The role of tax advisers - initial considerations - CFE PAC meeting on 25 March 2015

A tax adviser has to respect the law A tax adviser has to respect the law. Are there any other boundaries he has to respect? Do professional ethics translate the message of the law into professional duties, i.e. are they an interpretation of the law, or are they an add-on? Is “the spirit of the law” the result of the interpretation of the law (including anti-abuse laws and recognised principles of anti-abuse or non-circumvention), or does it go further? Who can decide what within the spirit of the law? Can professionals be sanctioned for behaviour not prohibited by the law, or would this be an infringement of fundamental rights and principle of the rule of law (i.e. the tax adviser´s right to exercise a profession within the boundaries of the law, the client´s right to privacy, a fair trial and legal representation, nulla poena sine lege principle)?

Specific aspects relating to “cooperative compliance” The client´s interest may coincide with the state´s interest but may never be overridden by the latter (provided that the law is respected). Any form of cooperative compliance will not change this. Even in an agreement in which a clients commits himself to do/disclose more than is legally owed, the tax adviser will watch whether the collaboration remains fully in his client´s interest. Cooperative behaviour will usually be in the client´s interest. But a client may choose not to be more cooperative than he has to on basis of legal obligations. It cannot be assumed, neither by the state nor by the tax adviser, that a client is ready to share information s/he is not obliged to share. Any agreement in which the client commits himself (and his tax adviser) to do more than legally required has to be clear about this. A client may incur no disadvantage from not cooperating more than he has to. But there may be situations where the non-granting of an advantage may factually become the imposition of a disadvantage (e.g. an incentive is created for voluntary compliance while at the same time, the general rule is made more restrictive)? A tax adviser may not enter an agreement with the administration that touches upon his obligation to serve his client´s interests unless the client has acknowledged such agreement.

The advice given has to be independent from: The state Is being tax adviser and being part of state administration incompatible? (different concepts in CFE member organisations)The own interest of the tax adviser Conflict of interest rules (member states/ professional bodies have diverging rules on whether assignment has to be terminated, client has to be informed or has to agree) Third parties Conflict of interest rules Ownership rules (member states/ professional bodies have very different concepts from no regulation to 100% ownership requirement) Conclusion: Independence from the state, the client or employer and third parties requires effective and enforceable rules, but there is a margin of appreciation by countries/professional bodies whether these have to be in the law and what specific form these rules should take.

Regulation is needed and justified to the extent it serves the client Regulation is needed and justified to the extent it serves the client. This applies in particular to the following: Qualification requirements Rules on diligence, care and conscientiousness, professionalism Regulation to safeguard the independence of advice given Regulation to ensure effective protection of the client´s legal position (confidentiality of client information and advice given) Regulation to safeguard the client´s financial interest (insurance, liability, handling of client´s funds) Regulation can either be based on legal provisions or on private initiatives.

Should the role of tax advisers and the afore-mentioned aspects be reconsidered? Due to obligations to disclose aggressive tax planning? Due to increased involvement in tax compliance (by law or by voluntary “cooperative compliance”)? Due to the use of technology (by the client, the tax adviser, the tax administration)? Due to risk management by the tax administration? Due to the need to specialise? Should the tax adviser of the future become more accountant than the tax adviser of today? Will the tax adviser become dispensable?