Monday

24th Sep 2018

Commission - EU must combat €1tn tax dodging

  • The Commission estimates that 1 trillion is lost each year to tax dodging (Photo: Fotolia)

EU countries must apply common tax rules to combat tax havens and loopholes allowing businesses to avoid corporation tax, according to new proposals released on Thursday (6 December) by the European Commission.

The Commission estimates that around 1 trillion euros is lost each year to tax evasion and avoidance in the EU, The situation is particularly acute at a time when governments across Europe are implementing austerity budgets and attempting to increase taxes to plug budget deficits and rebuild public finances.

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

Launching the proposals, the EU Tax commissioner Algirdas Semeta said tax evasion was "a scandalous loss of much-needed revenue" and "a threat to fair taxation".

"In a single market, within a globalised economy, national mismatches and loopholes become the playthings of those that seek to escape taxation", he added.

The EU has a limited role in tax policy which is currently limited to co-ordination of rules on VAT and provisions on administrative co-operation between countries.

The commission paper comes against the backdrop of revelations that a number of leading high-street firms, including Starbucks and Amazon, have exploited national tax systems to minimise their liabilities. There was public outcry when it was revealed that coffee-giant Starbucks had paid just €11 million in UK corporation tax over 14 years and nothing since 2009 despite racking up over one billion in sales. The controversy led to Starbucks promising on Thursday (6 December) that it would pay €25 million in corporation tax in 2013 and 2014.

Indeed, the Commission recommendation on 'Aggressive tax planning' comments that existing single market rules allow businesses to "structure arrangements with such jurisdictions via the member state with the weakest response….this does not only erode member states' tax bases but also endangers fair competitive conditions for business."

The commission calls on EU countries to include a clause in Double Tax Conventions (DTCs) agreed with other countries , as well as for an EU-wide rule on tax abuse. It also encourages member states to identify tax havens and place them on national 'blacklists', while detailing measures to persuade them to apply EU law.

Meanwhile, the EU executive also calls for an end to "harmful tax competition" between EU countries. In 2011 the commission tabled legislation for a common corporate tax base in a bid to stop countries competing to offer the lowest tax rates.

The two recommendations are not legally binding on governments but Commissioner Semeta has indicated that he would table "legislative proposals for action" if member states fail to act.

Ten EU countries, including Italy, have already received instructions from the EU executive to improve tax compliance as part of their national economic reform programmes in the 2012 European economic semester.

European states still cutting corporate taxes

European governments cut corporate taxes in 2010, continuing years of decline in taxation on capital and a shift towards taxes on consumption, and, to a lesser extent, labour.

Tax property not work, governments told

Governments should tax property and consumption ahead of income according to the Commission's 2013 Annual Growth Survey published on Wednesday.

EU corporate tax drive boosted by landmark ruling

The European Court of Justice (ECJ) on Tuesday boosted the European Commission's bid to harmonise member states' corporate taxation systems in a landmark ruling that is set to save retail giant Marks & Spencer billions in UK tax.

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. Brexit and MEPs expenses in the spotlight This WEEK
  2. Wake-up call on European Day Against Islamophobia
  3. Sound of discord at 'Sound of Music' Salzburg summit
  4. Salzburg summit presses for bigger Frontex mandate
  5. UK's post-Brexit plan 'will not work', EU says
  6. Airbnb agrees to clarify pricing for EU
  7. Libya keeps coast guards rejected by the EU
  8. EU divisions on menu at Salzburg dinner

Join EUobserver

Support quality EU news

Join us