Saturday

20th Oct 2018

EU in new push for common corporate tax base

  • Pierre Moscovici - hoping the "pressure" of public opinion will make member states reach a deal (Photo: EU Council)

The European Commission Wednesday (17 June) announced plans meant to put an end to secretive 'sweetheart' tax deals for multinationals and nudge member states towards common corporate tax rules, hoping that public opinion will push governments to a deal on the highly contentious issue.

Corporate tax systems should be "fairer" said EU commissioner Pierre Moscovici, adding: "It is no longer tolerable that some companies - often the most profitable - avoid their fair contribution of tax and that certain tax regimes encourage this".

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

At the heart of the plans - to be published as concrete legislative proposals early in 2016 - is a re-launch of a proposal for a common tax base across the EU for multinationals.

The current proposal has been stuck in the legislative pipelines - largely due to objections from countries such as Ireland and the UK - since 2011, but the political dynamics around the discussion have changed amid public anger over revelations that large companies avoid tax bills by shifting profits to countries offering low rates or sweetheart deals.

This time, says the commision, the so-called common consolidated corporate tax base (CCCTB), will be approached in two steps.

"Since the current proposal has proven too vast to agree in one go, we will [focus] first on the idea of a common base and move later towards consolidation," said Moscovici.

While member states are seen as open to talking about having a mandatory common base for multinationals across member states, the 'consolidation' part is seen as the first step to tax harmonisation, which rings 'sovereignty' alarm bells in several capitals.

However Moscovici believes the commission now has a greater chance of reaching a deal as the EU's moves are "part of a (global) trend" and "there is the pressure of public opinion".

The commission has kept this as a high priority issue after a journalistic investigation last year revealed that Luxembourg under prime minister Jean-Claude Juncker, who is now the head of the European Commission, had special arrangements allowing 343 multinationals to pay as little tax as possible.

The revelations resonated strongly as governments across Europe have been slashing spending policies amid the economic crisis.

"There is strong consensus that companies must pay a fair level of tax where they generate their profits. But there's less clarity on how to achieve this," said Moscovici.

He said a "common approach" could include "limiting low or no tax schemes and reinforcing our common anti-abuse artillery".

Transparency

Answering a transparency call by campaigners for tax justice, the commission also said it will set up a "public consultation" on whether companies should divulge certain information about their tax schemes.

The commission also listed 30 tax havens, most of them in the Americas and four - Andorra, Liechtenstein, Guernsey and Monaco - in Europe.

Reactions to the proposals were mixed with the centre-right EPP welcoming the commission's step-by-step approach on CCCTB but the Greens saying it "means the end of corporate tax dodging is inevitably also delayed".

Meanwhile others were concerned that a public consultation on whether companies should give country-by-country information on tax set-ups is an unnecessary delay.

"This should not slow down the momentum for financial transparency," said Tamira Gunzburg, director of ONE, a development NGO.

Eurodad, also a NGO, said the EU's blacklist on tax haven should have mentioned the "big problems in the EU’s own backyard, including Luxembourg, Ireland and the Netherlands".

Magazine

LuxLeaks: An opportunity?

European Commission President Jean-Claude Juncker was buffeted by the LuxLeaks revelations just days after he came to office. Yet the longterm effect may be beneficial.

Danes stunned by €800mn tax fraud

Criminals have duped Denmark’s tax authority into incorrectly refunding €830mn in the past three years, using online forms.

News in Brief

  1. Macedonia MPs back name deal in initial vote
  2. EU to open trade talks with US on beef
  3. EU court orders Poland to suspend firing judges
  4. Japan to focus on circular economy at G20
  5. Italian budget 'significant deviation' from rules, says EU
  6. Podemos initiates debate on legalising marijuana in Spain
  7. Merkel: Focus on banking union at December EU summit
  8. Scotland confirms mad cow disease case

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. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. What Italy's budget row is actually about
  2. EU preparing 'concentration camps' for migrants in Africa
  3. Poland to respect EU injunction on judicial purge
  4. EU votes on Facebook and plastic This WEEK
  5. Top EU banks guilty of multi-billion tax fraud
  6. Polish left a glimmer of hope in fight against illiberal democracy
  7. Europe and Asia seek stable relations in troubled times
  8. Asylum reforms derailed, as EU looks to north Africa

Stakeholders' Highlights

  1. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Join EUobserver

Support quality EU news

Join us