Wednesday

19th Jun 2019

Luxleaks committee demands overhaul of EU tax rules

  • Amazon is one of a series of multi-nationals whose tax arrangements are under scrutiny from an MEP inquiry committee. (Photo: Nic Taylor)

Governments that offer multi-national firms sweetheart tax deals should not be allowed to benefit if the European Union orders them to claw back the aid, according to a new report by the European Parliament’s special committee on tax rulings.

Instead, the proceeds should be “returned to the member states which have suffered from an erosion of their tax bases or to the EU budget, and not to the member state which granted the illegal tax-related aid, as is currently the case,” the report contends.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The European Commission is still investigating whether so-called ‘sweetheart’ tax agreements in Ireland, the Netherlands and Luxembourg, involving companies such a Apple, Starbucks and Fiat, constitute illegal state aid. The probe could lead to hundreds of millions of euros in new taxes being paid to the governments in question, despite the fact that they were responsible for offering special tax treatment.

The cross-party inquiry committee was set up in February in the wake of the “LuxLeaks” scandal, in which reporters disclosed the extent of tax-avoidance structures in Luxembourg allowing companies to benefit from significant reductions to their tax rate on income earned from intellectual property.

Also included in the 40-page draft report by Michael Theurer, a German liberal, and Elisa Ferreira, the Socialist group spokesperson on economic affairs, are recommendations that firms which refused to assist the committee investigation should be banned from the EU’s Transparency Register allowing them to access the EU institutions.

The MEPs also call for comprehensive exchange of tax information between European countries alongside a common consolidated corporate tax base.

“A compulsory EU-wide Common Consolidated Corporate Tax Base (CCCTB), which would solve not only the issue of preferential regimes and mismatches between national tax systems, but also most of the issues leading to tax base erosion at European level,” it argues.

Despite the level of controversy surrounding the LuxLeaks scandal, which was heightened by the fact that European Commission chief Jean-Claude Juncker was Luxembourg’s prime minister when the tax deals were struck, the inquiry committee has become something of a damp squib.

The committee report is not legally binding, and its work has been beset by political obstacles throughout its six-month mandate. The terms of reference were weakened by the parliament’s centrist political groups, denying it the right to demand documents on tax rulings from individual governments.

The report reveals that only four out of eighteen companies agreed to have a representative appear before the committee, while seven national governments failed to even reply to the committee’s requests for information.

For his part, EU tax commissioner Pierre Moscovici set out plans in March that would establish a system of automatic exchange of information on tax rulings and require national tax authorities to send each other short reports on rulings on a quarterly basis.

Although the commission is pushing governments to adopt its revised proposal for a Common Consolidated Corporate Tax Base across the EU, any legislation on tax requires the unanimous support of all governments, a reality which “reduces the incentive to move from the status quo towards a more cooperative solution”, the report notes.

EU in new push for common corporate tax base

The European Commission Wednesday announced plans meant to put an end to secretive 'sweetheart' tax deals for multinationals and nudge member states towards common corporate tax rules.

Magazine

LuxLeaks: An opportunity?

European Commission President Jean-Claude Juncker was buffeted by the LuxLeaks revelations just days after he came to office. Yet the longterm effect may be beneficial.

News in Brief

  1. New socialist group leader to push for Timmermans
  2. Romanian ex-PM frontrunner to head new liberal group
  3. France, Germany and Spain in fighter jet deal
  4. Tusk grilled in Poland over role as PM
  5. Italy is 'most credible' US partner in EU, says Salvini
  6. EU blames Sudan junta for killings and rapes
  7. Report: EU may suspend Turkey customs union talks
  8. Swiss stock exchange could lose EU access in July

Interview

Meet the lawyer taking the EU migration policy to the ICC

Juan Branco is a lawyer and co-author of a legal document submitted to the International Criminal Court (ICC) accusing EU officials and member states of crimes against humanity for their migration policies. "Some people should have to go to prison."

Agenda

Top EU jobs summit dominates This WEEK

A summit in Belgian capital this week will host heads of government and state to discuss top EU institutional posts. But before they meet, the jockeying for the Commission presidency will have already started among the European political groups.

Stakeholders' Highlights

  1. Nordic Council of MinistersNo evidence that social media are harmful to young people
  2. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  3. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  4. Nordic Council of MinistersEducation gets refugees into work
  5. Counter BalanceSign the petition to help reform the EU’s Bank
  6. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  7. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  8. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  9. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  10. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  11. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  12. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody

Latest News

  1. EU urges Swiss to move on talks or face sanction
  2. Frontex transparency dispute goes to EU court
  3. Commission goes easy on scant national climate plans
  4. Macron and Mogherini decline to back US accusation on Iran
  5. EU summit must give effective answer on migration
  6. Spain's Garcia set to be next Socialist leader in parliament
  7. Erdogan mocks Macron amid EU sanctions threat
  8. The most dangerous pesticide you've never heard of

Stakeholders' Highlights

  1. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  2. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  3. Nordic Council of MinistersNordic commitment to driving global gender equality
  4. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  5. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  6. Nordic Council of MinistersNordic talks on parental leave at the UN
  7. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  8. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  9. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  10. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  11. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  12. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law

Join EUobserver

Support quality EU news

Join us