Sunday

24th Sep 2023

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.

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 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.

Opinion

Europe's energy strategy: A tale of competing priorities

Enhancing energy security empowers nations to heavily invest in renewable energy sources such as wind, solar, and hydroelectric power. But with a stable supply of LNG, Europe can also speed up its shift away from fossil fuels.

Why Greek state workers are protesting new labour law

Thousands of Greek state workers are protesting against changes to the labour law proposed by the conservative Mitsotakis government. These include a six-day week, working hours of up to 13 hours and 'on-call' contracts.

Opinion

Europe's energy strategy: A tale of competing priorities

Enhancing energy security empowers nations to heavily invest in renewable energy sources such as wind, solar, and hydroelectric power. But with a stable supply of LNG, Europe can also speed up its shift away from fossil fuels.

Latest News

  1. Europe's energy strategy: A tale of competing priorities
  2. Why Greek state workers are protesting new labour law
  3. Gloves off, as Polish ruling party fights for power
  4. Here's the headline of every op-ed imploring something to stop
  5. Report: Tax richest 0.5%, raise €213bn for EU coffers
  6. EU aid for Africa risks violating spending rules, Oxfam says
  7. Activists push €40bn fossil subsidies into Dutch-election spotlight
  8. Europe must Trump-proof its Ukraine arms supplies

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