Written in June 2019, sometimes interesting to look back!
These subjects have been
made relevant from Spanish and UK Budgets in the past decade where part of the Governments’ increased revenue will
come from tackling Tax Avoidance and Tax Evasion. One of the problems I have
with the subject is that in speeches politicians often confuse tax avoidance
with tax evasion. This matters because Tax Evasion is already illegal. Closing down Tax Avoidance is in the hands of Parliamentarians to change. One way to do this would be to accept Anti Tax Avoidance Directive EU 2016/1164 which has five legally-binding anti-abuse measures and all Member States should apply against common forms of aggressive tax planning.
Leaving the EU has definitely favoured the UK's billionaires and fellow travellers!
The five anti-abuse measures are;
Controlled foreign company (CFC) rule: to deter profit shifting to a low/no tax country.
Switchover rule: to prevent double non-taxation of certain income
Exit taxation: to prevent companies from avoiding tax when re-locating assets.
Interest limitation: to discourage artificial debt arrangements designed to minimise taxes.
General anti-abuse rule: to counteract aggressive tax planning when other rules don’t apply.
IMPORTANT;
- Avoidance and evasion are not the same
- Downright favouring the wealthy is a political decision
- Tax avoidance in many cases is legal BUT over aggressive tax 'planning' CAN affect both the EU internal market and tax liabilities e.g. Profit 'shifting'
- Tax
evasion is illegal but needs effective and efficient COLLECTION systems
Tax Evasion – Definition
Unlawful attempt to
minimise tax liability
through fraudulent techniques
to circumvent or frustrate tax laws,
such as deliberate under-statement of taxable income
or wilful
non-payment of due taxes.
Whereas tax evasion is an offense
(punishable by both civil and criminal penalties),
tax avoidance
is not.
Whatever politicians or the newspapers say
there are no extra legal powers needed to stop Tax Evasion – it is illegal.
Though HMRC in the UK and La
Hacienda in Spain
If you need
advice or have a query please email
me
Examples of Tax
Evasion
- Being resident in
- Not declaring income from property letting
- Spanish resident having an Individual Savings
Account in the
- Not declaring gross paid interest on offshore
accounts
- Wilful refusal to pay tax
Tax Avoidance – Definition
Lawful
minimisation of tax liability
through sound and currently legal financial planning. Parliament could stop this
I am quite happy
to answer any queries you may have but I will refer you to an adviser for
authorised and regulated advice, if you email me
Examples of Tax
Avoidance
- Pension schemes are legitimate and
avoid tax but contributions and benefits have to be within HMRC rules and importantly, limits.
- QROPS for
- The legitimate use of offshore
trusts to hold assets but not if covered by EU 2016/1164
- The establishment of Trusts or Foundations for charitable purpose
Most Tax Avoidance in the EU is legitimate, subject to EU 2016/1164!
- In the
* * * * * * *
You can write
to me with your personal experiences, ask me a question or to be put in touch
with one of my recommended adviser by sending me an email
Linked with
this post are two recent articles from my Blog;
Qualified, Regulated and Independent Financial Advice
http://expatsfrombritain.blogspot.com/2019/05/financial-advisers-must-be-qualified.html
http://expatsfrombritain.blogspot.com/2019/05/financial-advisers-must-be-qualified.html
Interesting, even in 2021?
Tell me your experiences, write
to me by email
David Goodall
Financial Pages in Spain
Email: davidgoodall.spain@gmail.com
