Ex Post Impact Assessment European Parliament

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Tax evasion money laundering and tax transparency,in the EU Overseas Countries and Territories. Tax evasion money laundering and tax transparency,in the EU Overseas Countries and Territories. Ex Post Impact Assessment, At their meeting of 12 October 2016 the coordinators of the European Parliament s. Committee of Inquiry into Money Laundering Tax Avoidance and Tax Evasion PANA. took the decision to request from the Directorate General for European Parliamentary. Research Services EPRS to produce the following study Assessment of the legal political. and institutional framework on offshore practices related to tax evasion money laundering. and tax transparency in the EU Overseas Countries and Territories OCT as defined in. Annex II TFEU and the relations of the OCTs with EU Member States. The opening analysis was prepared in house by the Ex Post Evaluation Unit of the. Directorate for Impact Assessment and European Added Value within EPRS whereas the. specific contributions on individual Member States were commissioned from external. It is hoped that this analysis will feed into ongoing discussions in the PANA inquiry. committee on the effective implementation and enforcement of EU law in relation to. money laundering tax avoidance and tax evasion in and by Member States and their. associate and dependent territories, This study aims to present the legal political and institutional framework governing offshore. practices in the Overseas Countries and Territories OCTs of the European Union which fall under. the sovereignty of four Member States Denmark France the Netherlands and the United. Kingdom It contains an opening analysis that defines the key concepts including tax evasion. money laundering and tax transparency outlines the scope of the study to differentiate the OCTs. from other places often mentioned within the context of offshore financial services and briefly. describes the particular case of Greenland In addition a comparative analysis of the legal political. and institutional framework governing EU relations with and within the respective OCTs is. complemented by an overview of the EU framework and opportunities for action This aspect can. be of significance especially in view of the UK s announced withdrawal from the European Union. The detailed annexed contributions covering the OCTs under French Dutch and British rule and. which constitute a basis for this analysis were written by external experts. Dr Isabelle Ioannides and Jan Tymowski Ex Post Evaluation Unit. To contact the Unit please email EPRS ExPostImpactAssessment ep europa eu. ABOUT THE PUBLISHER, This paper has been drawn up by the Ex Post Evaluation Unit of the Directorate for Impact.
Assessment and European Added Value within the Directorate General for Parliamentary. Research Services of the Secretariat of the European Parliament. LINGUISTIC VERSIONS,Original EN, This document is available on the internet at http www europarl europa eu thinktank. DISCLAIMER AND COPYRIGHT, This document is prepared for and addressed to the Members and staff of the European. Parliament as background material to assist them in their parliamentary work The content. of the document is the sole responsibility of its author s and any opinions expressed herein. should not be taken to represent an official position of the Parliament. Reproduction and translation for non commercial purposes are authorised provided the. source is acknowledged and the European Parliament is given prior notice and sent a copy. Manuscript completed in April 2017,Brussels European Union 2017. PE 593 803,ISBN 978 92 846 0819 5,doi 10 2861 080148. QA 02 17 310 EN N,PE 593 803 4,Tax evasion money laundering and tax transparency.
in the EU Overseas Countries and Territories,Executive summary 7. Acronyms 9,1 Introduction 10,2 Objectives of the study 10. 3 Methodology and structure of the study 11,4 Key concepts 12. 4 1 Definitions of tax evasion money laundering and tax transparency 13. 4 2 Identifying the Overseas Countries and Territories 15. 4 3 Which territories are not examined 17,5 The case of Greenland 20. 6 Comparative analysis of the case studies 22,6 1 Legal framework 22.
6 2 Political framework 25,6 3 Institutional framework 27. 7 The EU framework 30, 7 1 EU initiatives on tax evasion money laundering and tax transparency 30. 7 2 EU influence on the OCTs 33,7 3 Openings for a more pro active EU 35. 8 Conclusions the way forward 36,9 References 38,List of Tables. Table 1 Key data on the EU Overseas Countries and Territories 15. Annex I In depth analysis evaluating the legal political and institutional framework. concerning offshore practices related to tax evasion money laundering and tax. transparency in the Overseas Countries and Territories OCT of France as defined in. Annex II of the Treaty on the Functioning of the European Union TFEU and the relations. of France with those OCTs 41,PE 593 803 5,Tax evasion money laundering and tax transparency.
