On 14 June 2022, EU officials and tax advisers from all over Europe discussed how the regulation of the tax adviser profession can help to curb down abusive tax avoidance during a conference organised by the European Tax Adviser Federation (ETAF) in Brussels. It was a timely topic as the European Commission publicly announced in April its intention to regulate tax advice in the EU.
In his welcome address, ETAF President Philippe Arraou condemned the excesses of the Pandora Papers and recognized the need for action to curb down abusive tax avoidance.
“But we shouldn’t put all tax advisers in the same basket. In the Member States where the profession is regulated, tax advisers are already obliged by law to practice their profession in full accordance with all applicable laws and regulations”, he said.
For ETAF, tax advice should be recognized as a reserved activity everywhere in the EU and every Member State should introduce a national binding professional law framework.
“When designing this new law for tax advisers, legal certainty will be key. It is highly important not to pass on the responsibility for loopholes in the legislation to those who are subject to the law”, Philippe Arraou warned.
The Director for direct taxation, tax coordination, economic analysis and evaluation at the European Commission, Benjamin Angel, reiterated that the Commission does not intend to regulate the tax profession as such but that it will put forward a set of rules that fit for all the people providing tax advice for creating structures in third countries only.
“While I certainly agree that a regulation of the profession across the board would be, on paper, the best solution, in practice, I don’t think it is something within reach. Therefore, it is more advisable to look for a second-rank optimum”, he explained.
The proposal for a Directive, which is being prepared by the Commission, is designed as an external ramification of the recent proposal for a Directive to prevent the misuse of shell entities for tax purposes (UNSHELL), which will apply in the EU only and which has good chances to be adopted under the Czech Presidency of the Council of the European Union, Mr Angel explained. The Directive will cover aggressive tax planning practices, that without being purely tax evasion, are nevertheless clearly circumventing the law, he added.
For MEP Markus Ferber, Vice-Chair of the subcommittee on tax matters (FISC) of the European Parliament, the European Union should first try to put its house in order before looking outside of its borders.
“Are the tax advisers the problem or the solution? Honestly, you can’t make the tax advisers the problem because they have not invented the tax system. They have to deliver a service, as advisers they give advice. The tax responsibility is not in their hands, it is in the hands of the taxpayers”, the MEP also argued.
Sarah Godar, Researcher at the EU Tax Observatory, recognized that the more differentiated tax systems are, the more avoidance opportunities we have. She agreed that the lawmakers should make sure that there are as little loopholes as possible but also hoped that tax advisers contribute to making the laws better.
Representing the tax profession in the debate, Philippe Vanclooster, former partner at PwC and Board member of the Belgian Institute for Tax Advisors and Accountants, outlined that the role of the tax adviser has evolved, at least in Europe.
“The role of a tax adviser is nowadays not only to find the best solution to avoid taxes and pay minimum taxes. The role of a tax adviser is giving good quality tax advice”, he pointed out.
The European Commission will launch a public consultation on this initiative at the beginning of July, with a view to present a concrete proposal still this year.
In the European Parliament, the FISC subcommittee has asked for a comparative analysis of the regulatory framework of tax intermediaries in several countries, to assess which best practices could be promoted at EU level and whether EU regulation could be recommended. The study should be presented at a meeting on 27 June.