Sweden Considers New Reporting Obligation for Tax Advisers
A parliamentary commission will consider the introduction of a new legal obligation for tax advisers to disclose information about advice on tax mitigation to the Swedish Tax Agency, Skatteverket.
Under the proposed rules, tax attorneys would be required to provide details of which clients have received advice on tax reduction models, and detail the form these models take. The new obligation would allow the Tax Agency to better combat tax avoidance and tax evasion, the nation’s Finance Ministry said in an April 7 statement.
Apart from a general requirement for tax advisers to uphold the law, Sweden doesn’t currently hold such disclosure obligations.
According to the Finance Ministry, allowing Skatteverket to access information about new tax arrangements as early as possible through introduction of the new rules would reduce the risk of taxpayers entering into illegal tax schemes, and thus provide greater legal certainty.
However, tax attorneys contacted by Bloomberg BNA expressed fears the new rules would erode the right of attorneys to offer confidential advice to their clients.
In an April 11 statement, Conny Tranberg, partner at Eversheds Sutherland, told Bloomberg BNA the proposal is “unlikely to be welcomed” by tax professionals and their clients. While tax advisers already have a general obligation to uphold the law, he said, they don’t have any legal obligation to provide information to tax or law enforcement authorities in this context.
“This proposal is highly controversial” he said. “Tax is a cost and it must be competitive in a global environment. Tax advisers’ advice must be confidential.”
“Today there is no general duty on information provision,” Fredrik Gustafsson, senior counsel at DLA Piper, told Bloomberg BNA April 11. “That said, the tax agency can request tax advisers to provide information about their clients and there is a duty to comply,” he said.
Gustafsson noted that there is an appeals court judgment that ordered an advisory firm to provide the agency with the firm’s client register and copies of invoices sent to clients.
“However, since we are protected by attorney-client privilege, members of the Swedish Bar Association and their assistants do not have a duty to comply. I am concerned about this proposal with respect to two issues. Firstly it could infringe on this attorney-client privilege. Secondly it will either lead to a lot of administrative work or lead to some hard questions over when the duty to disclose exists,” he said.
While the introduction of similar obligations are being considered in a number of other OECD nations, he added, it was “difficult to guess” whether the proposed Swedish requirements would be similar to those proposed in other nations.
The commission will examine the viability of requiring tax attorneys to inform Skatteverket of companies’ tax arrangements prior to declarations being filed. This, the ministry said, would allow the authority to formulate a response and shutter perceived legal loopholes.
It will also examine the feasibility of introducing so-called Mandatory Disclosure Rules as recommended by the OECD’s base erosion and profit shifting Action Plan 12, which seek to allow tax authorities early access to relevant information on aggressive cross-border tax planning strategies.
The commission will be charged with:
- examining the feasibility of a new information provision obligation and drafting a legal proposal;
- examining how the new obligation could improve Skatteverket’s verification and tax collection activities;
- assessing which information should be required;
- considering whether businesses or groups that devise their own tax arrangements should also be subject to the obligation; and
- formulating disclosure requirements related to cross-border tax schemes.
Originally suggested in April 2016 as part of a 10-point government plan to combat tax avoidance and tax evasion, the commission will present its findings by Oct. 31, 2018, after which comments will be sought from interested parties before a new law is presented to parliament.