The European Union needs a quick agreement on proposed rules for lawyers, bankers and other advisers that help devise ways to aggressively cut tax bills, the European tax commissioner said today.
The appeal for more transparency comes after new revelations in the Paradise Papers of widespread use by firms and rich individuals of off-shore jurisdictions.
Pierre Moscovici made his comments in a speech in the European Parliament in Strasbourg today.
Mr Moscovici called on member states and EU legislators to agree "in the next six months" on proposals made by the EU's executive commission in June that would force tax advisers to report tax- planning schemes devised for their clients.
"We know that multinationals, wealthy individuals, consultants, banks work hand in hand to subtract massive amounts of tax revenues," the Commissioner said.
The practices were "systemic," he said, questioning their legality.
He likened tax professionals that help evasion to "vampires that fear the light," and against which only transparency can work as a deterrent.
Moscovici also urged member states to agree by the end of the year on an EU blacklist of tax havens, to reduce the appeal of off-shore jurisdictions that charge little or no corporate tax.
Aggressive tax planning and tax avoidance are not illegal in themselves, but they are controversial and in some cases could hide illicit activities.
The proposal on stricter rules on tax advisers would impose sanctions on lawyers, accountants, banks and other consultants that do not disclose tax arrangements that could help avoidance.
So far, the commission's proposal has made little progress. On tax matters, all 28 EU states have to agree on reforms, a provision that has allowed smaller, low-tax countries to block several overhauls.
Luxembourg and the Netherlands are the EU countries with the largest volume of assets held in financial vehicles owned by corporations that shift funds within companies across borders, data cited by the European Central Bank in an October report show.
In total, those corporations hold about €10 trillion in the two countries, ECB data show, making up around one-eighth of the euro zone's entire financial system.
The entities "are mainly set up in Luxembourg for financial engineering and tax-planning purposes," a report prepared for the Grand Duchy's central bank, and cited by the ECB, said in April.
The report on the country's shadow banking system added that most of these companies "have virtually no physical presence in Luxembourg".
They are usually part of larger oil, food, pharmaceutical or telecoms corporations and "are mainly used to channel funds from or via Luxembourg to other entities of the group domiciled abroad," the report said.
Under the proposals on tax advisers made by the commission, lawyers or banks that helped set up these structures would probably be required to report them to tax authorities to shed more light on these dealings.
However, professional confidentiality may prevent tax advisers from disclosing data on their customers.
In a report published last week, EU lawmakers raised concern that Luxembourg-based tax advisers used such confidentiality to avoid giving information to Luxembourg's tax administration on clients involved in the so-called Panama Papers, another massive leak of financial documents last year.
Moscovici also urged progress on commission proposals to disclose publicly the ultimate owners of trust companies and other financial entities that benefit from exemptions on revealing who their clients are.
Trusts are legitimate vehicles to manage assets, but "could be used to hide money," the EU lawmaker in charge of the issue, Dutch Green Judith Sargentini, told Reuters.
Talks on this reform have been going on for more than a year, but Britain, Malta, Cyprus, Luxembourg and Ireland are among the countries opposing more transparency, Sargentini said.
Britain, which is home to a large trust industry, has defended confidentiality to protect privacy.
Other countries fear more public scrutiny could lead the firms to move outside the EU.
No breakthrough is expected from a new round of talks planned later today among negotiators for the EU parliament and EU states, Sargentini said.