residents."
(An accompanying press release is here
, with a FAQ sheet here
) And it adds that estimates of the size of the shadow economy in the EU of nearly one fifth of GDP, gives a clear indication of the extent of the problem, with the FAQ sheet adding that
"Some studies estimate the level of tax evasion and avoidance in Europe to be around €1 trillion."
(That would be a TJN study
that they are referring to.) The document also reinforces the size of the potential issues.
"Well-known and marketed financial centres with strong banking secrecy laws continue to dominate the international cross-border deposits market. Cayman Islands and Switzerland alone, with a total of USD 1352 billion deposits by non-banks represent almost 20% of all worldwide deposits by non-banks."
(Although of course by no means all of that is tax-evading money.) One of the recommendations is to push forwards amendments to the EU transparency arrangement known as the EU Savings Tax Directive, which we've written about extensively elsewhere; including how Switzerland is leading the charge to sabotage those amendments, with the complicity of the United Kingdom and other countries.
"The Council should swiftly give a mandate to the Commission and provide support to it in negotiating amendments to the existing EU savings agreements with Switzerland, Andorra, Monaco, Liechtenstein and San Marino."
Indeed, but the political obstacles, with tax havens inside the EU such as Luxembourg and Austria on the side of secrecy, are enormous. And there are other interesting prospects for international co-operation in their sights:
"Recent developments at international level as regards the US Foreign Account Tax Compliance Act (FATCA) open new perspectives for strengthening automatic information exchange between Member States and third countries thus improving transparency at a global level."
And there is, of course, plenty more in there.