The Think Tank of the European Parliament published the report ‘Regulation of intermediaries, including tax advisers, in the EU/Member States and best practices from inside and outside the EU‘, announcement, report (pdf), that is summarized as follows:

This study provides an overview of the regulatory environment of tax intermediaries. It presents a comparative analysis of five selected countries (4 EU, 1 Non-EU). For each country, it provides an understanding of the landscape of the tax profession, the current regulatory framework and its impact on tax compliance and draws attention to some weaknesses across this regulatory space. It also highlights some proposed remedies and direction for further in-depth research in this area. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Economic and Monetary Affairs’ Subcommittee on Tax Matters (FISC).

It is interesting to see that the rapporteurs recognise the importance of the tax profession and do not lump everyone together.

One of the remarks is that the impact of specific tax intermediary regulation on reducing tax evasion and undesirable tax avoidance remains unclear. Also the rapporteurs voice concern about the potential for over-regulation:

especially as there is some suggestion that the bulk of tax evasion/undesirable tax avoidance enabling activities may be occurring among the small pool of tax advisers who are not members of any professional bodies

They advise to:

explore the characteristics of the ‘bad apples’ and how to manage them in a more targeted way

The summary ends with a warning:

Overall, the report highlights a lack of impact evaluations on the hard and soft law instruments currently existing in the countries analysed. Restraint from adopting further rules governing the activities of tax intermediaries and relating to disclosure requirements, without an empirical understanding of the costs and effect of those currently in place is highly recommended.

It is unfortunate that this sober and intelligent approach is not taken by the designers of anti-money laundering (AML) and countering terrorist financing (CFT) rules.

Complete key findings

• Tax advice is provided by a broad and diverse range of professionals/intermediaries which include tax advisers, lawyers, accountants as well as bankers and wealth managers. In Germany, the status of tax adviser is legally protected, this is not the same in Italy, the UK, Ireland, and the Netherlands. In addition, Trade Unions play a strong role in tax advisory work in Italy, a phenomenon which does not exist in the other four countries.
• Despite four of the five countries practising professional self-regulation, tax intermediaries operate in an increasingly regulated environment (soft and hard forms) across all five countries, largely due to EU regulations as well as new regulations introduced by national tax authorities and Parliaments.
• The impact of specific tax intermediary regulation on reducing tax evasion and undesirable tax avoidance remains unclear and there is insufficient data available to enable the identification of best practices on the various forms of regulation currently in place.
• There is concern about the potential for over-regulation especially as there is some suggestion that the bulk of tax evasion/undesirable tax avoidance enabling activities may be occurring among the small pool of tax advisers who are not members of any professional bodies. Regulation needs to be targeted to be able to identify this small pool of advisers along with imposing relevant sanctions.
• Potential remedies identified in previous research to enhance the regulatory space for tax intermediaries are: the development and implementation of an EU wide Code of Conduct for tax intermediaries, the introduction of mandatory Professional Indemnity Insurance for tax intermediaries, and the adoption of a more targeted approach to deal with tax intermediaries who enable undesirable tax avoidance.
• The report recommends further research is needed including to: conduct an extensive comparative study of current regulation, assess the feasibility of uniform measures in light of different country and global institutional contexts, explore the characteristics of the ‘bad apples’ and how to manage them in a more targeted way, assess the differences between countries with and without direct regulation of tax intermediaries, and explore the principles of responsive regulation for the governance of such intermediaries.
• Overall, the report highlights a lack of impact evaluations on the hard and soft law instruments currently existing in the countries analysed. Restraint from adopting further rules governing the activities of tax intermediaries and relating to disclosure requirements, without an empirical understanding of the costs and effect of those currently in place is highly recommended.