Thursday

7th Jul 2022

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

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

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.

Rising prices expose lack of coherent EU response

The increasingly sharp debate over the rising cost of living exploded in European Parliament, with lawmakers from all stripes, liberal, left, green and conservative, calling on the EU to act.

News in Brief

  1. British PM defiant amid spate of resignations
  2. France says EU fiscal discipline rules 'obsolete'
  3. Russia claims untouchable status due to nuclear arsenal
  4. Catalan MEPs lose EU court case over recognition
  5. 39 arrested in migrant-smuggling dragnet
  6. France to nationalise nuclear operator amid energy crisis
  7. Instant legal challenge after ok for 'green' gas and nuclear
  8. Alleged Copenhagen shooter tried calling helpline

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Is Orban holding out an olive branch to EPP?
  2. EU should freeze all EU funds to Hungary, says study
  3. Legal action looms after MEPs back 'green' nuclear and gas
  4. EU readies for 'complete Russian gas cut-off', von der Leyen says
  5. Rising prices expose lack of coherent EU response
  6. Keeping gas as 'green' in taxonomy vote only helps Russia
  7. 'War on Women' needs forceful response, not glib statements
  8. Greece defends disputed media and migration track record

Join EUobserver

Support quality EU news

Join us