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Slovenia Pursuing 'Tax Haven' Asset Tax, Covering Also EU States

by Ulrika Lomas,, Brussels

17 February 2018

The European Central Bank on February 14 published an opinion (CON/2018/8) on a proposal from lawmakers in Slovenia on a draft law on the return of monetary funds to the country from designated "tax havens" and the imposition of a penalty tax, providing an outline of the proposed regime.

Before issuing its opinion on the potential legality of the regime and the steps that will need to be taken by local authorities if the law is enacted, the ECB set out the details of the regime, received from Slovenian authorities. It said:

"The main objective of the draft law, which was prepared by the National Council of the Republic of Slovenia, is to introduce a regime resembling a penalty tax regime in order to combat the leaking of monetary funds into designated low- or no-tax countries (so-called 'tax havens') which, according to the draft law's explanatory memorandum, are causing harmful tax competition to traditional tax countries such as Slovenia. The draft law stipulates the conditions, procedure, and relevant authorities for enabling the return of funds from the designated tax havens into the national budget. The list of countries considered as tax havens under the draft law includes inter alia several EU member states."

"The draft law provides that funds which have been directly or indirectly transferred from Slovenian bank accounts into accounts in the designated tax havens will be subject to a penalty tax rate. For transfers made from June 25, 1991, until the entry into force of the draft law, a rate of 20 percent will apply and the liable persons will have to make payments within a six-month period following the entry into force of the draft law. For transfers of funds made after the entry into force of the draft law, a rate of 22 percent will apply and payments will be due within three months of making the relevant transfer. In case of breach of the obligation of payment of the relevant sum, the liable person will be charged by the tax authority at a rate of 80 percent of the transferred funds."

"Liable persons include natural persons with Slovenian citizenship; foreign natural persons holding accounts in banks and other payment institutions in Slovenia; legal entities registered in Slovenia operating in the relevant period covered by the draft law; and foreign legal entities holding accounts in banks and other payment institutions in Slovenia during the relevant period. The draft law excludes from its scope certain entities, including State authorities, international organisations, religious organisations, as well as remittances made by banks on their own behalf and payments made by Banka Slovenije."

"Public authorities and financial institutions, including banks and Banka Slovenije, are obliged to provide information to the authorities responsible for the implementation of the draft law on any payments made by liable persons to the designated tax havens and to provide any other assistance, free of charge. The draft law indicates that all data related to liable persons under the draft law and all data related to the payments made to the designated tax havens is public information that can be acquired and published by anyone."

In its response, on the scope of the proposals, the ECB noted that on December 5, 2017, the Council adopted the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes. According to the Commission, when assessed against the EU list criteria, all member states are fully compliant.

"Since the taxation of funds transferred to member states designated as tax havens as foreseen by the draft law would also appear to affect the free movement of capital, the National Assembly should consult the Commission, as the guardian of the Treaties, on the draft law, if it has not already done so."

In its response, the ECB also discusses the necessary privacy safeguards for confidential data, provided by EU law; the obligation on the staff members of the national central bank to ensure confidentiality; and ensuring that the national central bank has sufficient additional resources, as required, to ensure its efforts in the area of financial sector stability aren't diminished by any new obligations on the bank to support the administration of the new law.

TAGS: tax | Slovenia | law | budget | tax authority | European Union (EU) | Europe

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