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(English) U.S. Emerging as ‘Leading’ Tax, Secrecy Haven, EU Report Says

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By Joe Kirwin

March 8th, 2017

The U.S. is emerging as a “leading tax and secrecy haven for rich foreigners” because of its resistance to global tax disclosure standards and the array of tax-free facilities available for non-residents, according to a European Parliament report.

Released March 7—two weeks before European Union lawmakers visit Washington D.C. and Delaware to probe money laundering and tax evasion issues— the report says U.S. states such as Nevada, Wyoming, South Dakota and Delaware are attracting money flows from around the world because of laws that permit beneficial owners of companies to remain anonymous.

“The United States provides a wide array of secrecy and tax-free facilities for non-residents both at the federal level and at the level of individual states,” the report said.

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The report underlines that the U.S., unlike “virtually all of the other developed counties in the world,” hasn’t agreed to implement the OECD’s common reporting standard for the automatic exchange of bank and tax data between tax authorities.

‘Fact Finding’ U.S. Visit

The European Parliament’s Panama Papers investigative committee will visit the U.S. March 21-24 for what has been described as a fact-finding mission.

The delegation will meet with counterparts in the U.S. Congress as well as with representatives of the U.S. Department of Treasury, the Internal Revenue Service and various think tanks and organizations.

According to a committee document seen by Bloomberg BNA, the purpose of the visit is “to discuss with interlocutors the state of play and future perspectives for transatlantic cooperation in the fight against money laundering, tax evasion and tax avoidance at international, OECD and G-7/G-20 level, and both tax and beneficial ownership transparency at U.S. State level.”


The report was published amid mounting concerns among EU member countries and the European Commission that the Trump administration and the Republican-controlled Congress won’t implement the Organization for Economic Cooperation and Development’s recommendations under its Action Plan on Base Erosion and Profit Shifting (BEPS), a massive, two-year project to rewrite the global tax rules, and thereby will put European companies at a competitive disadvantage to U.S. companies.

The hard-hitting report comes as the EU begins screening 92 countries, including the U.S., for possible inclusion on an EU tax haven blacklist, due to be finalized at the end of 2017.


A key concern for the European Parliament Panama Papers committee are existing U.S. laws that continue to permit beneficial owners of companies to remain anonymous.

Some rules—such as tolerance by states like Delaware or Nevada of highly secretive anonymous shell companies—”are rather the result of a race to the bottom between individual states or standards of disclosure and transparency,” the report said.

Referring to Delaware in particular, the report said that the “small East Coast state ranks first in importance” in the U.S., by a wide margin, and “also serves as one of the favored places” for real estate funds.

“Delaware’s advanced business statutes make it an attractive place for global investors,” the report added.

EU Divide

The beneficial owners transparency issue is currently the subject of a pending revision to the EU Anti-Money Laundering Directive. The European Parliament is pushing for standards that would require identification of anyone with 10 percent or more of a company or trust to be posted on a public registry.

However, EU countries oppose the stricter rules based on, among other things, data privacy standards.

The European Parliament report also noted that because U.S. banking regulation is split between the federal and state governments, “Delaware, Nevada, Florida and Wyoming—all with very strict banking confidentiality regulations—would oppose the passing of a federal law on CRS in Congress.”

FATCA Complaints

Another issue highlighted in the report is the one-sided nature of the U.S. Foreign Account Tax Compliance Act, as EU governments must provide the U.S. with tax and income data about U.S. citizens living within their territory, but that reporting isn’t reciprocated with information about EU citizens living in the U.S.

Since the European Parliament panel began investigating the Panama Papers nearly a year ago, the FATCA issue has consistently been raised in hearings, the most recent of which took place March 6.

“The fact is that money laundering takes place when money is transferred from shell companies in tax havens via countries such as Switzerland and then onto to the U.S.,” Giuseppe Marino, a professor at Bocconi University in Milan, said at a March 6 hearing on the role Swiss lawyers and banks played in setting up and facilitating shell companies revealed by the Panama Papers. “The one-sided nature of FATCA is clearly a problem.”

The report is at

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