Momentum is building within the European Parliament for the EU to formally name the United States a tax haven if it doesn't adopt the common reporting standard from the Organization for Economic Cooperation and Development and force states like Delaware, Nevada and South Dakota to revise rules allowing company owners to remain confidential. The
of such a designation could eventually include increased reporting burdens for companies operating in the U.S., and additional coordinated sanctions from EU member states.
For months, the EU has investigated U.S. tax rules, and those efforts intensified after the U.S. passed sweeping tax reform in December. Placing the U.S. on the EU's blacklist would put it in the company of nine other countries that the bloc considers to be noncooperative jurisdictions. That
currently includes: American Samoa, Bahamas, Guam, Namibia, Palau, Samoa, Saint Kitts and Nevis, Trinidad and Tobago, and U.S. Virgin Islands.
There are those within the European Parliament that believe the U.S. at the very least belongs on the EU's "graylist" of countries that don't meet the bloc's transparency and corporate tax standards. Some MEPs suggest the fact that the U.S. isn't already on the EU list shows that the process is political, with many EU member states not wanting to give the appearance of challenging the Trump administration for fear of the complications that may arise. There is concern within the European Parliament that if something isn't done about the situation, it will undermine the credibility of the EU tax haven list.
Recent changes to U.S. tax laws have raised concerns within the EU that the country is defying the global move to curb multinational tax avoidance. EU member nations asked the OECD Forum for Harmful Tax Practices to investigate several U.S. policies, such as the base erosion and anti-abuse tax. In addition, the European Commission is considering launching a WTO complaint against the U.S., alleging that it breaks international trade rules. The commission is looking specifically at the deduction for foreign-derived intangible income, as well as the requirement that U.S. shareholders of controlled foreign corporations pay tax on their global intangible low-taxed income. The EU is concerned the provision could be used as an illegal subsidy, as the tax to be paid would be lower than the regular tax otherwise due on other sources of income.
Experts also point to the Big Four accounting firms as major contributors to global tax avoidance, claiming that all four have played a role in helping hide money in offshore havens. In addition, the European Parliament is investigating the tax policies of major digital companies such as Facebook and Google.
Individuals with interests in both the U.S. and Europe should monitor the situation and seek assistance from qualified professionals to ensure continued compliance.