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CURRENT STATUS OF THE FIGHT AGAINST TAX HAVENS IN EUROPE
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In practice, this has meant that the most
“controversial” jurisdictions only automatically
transmit information to the tax authorities of
the states with which they wish to cooperate,
whether because they are important trade part-
ners or because they are powerful enough to
follow through on their threats in the event of
failure to respond to their requests for informa-
tion. For example, Switzerland – which agreed
to start AEOI from January 2018 – has already
indicated that it will only automatically exchange
information with a group of carefully selected
jurisdictions, such as G20 countries, important
trade partners and major financial centres. It
seems, then, that developing countries (who are
the main victims of banking secrecy and tax ha-
vens) run the risk of only benefitting in a limited
manner from the flows of information that will
result from application of the CRS.
In any event, the OECD has implemented a
system to evaluate the level of compliance with
CRS by different jurisdictions. Specifically, the
Global Tax Forum of the OECD has established
a monitoring system based on peer review,
which entails mutual evaluation between par-
ticipating jurisdictions and consists of two phas-
es. In the first phase, teams evaluate the legisla-
tive framework of the territories being examined
(level of transparency, availability of banking
information etc.) while in the second phase the
evaluation focuses on identifying whether the
automatic exchange agreements have been ap-
plied effectively. A final report is then published,
accompanied by a rating of the jurisdiction ex-
amined (compliant, partially compliant, non-
compliant etc.). However, because there are no
specific sanctions for non-compliant countries,
pressure for members of the Global Forum to
cooperate is based on being “named and
shamed” at the next G20 summit.
Abuse of trusts and shell companies as
the chief obstacle to effective information
exchange
One point that requires particular attention, and
which is taken into account in the peer review
processes described above, regards the identifi-
cation of the beneficial owners of accounts,
given that effective AEOI between jurisdictions
requires that information about the beneficial
ownership be available, not hidden behind the
screen of intermediate vehicles such as offshore
companies, foundations or trusts.
Recent tax scandals such as the Panama Papers
have merely confirmed the scale of the problem.
Many of the funds and assets that are hidden from
the tax authorities are held not in the name of in-
dividuals but in the name of companies or other
legal entities which are used as instruments to
conceal the true identity of the beneficial owner.
Unfortunately, there is no agreed definition of
what constitutes the “beneficial owner” of an
asset in all Member States, but in essence this is
the person who has the right to use and enjoy
the asset and who exercises ultimate control over
it. The real owner is also the one who receives
profits from the exploitation of the assets of a
company, foundation or trust, unlike the admin-
istrators, agents, trustees or other intermediaries.
The abuse of intermediary vehicles – and of
trusts in particular – breaks the link between the
legal owner (the one who is named as such in
official documentation: the trustee, for exam-
ple) and the beneficial owner, who is thus hid-
den behind a screen of legal ownership. This
does not prevent the beneficial owner from en-
joying the assets, but does allow them to avoid
paying the taxes which are due.
Strategies of this sort require the complicity
and mechanisms provided by some jurisdictions,
which often do not demand the information