Category Archives: Tax Evasion

On-demand webinar: Tax Evasion – A Global Compliance Risk

The Criminal Finances Act and other global legislation have placed anti-tax evasion measures on the corporate risk and compliance agenda. The past year has shown us that tax evasion enforcement is only ramping up. Increased investigations, large fines and new laws have demonstrated that there has never been a more important time to ensure that everyone in your organisation is on board with your compliance programme.

In this webinar, our experts explored the impact of tax evasion regulations over the past few years and shared best-practice guidance on compliance.

The webinar covered:

  • Why it’s important to have a strong compliance program
  • Reasonable procedures: do you have them and are they enough?
  • Best-practice guidance on spotting red flags
  • An international perspective on tax evasion, including DAC6
  • Major tax evasion cases and what we can learn
  • Tax evasion training requirements and best practice

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The webinar is also available to listen to as a podcast.

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DAC6 Cyprus: No administrative fines until 30 June 2021

On 26 February 2021, the Cypriot Tax Authority announced that it will be extending the timeline for administrative fines in relation to the overdue submissions of DAC6 information in Cyprus. This follows on from the announcement that there would be an extension of the submission of information until 31 March 2021.

The administrative fines in Cyprus will not be imposed on taxpayers or intermediaries as long as the following categories of DAC6 reports are made by 30 June 2021:

Original Historic Reportable Arrangements: Arrangements that were triggered for reporting from the period between 25 June 2018 and 30 June 2020. 

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DAC6 Belgium: Reporting Challenged in Constitutional Court

In December 2020, the Belgian Constitutional Court (Grondwettelijk Hof) decided to refer a preliminary question to the European Union Court of Justice in relation to DAC6. The preliminary question in Case number C-620/19 is around whether the DAC6 notification obligation infringes on the right of a fair trial and the right to private life under the EU Charter of Fundamental Rights.

In light of the professional secrecy restrictions, the Belgian Association of Tax Lawyers argued before the Constitutional Court that it is impossible to fulfil their notification obligation towards other intermediaries.

They claim that information that is protected by professional secrecy in respect of the authorities is also protected in respect of other intermediaries who may be involved. They believe that the DAC6 reporting obligations infringe the right of a fair trial and the right to private life. Both of which are guaranteed in the Charter of Fundamental Rights of the EU.

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New podcast episode of MDR Unpacked: Episode 3 – Argentina

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In our latest episode of MDR Unpacked, our Director of Best Practice Gary Yantin and Head of Legal and Product Research Ruth Mittelmann Cohen share the latest updates on the Mandatory Disclosure Rules in Argentina. They will look at what MDR means in Argentina, the timescales, the penalties and who needs to comply.

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DAC6: Spanish reporting system still not available

Tax advisers are still unable to report DAC6 arrangements in Spain due to the lack of a reporting system. The EU’s DAC6 Directive requires reporting of historical arrangements by the end of February, but the Spanish Tax Agency (Agencia Tributaria) has not yet enabled a mechanism to make a report.

The Spanish Association of Tax Advisors (Aedaf) announced at the end of January that it will be impossible for them to comply with their DAC6 obligation as the Ministry of Finance has not yet approved the regulations to do so. Furthermore, the Spanish Government has not yet responded to the clarifications requested by tax advisers providing them with guidance on which arrangements to report. 

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DAC6 Country Profile: UK

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UK Parliament and British flag
In light of the COVID-19 pandemic, the UK decided to defer DAC6 reporting by six months

We are publishing a series of guides on how each EU member state has implemented DAC6. The guide provides a preview to our full up-to-date country-by-country guide to DAC6.

Our next guide focusses on the UK’s implementation of DAC6.

This blog was originally published in July 2020 and was updated in February 2021.

How has the UK implemented DAC6?

Legislation Details

HMRC published the UK DAC6 legislation on 29 December 2020. The legislation is called “The International Tax Enforcement (Disclosable Arrangements) (Amendment) (No. 2) (EU Exit) Regulations 2020”. Here is the UK’s guidance on DAC6.

Taxes covered

UK legislation covers cross-border arrangements. The legislation is in line with the EU Directive, (i.e., direct taxes are in scope while indirect
taxes, customs duties or excise duties and compulsory social security
contributions are not covered), and does not include domestic arrangements or any additional hallmarks.

