Tuesday

18th Jan 2022

MEPs want companies tax dodges repaid into EU budget

  • Estimates cited by the European Parliament suggest the annual value of tax fraud and tax avoidance is up to €1 trillion (Photo: Wolfgang Staudt)

The proceeds from illegal tax breaks brokered between an EU state and a multinational company, known as clawbacks, should be returned either to the EU budget or to the coffer of other states unfairly deprived of the money, according to MEPs.

The idea was endorsed by the European parliament in a non-binding resolution adopted on Tuesday (19 January) in Strasbourg.

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

German centre-right MEP Werner Langen, who drafted the parliamentary report, said in a statement that "countries that play unfair tricks must not profit twice".

The report asks the EU Commission to modify current rules so that amounts recovered do not go to the member state which granted the illegal tax-related state aid.

The vast majority of MEPs agreed. Langen's report was passed 500 votes to 137, with 73 abstentions.

The idea is meant to dissuade national tax authorities and big companies from drafting tailor-made tax rulings that divert money away from national public coffers.

Citizens of the state where the tax should have been paid would then be deprived of the extra revenue, in part because their national authorities had created schemes deemed illegal by the EU's top competition authority.

The non-binding report is unlikely to gain much support from member states.

'It's just logic'

But a parliament contact close to the issue said it is "just logic".

"If something like this is punished, then money generated through this punishment should be at the disposal of the whole of the Union and not only the member state who engaged in this kind of practice", he said.

The EU's annual budget for 2016, drawn primarily from EU states and their taxpayers, is €155 billion.

Unlike tax clawbacks, fines settled against companies are deducted from the overall contribution by member states to the EU budget.

In 2013, computer software giant Microsoft was fined €561 million in an anti-trust case for failing to offer users a choice of web browser. It paid in full.

The most recent clawback case dates from only last week when the commission deemed that Belgian state tax breaks, which had benefited some 35 multinationals, were illegal.

The companies are now required to return some €500 million of the €700 million in unfair tax breaks back to the Belgian national authorities that brokered the illegal deal in the first place.

"National tax authorities cannot establish tax schemes that only benefit a select group of companies, in this case, multinationals", said Margrethe Vestager, the EU competition commissioner.

We’ll survive

The 47-year old competition chief has also led state aid tax cases against Starbucks in the Netherlands, Fiat and Amazon in Luxembourg, and Apple in Ireland. Fiat and Starbucks were each told to pay up to €30 million last October.

People probing unfair rulings estimate that thousands of tailor-made tax deals have been agreed in places like Ireland, Luxembourg and the Netherlands.

A probe into such rulings by the International Consortium of Investigative Journalists (ICIJ) in 2014 found Luxembourg authorities had helped cut the global tax bill of some 340 companies.

Most of those deals were designed in secret by big accounting firms like PricewaterhouseCoopers.

The Luxembourg schemes alone are said to have saved the firms billions in taxable revenue.

Development charity Oxfam, in a report out earlier this week, urged the global and corporate elite gathering at the World Economic Forum in Davos to "put an end to the era of tax havens".

It noted that 188 of 201 leading companies had a presence in at least one tax haven.

Catalan MEPs lose immunity, slam 'political persecution'

Catalan separatist MEPs Carles Puigdemont, Toni Comín and Clara Ponsatí lost their parliamentary immunity - a result they have hailed as a "political victory" for bringing the conflict between Catalonia and Spain closer to the heart of Europe.

12-month Future EU Conference is 'impossible', expert warns

The debate about the much-delayed Conference on the Future of Europe so far has been locked in endless institutional infighting over who should lead the event - lowering the expectations about what can be achieved in the coming months.

Future of Europe: Nearly half of citizens want reforms

European Parliament president David Sassoli called for the Conference on the Future of Europe "to start as soon as possible". Meanwhile, nearly half of EU citizens would like to see reforms to the bloc.

News in Brief

  1. Maltese MEP Roberta Metsola elected EU Parliament president
  2. Swedish MEP wants fines for EU carbon villains
  3. One year on: EU urges Russia to free Navalny
  4. EU bids farewell to late parliament president Sassoli
  5. Sweden investigates drones over nuclear plants
  6. Argentina, Australia, and Canada face EU travel restrictions
  7. German minister takes EU message to Moscow
  8. Djokovic now also at risk of missing French Open

MEPs chide Portugal and Council in EU prosecutor dispute

The Belgian and Bulgarian prosecutors who were appointed had also not been the experts' first choice. Belgian prosecutor Jean-Michel Verelst has challenged the council's decision at the European Court of Justice.

Latest News

  1. 'Hundreds' of Russian mercenaries in Mali, EU confirms
  2. Euro countries start haggling on fiscal rules
  3. New doubts raised on tracking ads ahead of key vote
  4. Time to stop China's economic hostage-taking of Lithuania
  5. James Kanter, Shada Islam are new editors at EUobserver
  6. The loopholes and low bar in Macron's push for a global tax
  7. No love for Russia in latest EU strategy
  8. New EU Parliament chief elected This WEEK

Join EUobserver

Support quality EU news

Join us