Wednesday

27th Sep 2023

EU countries are not 'tax havens', parliament says

  • Luxembourg (pictured), the Netherlands, Malta and Ireland cannot be considered 'tax havens', the parliament narrowly voted (Photo: Jimmy Reu)

Malta, the Netherlands, Luxembourg and Ireland cannot be considered as tax havens, the European Parliament agreed on Wednesday (13 December).

A Socialist group amendment listing the four EU member states specifically by name was part of 211 recommendations contained in a report by a special inquiry committee into money laundering, tax avoidance and evasion, the PANA committee.

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

The proposal obtained 327 votes against, 327 in favour and 24 abstentions, which means it could not be adopted as there was no majority.

According to the text, foreign direct investment in Malta amounts to "1,474 percent of the size of its economy", while Luxembourg and the Netherlands combined have more inward investment than the US.

Even though the parliament refused to name the four countries as tax havens, "we do name the weird foreign direct investments going into these countries", which makes the adopted text "really strong" anyway, said S&D MEP Jeppe Kofod, one of the co-rapporteurs of the report.

The MEPs' vote is the last stage of 18 months' work by the special committee, that was created in the wake of Panama Papers revelations in June 2015 with the aim of eradicating the practices revealed by the leaked documents.

According to a report from the international NGO Oxfam published on 28 November, Ireland, Luxembourg, the Netherlands and Malta should have been labelled as tax havens by the EU.

In Strasbourg, MEPs backed the recommendations from the PANA committee, approving them by 492 votes to 50 with 136 abstentions.

The parliament backed a common international definition of what constitutes a tax haven, an offshore financial centre, secrecy haven, non-cooperative tax jurisdiction and a high-risk country.

Among the other recommendations approved, there is also the establishment of a permanent committee of inquiry on taxation, based on the model of the US Congress.

Since a lot of follow-up work will be needed, "for the rest of the legislative period the idea is to have a special committee to keep up pressure in driving these recommendations forward", said Kofod.

EU finance commissioner Pierre Moscovici said he wished that the special committee could continue its work since it is not finished yet and "it will never be."

"[The] ability to invent new mechanisms" will always be needed, he noted.

MEPs also called for a change in the EU Council's voting on on tax policy, from the current unanimity - required by EU legislation - to a qualified majority.

This could be reached through a decision by the European Commission to make a tax reform proposal under article 116 of the EU treaty, that would lead to a co-decision between the council and the parliament - with a qualified majority in the council.

Member states "block a lot when it comes to fighting money laundering, and we have proof of that" said Kofod.

In addition, a change in the Code of Conduct group - a group of national experts working on tax issues - was adopted, "to radically redefine" its governance structure and transparency.

"We want to see into the secrecy culture" of member states, Kofod explained.

Prime ministers 'real enemy' of tax justice

"The real enemy of tax justice in Europe has been the prime ministers and presidents of EU governments," said Greens-EFA shadow rapporteur Molly Scott Cato, a British MEP.

Among the recommendations approved, MEPs voted also a new rules to regulate intermediaries, such as lawyers and accountants, who aid aggressive tax planning, plus incentives to refrain from engaging in tax evasion and tax avoidance.

MEPs also approved "regularly updated, standardised, interconnected and publicly-accessible" beneficial ownership registers of companies, foundations, trusts and similar legal arrangements.

"We have imposed a change of paradigm from a culture of secrecy to transparency, from watertight compartments to cooperation between administrations" said Moscovici.

"It has never been done in the past", he added.

The report and recommendations of the special inquiry committee will now be passed on to the council and commission for their consideration.

"We got a result we can only dream of thanks to the work in the committee", concluded Kofod.

The black list

On 5 December EU finance ministers agreed to blacklist 17 countries and territories that do not cooperate in the fight against tax evasion and tax avoidance.

On that list there were no European countries.

To classify 92 analysed non-EU jurisdictions, EU ministers used criteria based on transparency, fair taxation, and international efforts to tax profits where those profits have been made.

Ministers prepared also a second "grey list" of 47 countries, that still have to meet their commitments.

Eventual sanctions will be discussed by ministers for not complying countries.

The creation of a list, even if not perfect, "pushed some countries to take a commitment," Moscovici said at the time.

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.

EU commission wants 'credible' tax haven blacklist

The EU's finance commissioner Pierre Moscovici told reporters that he wants a credible EU blacklist of tax havens following the latest media tax avoidance revelations of the wealthy elite in the Paradise Papers.

Opinion

The EU's tax haven blacklist - impressive or impotent?

One year ago, the European Union published its first ever blacklist of tax havens. It is crucial that EU governments help end the era of tax havens to ensure the billions currently hidden from public coffers.

Opinion

The great EU corporate tax lie

Attempts by the European Commission to 'sell' the new Common Consolidated Corporate Tax Base as a measure against tax avoidance are disingenuous at best, say three MEPs from smaller member states.

Opinion

How do you make embarrassing EU documents 'disappear'?

The EU Commission's new magic formula for avoiding scrutiny is simple. You declare the documents in question to be "short-lived correspondence for a preliminary exchange of views" and thus exempt them from being logged in the official inventory.

Latest News

  1. Germany tightens police checks on Czech and Polish border
  2. EU Ombudsman warns of 'new normal' of crisis decision-making
  3. How do you make embarrassing EU documents 'disappear'?
  4. Resurgent Fico hopes for Slovak comeback at Saturday's election
  5. EU and US urge Azerbijan to allow aid access to Armenians
  6. EU warns of Russian 'mass manipulation' as elections loom
  7. Blocking minority of EU states risks derailing asylum overhaul
  8. Will Poles vote for the end of democracy?

Stakeholders' Highlights

  1. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  2. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  3. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  4. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Join EUobserver

Support quality EU news

Join us