NOTE: The scope of DAC 6 has been amended following Brexit through the International Tax Enforcement (Disclosable Arrangements) (Amendment) (No. 2) (EU Exit) Regulations 2020 (2020 No. 1649). The UK has removed hallmark categories A, B, C and E.

Legal Professional Privilege

UK exempts from reporting those intermediaries who are protected by legal professional privilege. In the UK, this includes lawyers, in cases where the information to be reported is covered by legal professional privilege.

In cases where LPP exemptions apply, the reporting obligation shifts to other intermediaries or the relevant tax payer.

Reporting

Reporting will be made either via manual data entry or via XML file upload. Reporting will be done in English.

Penalties

For non-compliance with any part of the regulation a maximum default penalty of up to GBP 5,000 applies, unless an HMRC officer considers this to be inappropriately low. In these cases, a penalty of GBP 600 each day may be applied for an initial period. If failure continues following the initial period, a further fine of GBP 600 for each day may be applied for the period in which the failure continues.

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DAC6 Country Profile: Spain

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Spanish Parliament
In light of the COVID-19 pandemic, Spain delayed DAC6 reporting by six months

We are publishing a series of guides on how each EU member state has implemented DAC6. The guide provides a preview to our full up-to-date country-by-country guide to DAC6.

Our next guide focusses on Spain’s implementation of DAC6.

This blog was originally published in July 2020 and was updated in February 2021.

How has Spain implemented DAC6?

Legislation Details

Spain’s tax authority, Agencia Tributaria (Tax Agency), published DAC6 legislation, called Ley 10/2020, de 29 de diciembre, por la que se modifica la Ley 58/2003, de 17 de diciembre, General Tributaria, en transposición de la Directiva (UE) 2018/822 del Consejo, de 25 de mayo de 2018, que modifica la Directiva 2011/16/UE por lo que se refiere al intercambio automático y obligatorio de información en el ámbito de la fiscalidad en relación con los
mecanismos transfronterizos sujetos a comunicación de información.

DAC6 is implemented by amending General Tax Law 58/2003, of 17
December 2003. The amendments for the final law approval were introduced in Law10/2020 of 29 December 2020.

Taxes covered

Spain’s legislation covers cross-border arrangements. The legislation is in line with the EU Directive (i.e., the legislation applies to all taxes except
VAT, customs duties, excise duties and compulsory social security
contributions), and does not include domestic arrangements or any additional hallmarks.

Legal Professional Privilege

In Spain there are two categories of intermediaries with regard to the application of LPP exemptions. One category is professionals who carry out “participitory advice”; this category is not covered by an LPP exemption. The other category is intermediaries who provide “neutral advice”; this category is covered by an LPP exemption. Within the category of those who are covered, the following categories of professionals have LPP: law firms, tax advisors, auditors, and some other professions.

In cases where the intermediary because of LPP, the obligation will shift to the taxpayer.

Reporting

Spain requires reporting to be made by intermediaries and relevant taxpayers using an electronic/XML file via the online service of the Spanish tax authorities. The information must be submitted in the official language (Spanish). Some sections can be completed in English, but a Spanish translation will need to be provided.

Penalties

The penalties regime applied under the bill mentions for failure to comply with the reporting requirements a penalty of EUR 2,000 per data/ per omitted / inaccurate data on reportable arrangements, with a minimum penalty of EUR 4,000 and a maximum equivalent of the fees or tax value resulting from the reportable arrangement, or the value of the cross-border arrangement if the offender is the relevant taxpayer. The minimum and maximum amounts will be halved when the information is filed after the deadline without prior notice from tax authorities.

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VinciWorks releases new tax evasion course

VinciWorks’ new tax evasion course takes a modern, fresh approach to tax evasion training with a focus on industry-specific guidance, role-relevant scenarios and an interactive, engaging approach to ensuring all staff have the skills and understanding they need to prevent facilitation of tax evasion.

Tax evasion training game

The Criminal Finances Act created a corporate criminal offence for failing to prevent the facilitation of tax evasion. This places the responsibility on businesses to have “reasonable procedures” in place to ensure none of their employees or contractors are involved in helping someone evade their taxes anywhere in the world. Guidance from HMRC advises that reasonable procedures should be guided by the following 6 principles:

  • Risk assessment
  • Proportionality of risk-based prevention procedures
  • Top-level commitment
  • Due diligence
  • Communication and training
  • Monitoring and review
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