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9th Dec 2019

MEP takes EU to court on tax transparency

  • Luxembourg was the centre of a major investigation into how tax authorities cut tax busting deals with multinationals (Photo: Jimmy Reu)

The European Commission is being taken to court for not handing over documents in a case that aims to shed light on wide-spread corporate tax evasion schemes by EU states.

The move is part of a larger transparency effort by euro-deputies in a committee with a mandate to probe tax rulings following the so-called LuxLeaks scandal.

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The scandal, which erupted after a November 2014 investigation from the International Consortium of Investigative Journalists (ICIJ), found nearly 340 companies had managed to slash their global tax bills through dubious deals brokered between Luxembourg tax authorities and PwC, Ernst & Young, Deloitte and KPMG.

Most of those deals were brokered when EU Commission president Jean-Claude Juncker held top positions in Luxembourg.

Juncker, despite his many years as Luxembourg's prime minister and finance minister, insists he had no role in the matter.

MEPs in the committee, first launched last February, have since broadened their probe to the EU Commission and EU states with a new six-month lease.

Last April, the EP committee had requested the European Commission hand over documents and minutes from a so-called working group on business taxation in the Council, representing member states.

The group is made up of senior representatives for finance ministers.

Minutes of the meetings, prepared by the commission, outline the positions of member states on the tax rulings.

MEPs had their request denied.

EU economics commissioner Pierre Moscovici said the consent of member states was needed first, noting that almost half had refused to transmit the documents.

MEPs piled on the pressure with Moscovici then agreeing to limited access with some of the documents partly redacted and only accessible in a restricted reading room.

But Fabio de Masi, a German MEP from the United Left, said full access was needed.

On Wednesday (13 January), he filed a lawsuit against the commission with Europe's top court in Luxembourg.

In an emailed statement, he said the "commission can no longer hide behind excuses on tax secrecy when withholding vast amounts of political information from elected members of parliament".

He further noted full disclosure was needed to reveal the "systematic political backup for a tax avoidance cartel that costs taxpayers in the EU hundreds of billions of euros annually".

The European Commission, for its part, says it will review de Masi's complaint but is not yet aware if it has been filed with the court.

But earlier this week, Moscovici told MEPs at a hearing at the European Parliament that corporate tax reforms and fiscal transparency were a priority for 2016.

"We have a serious problem with tax avoidance and lack of transparency. Too many people have looked the other way", he said.

Among his plans is an anti-tax avoidance package to be presented before the end of the month.

The package involves cracking down on aggressive corporate tax planning, also known as "base erosion and profit shifting" or BEPs.

“We will start with the anti-BEPS directive at the end of January, as for that we have already agreement at the level of the G20 and OECD”.

This article was updated at 10.00 on 14 January to include a response from the European Commission.

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