EU thinktank TAX 3 Committee have suggested a number of significant improvements to which the European Parliament have voted overwhelmingly in favour of. One of which being the most controversial legislation amendments in the financial sphere at the moment: the phasing out of EU Member States investment-based citizenship and residency schemes.
Experts around the world are waiting to see what the ECs final decision will be after the parliamentary vote.
The TAX 3 Committee on Financial Crimes, Tax Evasion & Tax Avoidance was established in early 2018. Towards the end of 2018, it produced a draft report raising the following issues & suggestions:
1. To renovate the EU’s financial crimes & tax enforcement system.
The committee chair spoke about the regrets the fact that many areas of taxation remain a Member State competence, and said the EU Council of ministers is ‘clearly the weakest link’ in tax regulation.
2. To improve cooperation between EU authorities.
Another recommendation is to create an EU-wide financial police force to be created to solely with the aim to counter the laundering of criminal proceeds and the perpetrators, the value of the money laundering industry has reportedly cost the EU an estimated EUR €110 billion so far.
3. To phase out all citizenship-by-investment schemes in Europe.
It named some schemes as particularly threatening to the integrity of international exchange of information under the OECD Common Reporting Standard and posing ‘serious risks of money laundering and tax evasion’. According to the motion put forward by the EU parliament, the economic advantages of the programmes offered by EU Member States do not offset the serious security, money laundering and tax evasion risks they present.
Certain MEPs are concerned that the programmes carry risks, and controversially called on the European Commission to rigorously & continuously ensure that Member States actively engage in due diligence in administering their schemes until they are repealed in each Member State.
Not everyone backs the repeal of the citizenship-by-investment programmes
The Investment Migration Council is a collectivist group that supports citizenship-by-investment programmes, has commented stating that the industry is currently generating EUR €20 billion revenue and phasing it out would threaten dynamic investments in developing and emerging economies. It called on the EU rather to simply support improved implementation standards and monitoring.
Members of the European Parliament also voted to impose countermeasures against blacklisted non-cooperative jurisdictions at the EU level, rather than by individual Member States.
The results of the parlimentary vote was as follows:
Votes (total 751 seats)
In favour of repealing European golden visa schemes: 505
Against repealing European golden visa schemes: 63
Abstained from voting: 87
However, the European Parliament’s role is advisory only, and its decision will now be passed on to the European Commission to consider.
Read more about the Cyprus Citizenship-by-Investment Passport Programme.