Thursday

29th Jun 2017

EU proposes new tax transparency rules

  • Moscovici: 'Tolerance has reached rock-bottom for companies that avoid paying their fair share of taxes' (Photo: Alan Cleaver)

Peer pressure will underpin a new European Commission proposal to make big companies pay their fair share of tax and prevent governments from cheating others out of taxable revenue streams.

The Brussels-executive on Wednesday (18 March) told reporters that requiring member states to be more transparent in their tax rulings would create a “virtuous circle” between states and companies.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • Loopholes in the EU savings tax directive were exploited by the Geneva subsidiary of UK banking giant HSBC bank. (Photo: Gyver Chang)

“Better transparency will lead to greater scrutiny,” said EU commissioner for taxation Pierre Moscovici.

Moscovici’s so-called tax transparency package is seen, in part, as a response to the series of tax scandals over the past few months that have implicated large banks and multinationals.

The media disclosures are an embarrassment to the EU commission president Jean-Claude Juncker, who under his 14-year tenure as Luxembourg’s prime minister and finance minister, oversaw many of the deals that allowed big firms pay less than 2 percent tax liability in the Grand Duchy.

The latest legislative proposal from the commission intends to crack down on those schemes by imposing an automatic exchange of information on tax rulings and requiring national authorities to send each other short reports every three months.

It is a step up from current rules that only require a “spontaneous” exchange of information but is said to fall short on addressing the sweetheart deals exposed by last year's LuxLeaks scandal.

Koen Roovers at the Financial Transparency Coalition said in a statement that the commission’s package is a “fractional” response to the Luxembourg tax scandal because the public will still remain in the dark.

"Over 150 companies in the leak were associated with the United States, but they will simply be out of bounds under this proposal,” he said.

“If all EU tax rulings were made public, companies would have a harder time negotiating the types of tax deals that don’t stand up to public scrutiny,” he added.

UK Green MEP Molly Scott Cato, who heads the political group's economic and finance portfolio, said the commission's package did not tackle the problems exposed by the LuxLeak disclosures either.

“In particular, the Commission does not recognise that tax competition or dumping is a major underlying problem, which undermines the EU's internal market,” she said.

But the former French finance minister defended the new proposal and said it “will radically improve transparency” and “move us closer to our goal of fair taxation and fairer tax competition in the Union”.

He expects member states to back the proposal and have it implemented at the start of next year.

“Today’s package is not the end of the story. It is the beginning of the story,” he added, noting public disclosure requirements for companies may be part of another proposal set for later this year.

The commission also plans on repealing the savings tax directive whose loopholes were exploited by the Geneva subsidiary of UK banking giant HSBC bank.

National governments have come under intense pressure to crack down on shady deals that allow firms to reduce tax liabilities by shifting their profits towards states with beneficial tax regimes.

Their tax rulings allow for aggressive tax planning where companies in places like Luxembourg can then channel taxable profits back into the business and away from the public coffer.

The schemes are thought to sap government budgets of around €1 trillion a year, according to one report, but the commission says the lack of reliable data makes the calculation a nearly impossible exercise.

“We can’t give a figure, it’s a lot of money is all I can say,” said Moscovici.

EU plans 'revolution' on sweetheart tax deals

New EU plans to force governments to send quarterly reports on tax rulings are a “revolutionary” step towards overcoming corporate secrecy, the bloc’s tax commissioner has said.

EU inks bank secrecy deal with Swiss

The EU and Switzerland inked a landmark deal on Wednesday aimed at clamping down on banking secrecy and preventing EU citizens from hiding undeclared cash in Swiss bank accounts.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Stakeholders' Highlights

  1. World VisionEU, Young Leaders and Civil Society Join Forces to End Violence Against Girls
  2. EU2017EEGet the Latest News from the 2017 Estonian EU Council Presidency @EU2017EE
  3. International Partnership for Human RightsEU-Kyrgyzstan Human Rights Talks Should Insist on Ending Reprisals Against Critical Voices
  4. European Free AllianceEFA Is Looking for a New Intern
  5. Malta EU 2017Conservation of Atlantic Tunas: International Measures Become EU Law
  6. European Healthy Lifestyle AllianceCan Statin Therapy Interfere With a Physically Active Lifestyle?
  7. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  8. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  9. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  10. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  11. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  12. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!