Wed. May 18th, 2022

Brussels, 29 March 2022

  • Some progress being in made in the Netherlands but more needed primarily on regulating financial intermediaries, letter box companies and patent box regime
  • Russian oligarch evading of asset freezes and sanctions shows much more work needed with jurisdictions mentioned in Pandora Papers

Tax legislation changes in the Netherlands and tax information exchange with jurisdictions featuring prominently in the Pandora Papers were studied by MEPs on Monday afternoon with experts.

In the first hearing, MEPs discussed with experts the recent changes made to the tax system in the Netherlands and analysed what still needs to be done to better fight tax evasion and tax avoidance. Watch the hearing again here.

During the second hearing, MEPs and experts discussed how well the exchange of information in tax matters is working with the Crown dependencies, British overseas territories and some US States. Watch the hearing again here.

The Netherlands – work in progress

Five experts presented their experiences and views on what the Netherlands is changing to better fights tax evasion and avoidance and aggressive tax planning, while highlighting what still needs to be worked on.

Letter box companies, better regulation of financial intermediaries, the continued existence of the patent box regime, and a withholding tax regime that still contained too many loopholes were some of the issues which came up most regularly as areas requiring further work.

MEPs themselves regularly highlighted the need to better regulate the role of tax advisers, which they considered was weak in the Netherlands, and also to better regulate the lobbying around tax legislation. They also asked for more details about the specific changes made to the Dutch tax system and how the effect of these changes could best be measured in the coming months and years. Other questions concerned the way the Netherlands was most likely to implement the new tax international agreements and the upcoming EU legislation.

Exchange of tax information with Pandora Papers countries

The second hearing took place very much within the context of Russia’s invasion of Ukraine and the subsequent asset freezes of numerous Russian oligarchs. The invited experts underlined the extent to which Russian oligarchs have played the system through the lack of transparency and the extent to which this lack of transparency is making it difficult to actually enforce many of the asset freezes decided against these Putin allies.

Experts outlined what should be done to improve the amount and transparency of information obtained from jurisdictions favoured for their lax tax codes. This included a central registry for ownership information of all types of trusts, improving transparency regarding beneficial owners or requiring EU member states to annually publish their Common reporting standard statistics. It was also recommended to impose the Common reporting standard on US financial institutions.

MEPs asked what could be envisioned to improve exchanges of information with the US and would could be done by way of regulation to better check tax enablers. They also asked for details on how to further regulation regarding trusts and shell companies and how the automatic exchange of information could be used for anti money laundering purposes. MEPs also sought to better understand what the main attraction was for booking business in the Crown Dependencies.