US could face EU blacklist in 2019

The US has been warned that if it fails to apply the OECD’s Common Reporting Standard, and does not agree to exchange the bank account details of non-US citizens with governments around the world, it will be placed on the EU’s tax haven blacklist.

Valère Moutarlier, Head of Direct Taxation in the European Commission’s Directorate General of Taxation and Customs Union pointed out that the US Tax Cuts & Jobs Act 2017 (TCJA) has already been referred to the OECD Forum for Harmful Tax Practices, saying that it “raises new corporate tax issues.”

If the OECD Forum finds the TCJA to have violated international standards, this is likely to be a contributing factor in the EU decision whether or not to blacklist the US.

The TAX3 Committee, the EU’s special committee on financial crimes, tax evasion and tax avoidance has been considering the blacklist, and is drawing up a list of sanctions for blacklisted countries, which will be finalized by the close of 2018.

The EU tax haven criteria are due to be updated in 2019, in order to include transparency requirements around the beneficial ownership of companies, and also an increased number of anti-base erosion and profit shifting measures.

At the end of 2017, US Treasury secretary Steven Mnuchin wrote to EU secretary general Jeppe Tranholm-Mikkelsen, criticising the blacklist, and saying it “undermines international standards put in place to identify non-cooperative tax jurisdictions.”

Sources

• Bloomberg
• European Parliament (study of FATCA)
• International Adviser