22nd Mar 2018

EIB must tighten rules on tax havens, NGOs warn

  • Money from the European Investment Bank is finding its way to tax havens, campaigners have warned (Photo: EIB)

The European Investment Bank (EIB) must tighten up its lending rules to prevent its money being funnelled through tax havens, NGOs have warned in a new report.

The report ‘Towards a Responsible Taxation Policy for the EIB’, published on Tuesday (21 April) by transparency NGOs Re-Common and Counter Balance, calls on the Luxembourg-based to set up its own ‘Tax Unit’ to assess how much corporate tax its clients are paying, and produce its own analysis of tax havens rather than rely on the OECD’s ‘black and grey’ list of jurisdictions.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The EIB lent more than €77 billion in 2014, of which €8 billion went to investment projects outside the European Union. The Luxembourg-based bank lends directly to an array of large and small businesses and other financial institutions.

The NGOs argue that identifying beneficial ownership - where a company has a secret owner - would allow the EIB to know who ultimately owns, controls or benefits from a company or fund that receives its support.

EIB clients should also be required to produce country-by-country-reports, the report adds.

“Countries receiving loans from the public, though institutions like the EIB, should declare to the public their beneficial owners and information on where the profits from a project will accrue,” the report argues, adding that this “would allow the public to see whether companies are engaged in off-shoring their profits into tax havens.”

This demand for all companies seeking EIB funds to publish country-by-country-reports (CBCR) also featured in a European Parliament report adopted in March 2014. At present, EU rules require CBCR only from banks and firms in the extractive and logging sectors.

“Recent revelations such as Luxleaks and Swissleaks prove that Europe is losing out billions of euros because of tax dodging, and in developing countries the situation is even worse,” said Antonio Tricarico, the report’s author.

In reply, the EIB noted that most of the reforms proposed by the report would require legal changes to be agreed by MEPs and ministers.

The EIB has a policy commitment to preventing tax avoidance, money laundering and other damaging activities, including a general prohibition on investments linked to non-compliant jurisdictions (NCJ) or tax havens.

However, a report by the Illicit Finance Journalism Project last October found that the EIB had lent money to a number of companies operating in tax havens. For example, Qalaa, an African investment fund with $9.5 billion on its books, has received hundreds of millions of euros from the EIB, but is domiciled in the British Virgin Islands.

The EIB, which relies on the EU’s 28 countries for its capital, is one of the largest development banks in the world. Its triple-A credit rating and ability to borrow large amounts of cash at low interest rates makes it a highly attractive institution for private firms to work with.

In Europe, meanwhile, the bank is set to be the driving force behind the European Commission's flagship €315 billion infrastructure investment fund.

EU tax havens drain money from developing nations

Tax havens in places like Luxembourg are zapping billions of euros from the coffers of developing countries and forcing weak governments to rely on dwindling international development aid, experts say.


Europe’s tax haven investments in Africa

A combination of lax rules and no-questions-asked policy means that money from the European Investment Bank, the EU's longterm lending institution, is flowing to tax havens. An Egyptian case study shows how this happens.

EU summit takes hard look at Russia

EU leaders will discuss Russian security threats in the wake of the UK attack, but will not adopt new sanctions at Thursday's summit.

Germany casts doubt on Austrian intelligence sharing

An Austrian police unit headed by a far-right town councilor and tasked to tackle street crime was sent to raid the offices and homes of people working for Austria's domestic intelligence agency - prompting German counterparts to review cooperation.


EU praises Turkey on migrant deal despite Greek misery

The EU-Turkey deal was agreed two years ago in Brussels. Focus has largely been on reducing migrant flows across the Mediterranean and helping Syrian refugees in Turkey, while the plight of those on the Greek islands are ignored.

Germany casts doubt on Austrian intelligence sharing

An Austrian police unit headed by a far-right town councilor and tasked to tackle street crime was sent to raid the offices and homes of people working for Austria's domestic intelligence agency - prompting German counterparts to review cooperation.

News in Brief

  1. Parliament must publish 'trilogue' documents, court says
  2. Italy's centre-right set to share top posts with 5-star movement
  3. Brussels condemns tear gas in Kosovo parliament
  4. Finland pays billionaire €400,000 in EU farm subsidies
  5. 44 leaders sign up for Africa free trade area deal
  6. British 'blue' passports to be made in EU
  7. EU to have 'immediate' trade talks with Trump
  8. Separatist activist renounces Catalonia leadership candidacy

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. EU summit takes hard look at Russia
  2. Germany casts doubt on Austrian intelligence sharing
  3. EU leaders set for 'stormy debate' on digital tax at summit
  4. EU praises Turkey on migrant deal despite Greek misery
  5. Judicial reforms 'restore balance', Poland tells EU
  6. Whistleblower fears for life as US arrests Malta bank chair
  7. Behind the scenes at Monday's EU talks on Russia
  8. US yet to push on Nord Stream 2 sanctions