Demands to open Britain’s shady network of overseas tax havens are set to be used by the EU as leverage to force concessions during Brexit trade talks.
The European Commission will soon review whether British territories previously left off a Brussels tax haven blacklist should now be added – just as negotiations move on to the all-important future trade deal.
Publicly EU officials say the blacklisting process has nothing to do with Brexit, but separate sources in Brussels told British territories where billions of pounds are stashed will come into play.
One official made clear the EU would “go after” them, while another said the UK Government must ask itself if it wants to fly in the face of British public opinion on tax avoidance.
EU commissioners in December produced a blacklist of uncooperative tax jurisdictions, in a bid to clamp down on evasion and avoidance, tackle “threats” to members states’ tax bases and take on “third countries that consistently refuse to play fair”.
But the 17 jurisdictions listed included no British Overseas Territories or Crown Dependencies, despite them being named in earlier EU lists and some being implicated in the Paradise Papers scandal.
The EU had agreed the blacklisting screening process would be put on hold for territories caught in Hurricane Irma, meanwhile the UK is said to have pushed back against tougher sanctions for blacklisted territories.
Meanwhile EU states including Spain, Italy, France, Germany, Belgium, Portugal and Greece are all countries with a higher than global average exposure to citizens and firms stashing wealth offshore.
Spokespeople at the European Commission said decisions on which jurisdictions to blacklist would be taken according to a strict and public criteria, not subject to any political pressure or consideration in Brexit negotiations.
But with the crucial Brexit trade talks to start in March, some officials privately acknowledge the dynamic is shifting, with the EU potentially using the process as leverage and vowing to pursue the territories for revenue post-withdrawal.
In particular, the UK is desperate to ensure the deal includes single market access for London’s financial services sector, but Brussels is adamant it must mean firms in the City adhering to European law.