European Commission launches tax evasion plan

The European Commission is seeking to up the fight against tax evasion within the European Union.

The Commission wants governments to automatically exchange information on a wide range of financial income earned in their countries by non-residents.

This would give the EU the most comprehensive such system in the world, the EU supranational body said.

Next week, the G8 major nations will meet to discuss global measures against tax evasion and money laundering.

The EU said it would push at the meeting in Northern Ireland for a similar system of information sharing to be rolled out worldwide, which it said would help developing countries collect more tax.

The Commission plan, which will cover all income including dividends and capital gains, will build on the existing exchange of non-residents’ saving details, which is due to be strengthened by the end of the year.

EU Taxation Commissioner Algirdas Semeta said: “With today’s proposal, member states will be better equipped to assess and collect the taxes they are due, while the EU will be well positioned to push for higher standards of tax good governance globally.

“It will be another powerful weapon in our arsenal to lead a strong attack against tax evasion.”

Tax evasion is the illegal concealment of income and other taxable assets, typically by moving money to bank accounts outside the jurisdiction and without the knowledge of the country where the tax should be due.

The automatic exchange of information means that member states collect data on income earned in their country by non-residents and then send it to the authorities in the individual’s home country so it can be taxed correctly.

The exchange takes place through a secure IT network so that the EU’s data protection rules are fully respected.

A plan for exchange of information on income from employment, directors’ fees, life insurance, pensions and property is due to start on 1 January 2015.