Sunday

22nd Oct 2017

Brussels shames EU countries on tax fraud

  • Cyprus' shadow economy is worth 26 percent of its GDP (Photo: bundesbank.de)

A fresh report on tax fraud by the European Commission makes several EU countries look like villains in the €1-trillion-a-year racket.

Taxation commissioner Algirdas Semeta put forward the findings in Brussels on Wednesday (27 June) together with ideas on how to clamp down on the practice in future.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

He noted that Austria is vetoing EU-level talks with Andorra, Monaco, San Marino and Switzerland on a new agreement to reveal the true owners of front companies and to make the tax havens hand over more data on EU citizens' deposits.

Cyprus, the incoming EU presidency, appeared on his list of countries which have been instructed by Brussels to implement existing laws properly.

The island, an offshore banking centre, also emerged as hosting one of the EU's most pervasive "shadow economies," worth 26 percent of Cypriot GDP (Bulgaria was the worst on over 30%).

Greece, the EU's biggest bailoutee so far, was said to host a black market worth 24 percent of its GDP.

The country's new shipping minister resigned on Tuesday when it came out he owns an offshore firm in violation of Greek law on public officials.

Semeta also named Luxembourg - the home country of Jean-Claude Juncker, a key architect of EU financial reforms in his role as President of the Eurogroup - as vetoing the third party tax agreement along with Austria.

The commissioner said he hoped EU leaders at the summit on Thursday would put "strong peer pressure" on the Austrian and Luxembourgish leaders to back down.

His report noted that tax fraud costs the EU €1 trillion a year - more than the five bail-outs so far put together.

It added that the related "shadow economy" in the EU is worth €2 trillion a year.

In another window on the murky world, it said 35 percent of EU countries "non-bank deposits" are held in opaque offshore firms.

It noted that the Cayman Islands and Swizterland currently host 20 percent of such deposits worldwide, worth $1.4 trillion.

It also said the Cayman Islands, a British overseas territory, is among the world's fastest growing non-bank deposit centres. Numbers of deposits in Switzerland have flattened out, while numbers in Jersey, another quasi-British location, are falling.

Semeta's ideas for future actions include: introducing a pan-EU tax-identification number for every cross-border taxpayer; minimum criminal penalties for tax cheats; a new "quick-reaction mechanism" on VAT fraud; and more anti-tax-fraud powers for the EU's joint police body, Europol.

He also plans to publish new "action plans" on how to deal with tax havens and companies which do "aggressive" tax planning.

"Why should teachers, nurses and shopkeepers carry a heavier tax burden just because large companies can employ clever tax planners to avoid paying their share?," he said in his speech.

Details of the new initiatives are due by the end of the year.

Macron puts trade policy on summit table

France's president wants a "political discussion" on EU trade policies at Thursday's summit, amid domestic concerns over Canada and South America deals. But his colleagues are likely to avoid a lengthy debate.

News in Brief

  1. Rajoy to trigger Article 155 on Saturday in Catalan crisis
  2. EU conducts unannounced inspection of German car firm
  3. Lithuania calls for new EU energy laws
  4. EU leaders aim for December for defence cooperation
  5. Juncker says hands tied on Russia pipeline
  6. Czechs set to elect billionaire Andrej Babis
  7. Italian regions hold referendums on more autonomy
  8. EU leaders refuse to mediate Catalonia conflict

Stakeholders' Highlights

  1. Mission of China to the EUPresident Xi Jinping Proposes Stronger Global Security Governance at Interpol Assembly
  2. European Friends of ArmeniaEU Engagement Could Contribute to Lasting Peace in Nagorno-Karabakh
  3. UNICEFViolence in Myanmar Driving 12,000 Rohingya Refugee Children Into Bangladesh Every Week
  4. European Jewish CongressBulgaria Applauded for Adopting the Working Definition of Antisemitism
  5. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  6. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  7. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  8. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  9. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  10. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  11. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe
  12. CECEE-Privacy Regulation – Hands off M2M Communication!

Latest News

  1. The mysterious German behind Orban's Russian deals
  2. Mogherini urged to do more on Russian propaganda
  3. Turkey funding cuts signal EU mood shift
  4. Posted workers top EU agenda This Week
  5. Leaders lobby to host EU agencies at summit's margins
  6. Legal tweak could extend EU control on Russia pipeline
  7. Ukraine language law does not harm minorities
  8. EU begins preparations for Brexit trade talks