9th May 2023
Latest compliance news for international recruiters
Does your agency place contractors in the likes of France, Luxembourg, Switzerland or even Paraguay? If so, you’ll know only too well how complex the world of international tax and compliance, and keeping abreast of all the latest developments can be, particularly with the introduction of new working models like digital nomadism. We’ve outlined some of the latest tax-based stories, and potential subsequent legal shifts, for you to be aware of before placing specialist contract talent around the world.
Bank Reyl fined again for tax evasion in France
Bank Reyl, the Geneva-based private bank has once again been caught up in a money laundering and tax evasion scandal and has received a fine totalling €5.75m from the French government. In addition, general manager and partner, Francois Reyl was convicted of playing a key role in the organisation’s illegal practices and received sanctions worth €500,000.
The case started with former French Finance Minister Jérôme Cahuzac, who was accused of concealing accounts and assets at the bank which enabled him evade French taxes. Bank Reyl pled guilty to money laundering for a first time in 2016 along with charges of aiding and abetting other cases of tax evasion. Since that point the bank faced a number of other significant charges dating back 14 years. One charge involved an alleged case where a total of eight customers who transferred assets worth over €14m to a financial institution in Singapore in 2009. The continued sanctions that Bank Reyl, which is actually owned by an Italian holding company, has faced, highlight perfectly that borders make no difference to financial authorities when it comes to closing down potential criminals.
Luxembourg PM heckled in EU Parliament over ‘tax haven’ status
Luxembourg Prime Minister Xavier Bettel was heckled in the European Parliament last month by a lawmaker who accused his country of hiding the assets of the rich and powerful. Manon Aubry, co-President of the Left group said to Bettel, “Mr Bettel, I have a riddle for you: what do Tiger Woods, Brad Pitt, the Hermès family, Shakira, the Prince of Saudi Arabia, Bernard Arnault, the Italian mafia or the Russian underworld have in common? They all have, one has to say, an amazing passion for your country, Luxembourg. The reality is, Mr Bettel, you are the head of a country that is a tax haven, a paradise that organises theft in an organised gang.” Aubry then showed an image of a building allegedly located on rue Eugene Ruppert in Luxembourg City, which, according to her, is home to over 1,800 shell companies that are used for tax evasion.
Bettel attended a session of the EU Parliament in Strasbourg in late April where he gave a speech on the future of Europe, warning against protectionism and closed borders. In response to the remarks, Bettel defended the country’s efforts to combat tax evasion, saying Luxembourg had ratified every international anti-tax-avoidance initiative.
MEPs have repeatedly singled out Luxembourg, together with other countries like Ireland, the Netherlands and Cyprus, for alleged illegal tax practices. Last year, the head of the EU Parliament’s tax subcommittee said that he thought the country was still a tax haven after talking to professionals in the tax advisory industry and officials of the local tax office.
For agencies placing talent in Luxembourg, it’s likely that there will be increased scrutiny on the domestic tax system as awareness of the country’s worsening reputation grows. This means there’s probably never been a more important time to stay fully compliant when operating here.
Paraguayan opposition leader hints at corruption and fraud crackdown if elected
Paraguay’s main opposition presidential candidate, Efraín Alegre has laid out his plans to favour ‘austerity’ over raising taxes on the country’s farmers if he wins the upcoming election. He leads the Concertacion Nacional coalition and is neck and neck with Santiago Pena, the ruling Colorado Party leader. Candidates are under significant pressure to reduce a fiscal deficit that was 3% of gross domestic product last year, either through reducing spending or increasing taxes on farming, the main driver of the landlocked country’s economy.
Paraguay is a leading exporter of soybeans and beef, however the country’s diplomatic ties with Taiwan have closed doors to China, limiting its customer base. Attempts by the government to increase taxes, including on farming, have long faced political and industry pushback. Peña, has said publicly that he wants to crack down on tax evasion and have more people working in the formal economy however the future direction of the nation’s authorities will only be decided after the election itself. Agencies placing contractors in Paraguay and other neighbouring Latin American countries should keep up to speed with this evolving story as there are likely to be major changes to tax systems over the coming months, regardless of which side claims the victory.
Authorities around the world continue to seek new ways to reclaim lost tax revenue from organisations and individuals suspected of committing tax evasion and fraud. If your business places professionals internationally then you’ll know only too well the risks of breaking regulations and the potential sanctions you could be on the receiving end of. To guarantee that you’re operating in a compliant manner, and to get help navigating the ever-evolving landscape of tax regulations, partner with an expert firm like 6CATSPRO
6CATSPRO is part of WorkwellTM Group
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