Saturday

23rd Jun 2018

Four EU states among world's worst tax havens

  • PwC whistleblowers in Luxembourg are challenging their sentences (Photo: Jimmy Reu)

Cyprus, Ireland, Luxembourg, and the Netherlands are listed among the top 15 global corporate tax havens, according to a new report from aid agency Oxfam.

The report out on Monday (12 December) claims that the member states contribute to helping big businesses dodge tax on a massive scale, despite EU and other efforts to crack down on the practice.

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.

... our join as a group

Bermuda tops the list of the 15 followed by the Cayman Islands and the Netherlands. Ireland ranks 6, followed by Luxembourg (7) and Cyprus (10). The British Virgin islands, Jersey and the Bahamas are also listed.

The ranking comes ahead of a court case in Luxembourg on Monday where former employees of PricewaterhouseCoopers (PwC), who exposed how firms collude with governments to pay less tax, are appealing against their convictions.

The acquittal of French journalist Edouard Perrin, who first exposed the scandal, is also being challenged by the Luxembourg's public prosecutor.

Meanwhile, EU governments continue to use elaborate schemes to provide firms with preferential tax treatments in an effort to attract their business and investments.

But those that benefit are most often the owners and shareholders at the expense of national budgets.

The Netherlands and Luxembourg use a combination of tax incentives and schemes to shift profits elsewhere. Cyprus and Ireland have similar strategies but also engage in low corporate tax rates.

The OECD, a Paris-based club of industrialized nations, had launched efforts to curb such schemes, but the plans appear to have backfired as governments race to lower corporate tax rates.

One plan, also taken up by the G20, has attempted to allow governments to tax profits where those profits have been made. Known as the Base Erosion and Profit Shifting (BEPS) initiative, the move has instead resulted in states reducing corporate tax rates.

"Since the BEPS agreement several European countries have announced or made plans to cut corporate tax rates including the UK, Hungary, Belgium, and Luxembourg," notes the report.

But such efforts may also be breaking the rules if abused.

Belgium earlier this year was ordered by the EU commission to recover hundreds of millions of euros after it reduced the corporate tax base of some companies using an "excess profit" tax scheme.

Another report last week by the Brussels-based European Network on Debt and Development had found that secret tax deals between EU governments and multinational corporations had increased dramatically following the 2014 media revelations that Luxembourg helped firms avoid paying billions in taxes.

Other EU led efforts to increase transparency and clamp down on the practice may also contain loopholes.

Among the more extreme is an EU attempt to draw up a blacklist of tax havens. Proposed earlier this year by the EU commission, the list won't include any EU member state. Switzerland and the United States probably won't be listed either.

The EU commission had also floated a plan in April that would require multinationals to publish information on taxes paid where they operate.

But the plan only requires the firms to publish the financial data of their operations within the EU and only covers those that earn some €750 million per year.

EU commission wants tax haven blacklist

Blacklist added in wake of Panama leaks to broader proposal to force big companies to reveal tax information. But critics sceptical the EU move will make a difference.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

News in Brief

  1. Venice Commission: Hungary should repeal NGO law
  2. Trump threatens to slap 20 percent tariff on EU cars
  3. EU closes deficit procedure against France
  4. Romania's ruling party leader gets jail sentence
  5. EU states defer individual decisions on asylum reforms
  6. Commission opens case on Qatar gas flow
  7. EU adopts posted workers directive
  8. EU leaders to call for 'coordinated plan' on AI

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Latest News

  1. Migration row at centre of EU summit This Week
  2. Merkel's woes cast shadow on EU's future
  3. Europe's tech race - trying to keep pace with US and China
  4. Merkel and Juncker's mini-summit risks fiasco
  5. Greece and creditors proclaim 'end of crisis'
  6. How a US firm pushed for EU €2.1trn pension fund
  7. Commission defends Africa migrant plan ahead of summit
  8. Bavaria hijacks EU migration talks

Join EUobserver

Support quality EU news

Join us