DESCRIPTION: The EU summit on May 22 will target tax evasion, but a Nordic collaboration has been working since 2006 to target tax havens.
PQ: A staggering 1 trillion euros ($1.3 trillion) is lost to tax evasion each year in the member countries of the European Union.
Nordic Countries Target Tax Evasion Ahead of EU Summit
By Barbro Plogander
Epoch Times Staff
GOTHENBURG, Sweden—The huge global problem of tax evasion will be addressed at an upcoming European Union (EU) summit. Seven Nordic countries have a head start on the rest of the EU, however, as they have already secured bilateral information exchange agreements with 40 tax havens.
A staggering 1 trillion euros ($1.3 trillion) is lost to tax evasion each year in the member countries of the EU, according to a video message by the president of the European Council, Herman van Rompuy, on April 12. This is seven times the entire annual budget of the EU itself.
At a May 22 summit, EU leaders will discuss tax evasion. Van Rompuy indicated that the EU can neither afford nor tolerate this massive tax evasion anymore.
Back in 2006, The Nordic Council of Ministers had already come to the same conclusion as far as their respective member countries were concerned. Denmark, Finland, Iceland, Norway, Sweden, Greenland, and the Faroe Islands joined forces in a new project to combat tax dodgers. The Nordic working group against tax evasion was dubbed NAIS.
“We pronounce the name as ‘nice,’” Chairman Margareta Nystrom said with a laugh.
Nystrom, who also works for the Swedish Tax Agency, told the story of a Swedish consulting firm, registered in a Caribbean tax haven. The owners kept overseas earnings away from the Swedish Tax Agency this way, and spent it on lavish vacations and expensive sports cars.
But as an information exchange agreement was negotiated with the aforementioned tax haven, the name of the consulting firm wound up at the Swedish Tax Agency office in Stockholm, which could then demand information from the company.
It is expensive to get caught dodging taxes in Sweden. If you can correct the “error” before the tax agency gets wind of it, it is less costly. For this particular company, however, it was too late.
One day, a big cardboard box full of the company’s files arrived at the tax agency office in Stockholm. It contained the name of the owners, which banks they had used, and all transactions.
“We could trace exactly how they had used this money,” Nystrom said.
The Swedish taxpayer would no doubt find it “nice” if tax evasion stopped. In Sweden alone, a country of only 9 million people, some 7 billion dollars that should go to the government each year is lost through tax evasion.
Tax havens could lower their penalties by negotiating with the Nordic collaboration and provide information. Another advantage is that the tax havens do not need to negotiate with each country individually. At the end of 2012, the Nordic countries had reached agreements with 40 countries.
NAIS monitors the deals, as there may be some conformity issues. They also decided that they needed to focus on getting the right kind of material from the (former) tax havens in order to secure evidence for the Nordic tax agency investigations. Among other means, they developed a special Nordic questionnaire.
“We get very good responses compared to other countries,” Nyström said.
In a globalized world, money, goods, and services flow freely. The problem of tax evasion and banking secrecy thus need international solutions, according to van Rompuy.
“Europe must speak with one voice,” he said.
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