Tax Criminal Law in European Context IAPA annual meeting 2015, Prague Ondřej Trubač Tomáš Pavelka

1. Why EU rules on taxation? 2. Why harmonise tax criminal law? 3. Effects of EU rules within Member States 4. Tax offences across EU Member States 5. Cross-border cooperation in tax criminal matters

a) Internal Market -Free movement of goods, services, capital -Negative harmonisation -Ban on discriminatory taxation (direct / indirect) and measures having equivalent effects -Tackling double taxation (bi-lateral treaties) -Positive harmonisation -VAT -Excise duties -Hot topic: financial transactions tax (Commission proposal on common system, currently 11 EU Member States participate) 1. Why EU rules on taxation?

Why EU rules on taxation, contd. b) Fair level of taxation -Combatting tax avoidance (cooperation and information exchange) -State Aid c) Source of income -Share of VAT as EU’s “own resource” Common denominator: action at EU level achieves better results

a) Internal Market -weak motivation, internal market is better achieved by pushing the individual Member States that misbehave b) Source of EU’s income -Strong motivation, individuals and corporations who do not pay tax are directly damaging EU’s financial interests c) Insufficient coordination – procedural aspects of tax criminal law -Strong motivation, EU agencies such as Eurojust, Europol and the European Anti-Fraud Office (OLAF) have only limited powers 2. Why harmonise tax criminal law?

d) Legal basis -TFEU Article 83 – EU competence on criminal law with cross- border dimension -does not explicitly refer to tax crimes -Only by means of directives -TFEU Article 86 on European Public Prosecutor’s Office -To combat crimes affecting financial interests of the EU – concerns tax crimes but also conduct related to EU Structural Funds (such as corruption, bid rigging and misuse of funds) -Not yet implemented – Commission’s proposal of 2013 Why harmonise tax criminal law, contd.

a)Direct effect – horizontal / vertical -Treaty provisions, Regulations, Decisions, (Directives) b) Indirect effect -All Member States action and legislation must conform to EU law c) Need to be transposed -Directives - most tax law and tax criminal law measures -BUT – vertical direct effect -Soft law, cooperation measures 3. Effects of EU rules within Member States

a) Common elements -The conduct -Cheating public revenues: evasion of tax, duties, contributions to social security, and similar payments -Fraud: smuggling, tampering with goods certificates, etc. -Transparency: failure to provide information, provision of false documents, other misbehaviour in the procedure -The principles -Taxation only on the basis of act of higher law (a statute) -Privilege against self-incrimination -Due process 4. Tax offenses across EU Member States

b) Diverging elements -Sources of law: -special tax crime laws (Austria) -general criminal codes (the Czech Republic) -Penalties: -length of imprisonment -imprisonment at all? -freezing and forfeiture of assets -Procedural matters -Right to legal aid Tax offenses contd.

-EU is the World leader in automatic exchange of information in tax area -Automatic exchange in the fields of a) savings taxation, b) direct taxation, c) VAT, d) recovery of taxes -New VAT quick reaction mechanism – Carousel frauds -Accounting rules – Country-by-Country reporting -FISCALIS 2020 programme – framework + more money -EU agreements with neighbouring non-EU countries -Andorra, Liechtenstein, Monaco, San Marino, and Switzerland + dependent territories of the UK and the Netherlands 5. Cross-border cooperation in tax criminal matters

Q & A Thank you for your attention JUDr. Ondřej Trubač, Ph.D., LL.M JUDr. Tomáš Pavelka, LL.M