Saturday

23rd Mar 2019

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.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

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.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Join EUobserver

Support quality EU news

Join us