This week’s blog post is written by Corney Versteden, Tax Partner with HLB Van Daal & Partners.
The Greens/European Free Alliance in the European Parliament (Greens/EFA) recently released a report titled “The Role of the U.S. as a Tax Haven: Implications for Europe” which recommends that the United States should be included in the European Union’s new blacklist of tax havens because of its transparency laws.
According to the report, the U.S. is becoming one of the largest tax havens because the U.S. allows companies to be created without providing beneficial ownership information. Also, the exchange of tax information between EU and U.S. tax authorities is not reciprocal given that the EU countries are required to provide more information to the U.S. than they receive in return.
Recommendations Highlighted in the Report
- all countries should establish central public registries of beneficial ownership information for all types of legal persons (i.e. companies) and legal arrangements (i.e. trusts);
- the European Union should carefully screen the United States according to the criteria that will be developed for a common European blacklist of tax havens; and
- the European Union should introduce a withholding tax scheme on all EU-sourced payments against non-compliant financial institutions, similar to what the United States has implemented under the Foreign Account Tax Compliance Act (FATCA).