Thursday

21st 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. EPP proposes suspension for Orban's Fidesz
  2. May asks for Brexit extension until 30 June
  3. Juncker: Brexit decision unlikely this week
  4. North Macedonia EU-membership talks set for June
  5. EU ups benefits rights for mobile workers
  6. Chinese leader visits Italy, France as Rome joins 'Silk Road'
  7. EU agrees to sanction political parties breaching data rules
  8. EPP votes Wednesday on future of Orban's party

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

Latest News

  1. May tosses Brexit spanner into EU machinery
  2. Centre-right EPP faces showdown with Orban
  3. A compromise proposal for the Article 50 extension
  4. US glyphosate verdict gives ammunition to EU activists
  5. Have a good reason for Brexit extension, Barnier tells UK
  6. EU countries push for new rule of law surveillance
  7. EU rolls out €525m for military projects, but bars illegal tech
  8. May to seek Brexit extension amid UK 'constitutional crisis'

Join EUobserver

Support quality EU news

Join us