Wednesday

12th May 2021

EU outlines sanctions for tax havens

  • Moscovici: 'I hope the list is a serious one. It’s up to member states. Their reputation is at stake' (Photo: European Commission)

Jurisdictions designated as tax havens by the EU could face financial sanctions, the European Commission has said.

The list of potential penalties included withholding of tax revenues collected by EU states that were due to blacklisted entities, freezing EU development funds, and blocking of loans from the European Bank of Reconstruction and Development (EBRD), Pierre Moscovici, the EU taxation commissioner, said in Brussels on Tuesday (28 November).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"We're going to make EU funding conditional on good tax criteria," he said.

Moscovici spoke to MEPs ahead of a decision by EU finance ministers, expected next Tuesday, on which countries and protectorates to name and shame as tax avoidance black spots.

"I hope the list is a serious one. It's up to member states. Their reputation is at stake. The Commission won't be able to go along with a list that isn't serious," he said.

He also said Tuesday's decision will not be the EU's last word on the matter.

"There's going to be a constant process of updating the list," Moscovici said.

Oxfam, an international NGO, said earlier on Tuesday that, according to the EU's own criteria, there should be four EU states - Ireland, Luxembourg, Malta, and the Netherlands - on the blacklist, as well as 35 other jurisdictions.

But EU states are to be automatically excluded from the list, with Oxfam saying that that amounted to "whitewashing" European complicity in tax dodging.

Moscovici said that "as a citizen", he "sympathises" with Oxfam's approach.

But he claimed that the NGO's listing of the EU four used criteria "far beyond" what had been agreed for the blacklist and had failed to take into account "commitments undertaken [for tax reforms] as part of this process".

Speaking at a European Parliament hearing on the issue on Tuesday, the EU commissioner also said he had no mandate to punish countries such as Ireland for having a near-zero corporate tax rate.

"We [the Commission] have no competence on tax rates," he said.

"Whatever my personal preference may be, I'm not going to propose a minimum corporate tax. I don't want to wave a red flag at people in issues that are far beyond my competence," he said.

Some MEPs, such as German green Sven Giegold, attacked EU member states at Tuesday's hearing for obstructing or diluting EU laws on greater tax transparency.

"If we draw a conclusion, it's a blockade," Giegold said.

But Moscovici said that view was too "pessimistic" and that, in his dealings EU finance ministers, there was genuine will to crack down on tax abuse.

Brexit, not Singapore

He said his private talks with two successive British finance ministers also indicated that the UK would "not become a huge Singapore or offshore tax haven just near our borders" after it left the EU in 2019.

The tax haven blacklist and the EU parliament hearing came after the latest revelations on tax dodging by the world's wealthiest companies and individuals.

The so-called Paradise Papers leak, publicised by the ICIJ, a Washington-based group of investigative journalists, exposed how law firm Appleby helped US tech giant Apple, former German chancellor Gerhard Schroeder, and the British Queen, among others, to conceal their wealth from tax authorities.

The list also included the EBRD itself as well as Belgian, Danish, Dutch, Finnish, Lithuanian, and Slovenian state entities.

Jan Strozyk, a German journalist who worked with the ICIJ, told MEPs the involvement of people such as Schroeder risked normalising the practice in people's eyes.

"People will say in future: 'If even Mr Schroeder is using offshore companies in the British Virgin Islands then why shouldn't I?'," he said.

Kristof Clerix, a Belgian journalist with the ICIJ, said it was "ironic" that Danish and Dutch state entities dealing with development aid for poor countries used shell firms to avoid paying taxes on projects in the same jurisdictions in the third world that they were supposed to be helping.

Agenda

May-Juncker meeting sets the tone This WEEK

As Brexit negotiations approach the (possibly) grand finale of their first phase, the EU's attention this week is turning to the eurozone - who is the new boss and how to deepen and expand it.

EU blacklists 17 tax havens, avoids sanctions

Finance ministers pointed out 'non-cooperative' entities and set up a second 'grey' list of more than 40 countries that have promised to improve their tax practices.

News in Brief

  1. Israeli rockets kill 20 people in Gaza retaliation
  2. No more EU expulsions likely over Russia bomb attacks
  3. EU ready to ignore Hungary veto on Hong Kong
  4. Borrell admits EU neglect of Western Balkans
  5. Macron accused of 'cowardice and deceit' in military letter
  6. EU citizens in UK applying for settled status face legal limbo
  7. Netherlands gives €2bn to offshore carbon storage project
  8. Germany will allow Johnson & Johnson vaccine for all ages

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. Russia penetrated Merkel's 'inner circle', Khodorkovsky says
  2. First recovery euros could be paid out in July
  3. Commission wants help for Italy after weekend's migrant arrivals
  4. Mercosur trade deal will fuel 'poison pesticides' back into EU
  5. Can new Iran talks avoid mistakes of the original JCPOA?
  6. EU and US urge Israel to defuse Jerusalem violence
  7. Frontex 'mislabelling minors as adults' on Greek islands
  8. Has Albania really met the 15 tests to join the EU? No

Join EUobserver

Support quality EU news

Join us