A leading member of the European Parliament is calling for offshore tax havens such as the Channel Islands and the Isle of Man to be abolished in the drive towards a single financial services market.
German MEP Christa Randzio-Plath, who chairs the European monetary affairs committee which has responsibility for the single financial services market within the EU, says it is unfair that such tax havens exist. She wants EU tax rates brought in line.
Such a move would have wide ranging effects on the offshore subsidiaries of many UK life offices, effectively preventing them from offering tax-free products to EU citizens.
It would affect EU tax shelters such as Luxemburg and Dublin as well as access to other non-EU entities such as Switzerland, the Isle of Man and the Channel Islands.
In an interview at the Aberdeen Asset Management annual non-executive director conference on August 31, RandzioPlath said she is a strong supporter of a move towards tax co-operation by EU members.
She said: “I cannot understand how we can make the industry function if we cannot answer the question of taxation. We, as the European Parliament, call for the end of this tax discrimination. I am not calling for tax harmonisation, I am calling for tax co-ordination. If you have a single market, tax havens should not exist.”
Scottish Mutual International sales director Tim Nelson says: “We are fully compliant in all territories we operate in. We do business is the same way a local company does, paying the same tax rates they do. We do not see ourselves as operating in tax havens.”