Tax authorities to gain access to beneficial ownership information

The European Council has agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering

The proposal to grant access for tax authorities to information held by authorities responsible for the prevention of money laundering comes in the wake of the Panama Papers revelations
The proposal to grant access for tax authorities to information held by authorities responsible for the prevention of money laundering comes in the wake of the Panama Papers revelations

The European Council has agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering.

The directive will require member states to enable access to information on the beneficial ownership of companies. It will apply as from 1 January 2018.

The proposal is one of a number of measures set out by the Commission in July 2016, in the wake of the April 2016 Panama Papers revelations.

The EU has made significant progress in recent years to enhance tax transparency and strengthen cooperation between the member states’ tax authorities. And recent amendments to anti-money-laundering legislation recognise the links between money laundering and tax evasion, as well as the challenges faced in prevention.

Media leaks such as the Panama Papers, revealing large-scale concealment of offshore funds, have highlighted areas where further measures still need to be taken. The transparency framework must be further reinforced at both EU and international levels.

In particular, tax authorities need greater access to information on the beneficial ownership of intermediary entities and other relevant customer due diligence information. The directive will enable them to access that information in monitoring the proper application of rules on the automatic exchange of tax information.

Where a financial account holder is an intermediary structure, financial institutions are required by directive 2014/107/EU to look through that entity and report its beneficial ownership. Applying that provision relies on information held by authorities responsible for the prevention of money laundering, pursuant to directive 2015/849/EU.

Access to that information will ensure that tax authorities are better equipped to fulfil their monitoring obligations. It will thus help prevent tax evasion and tax fraud.

Agreement was reached at a meeting of the Economic and Financial Affairs Council, without discussion. The Council will adopt the directive once the European Parliament has given its opinion.

The directive requires unanimity within the Council, after consulting the Parliament.

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