in the EU Overseas Countries and Territories, Annex II In depth analysis evaluating the legal political and institutional framework. concerning offshore practices related to tax evasion money laundering and tax. transparency in the Overseas Countries and Territories OCTs of the Kingdom of the. Netherlands as defined in Annex II of the Treaty on the Functioning of the European. Union TFEU and the relations of the Kingdom of the Netherlands with those OCTs 93. Annex III In depth analysis evaluating the legal political and institutional framework. concerning offshore practices related to tax evasion money laundering and tax. transparency in the Overseas Countries and Territories OCTs of the United Kingdom as. defined in Annex II of the Treaty on the Functioning of the European Union TFEU and. the relations of the United Kingdom with those OCTs 145. PE 593 803 6,Tax evasion money laundering and tax transparency. in the EU Overseas Countries and Territories,Executive summary. The release of the Panama Papers has triggered additional efforts including by the. European Parliament to understand the relationship on the one hand of the Overseas. Countries and Territories OCTs some of which are commonly considered as tax havens. and on the other of the EU Member States to which they are related Denmark France. the Netherlands and the United Kingdom Notwithstanding the importance of according. equal attention to other outermost regions including those that are of concern in the areas. of financial services and taxation this study limits its analysis to the OCTs listed in Annex. II of the Treaty on the Functioning of the European Union TFEU. With regard to the OCTs legal status the situation differs between the individual Member. States and between the territories subject to their sovereignty While some of them. including those active in financial services that belong to the UK and three countries of. the Kingdom of the Netherlands Aruba Cura ao and Sint Maarten seem to have reached. a status of quasi independent countries with significant freedom for self governance. others especially the French OCTs remain formally autonomous but under the clear and. tight control of the Member State In the case of Greenland which is the only OCT. associated with Denmark its decision to withdraw from the EU might eventually lead to. full independence once the economic situation allows. The institutional arrangements of OCTs with the relevant EU Member States directly affect. the possibility to establish policies and adopt regulations including on taxation and money. laundering In some of them especially in the UK OCTs in the Caribbean the non existent. or very low corporate taxation and the presence of rules allowing the creation of complex. offshore structures have led to an important increase in the number and scale of. registrations and financial operations now subject to alleged practices of tax avoidance. and or worse As for the anti money laundering legislation rules in those OCTs that. remained largely dependent on their continental authorities seem to be more aligned with. those of the EU which are themselves currently under revision In addition the relatively. high tax burden in Greenland and the French OCTs does not offer the conditions that. would lend them to becoming potential tax havens, As the EU Treaties do not contain specific legal obligations for the Member States to ensure. the application of the relevant EU law in their respective OCTs ensuring that international. tax cooperation rules and anti money laundering are respected becomes a political. responsibility for the four Member States Denmark France the Netherlands and the UK. Because they rely economically on financial services and in order to avoid being. blacklisted the OCTs have adopted various international standards such as the OECD s. automatic exchange of information in tax matters In addition the sovereign power of the. UK government has influenced at least some regulatory improvements of offshore. practices in Bermuda the Cayman Islands and the British Virgin Islands However the. specific realities that underpin relations between the UK and its OCTs particularly the fact. that most of them enjoy budgetary self sufficiency mean that in practice the UK s political. leverage is more limited than may be thought,PE 593 803 7.
Tax evasion money laundering and tax transparency,in the EU Overseas Countries and Territories. Beyond the regulatory framework which for some of the OCTs is more or less similar to. that of the EU acquis communautaire and in line with international standards. implementation of the law by the local authorities is of concern for a number of the UK and. Dutch OCTs This is particularly the case for OCTs with smaller populations such as in the. Caribbean countries of the Kingdom of the Netherlands where insufficient financial and. human resources can create problems of enforcement. The EU could use the opportunity of its direct relations with those countries and territories. especially through the framework of the Overseas Association Decision and the separate. agreements with Greenland to pressure those OCTs that do not respect international. standards of tax cooperation and transparency to do so This could be particularly. important in the case of the Caribbean countries of the Kingdom of the Netherlands where. the central government of the Netherlands in The Hague has limited possibilities to. intervene The improvement in local oversight capacity and mitigation of budgetary limits. on human resources in all the OCTs could also help tackle the challenges of combating tax. evasion and money laundering, It remains to be seen how the relationship of the EU with the British OCTs will change. following the Brexit negotiations but the global context might suggest that the same. requirements that the Union could ask of third countries considered as tax havens could. also potentially apply to the UK,PE 593 803 8,Tax evasion money laundering and tax transparency. in the EU Overseas Countries and Territories,AEOI Automatic exchange of information. AML anti money laundering,BEPS Base erosion and profit shifting.
BVI British Virgin Islands,CBCR country by country reporting. CCCTB Common consolidated corporate tax base,CJEU Court of Justice of the European Union. EU European Union,EVAL Ex Post Evaluation Unit European Parliament. FATCA Foreign Account Tax Compliance Act,FATF Financial Action Task Force. GCEFSL Groningen Centre for European Financial Services Law. GDP gross domestic product,MCAA Multilateral Competent Authority Agreement.
OAD Overseas Association Decision, OCTA Association of the Overseas Countries and Territories of the European. OCTs Overseas Countries and Territories, OECD Organisation for Economic Cooperation and Development. PANA European Parliament Committee of Inquiry into Money Laundering. Tax Avoidance and Tax Evasion,PWP Partnership Working Parties. SRA Self Rule Act, TAXE 2 Special European Parliament Committee on Tax Rulings. TFEU Treaty on the Functioning of the European Union. UNODC United Nations Office for Drugs and Crime,USA United States of America.
VAT value added tax,PE 593 803 9,Tax evasion money laundering and tax transparency. in the EU Overseas Countries and Territories,1 Introduction. The release of the so called Panama Papers in April 2016 added a sense of urgency to the. need for tackling the issue of offshore tax havens including in some of the EU Member. States Overseas Countries and Territories OCTs The leak of 11 5 million files from the. database of Mossack Fonseca the world s fourth largest offshore law firm highlighted in. particular the role played in the offshore financial sector by UK Overseas Territories in the. Caribbean placing the spotlight on the British Virgin Islands BVI Bermuda and the. Cayman Islands More than half of the 200 000 companies for which Mossack Fonseca acted. as a registered agent were based in the British Virgin Islands 1 It should be kept in mind. that these records pertain to the activities of only one law firm in one country Therefore. it is difficult to judge what share of the market for such services they constitute. In line with the public outcry against tax avoidance and tax evasion 2 and demands for. tightening the offshore sector in the OCTs point 1 14 of the PANA Committee s mandate. Tax evasion money laundering and tax transparency in the EU Overseas Countries and Territories Tax evasion money laundering and tax transparency in the EU Overseas Countries and Territories Ex Post Impact Assessment Study At their meeting of 12 October 2016 the coordinators of the European Parliament s Committee of Inquiry into Money Laundering Tax Avoidance and Tax Evasion PANA took

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