On 16 June 2015, AK EUROPA, the Brussels Office of the Austrian Federal Chamber of Labour in cooperation with ÖGB Europabüro, the Brussels Office of the Austrian Federation of Trade Unions hosted a panel discussion on the subject of tax policy in the European Union. Following a presentation of the AK study “Tax Avoidance, Tax Evasion and Tax Havens”, the panelists discussed among other legal tax avoidance, the adverse consequences of tax competition as well as the options of counter measures at European level.

Tax avoidance damages national budgets on a large scale

Otto FARNY (Vienna Chamber of Labour) presented the AK study “Tax Avoidance, Tax Evasion and Tax Havens” he co-authored. He explained the two major events, which could provide the issue with certain public attention: first the “news” that many multi-national corporations, such as Starbucks or Apple would hardly pay any tax in Europe and the “Tax CDs”, based on which more high-profile cases also (indirectly) came to light.

Studies worked on the assumption that because of avoidance practices, European states would lose USD 75 billion in tax revenue. With regard to the EU proposals, in particular the Common Consolidated Corporate Tax Base (CCCTB), Farny referred to a study of PricewaterhouseCoopers (PwC), which compared, based on a virtual sample company, the effective tax rates for the same company in several European states. In spite of a nominal corporate tax rate of 25 % in Austria, due to various special regulations (depreciations etc.) in the Alpine Republic, companies would get off “more cheaply” than for example in Slovakia or Czechia, where the theoretical rates were significantly lower. A Common Consolidated Corporate Tax Base (CCCTB) would mean that these could suddenly be compared, which could further benefit a race to the bottom within the scope of the EU tax competition, if not minimum tax rates would be determined at the same time.

Evelyn REGNER, Member of the European Parliament and the Special Committee on Tax Rulings (TAXE), emphasised the significance of public pressure, created by LuxLeaks, which got the subject of tax avoidance going in the first place. The TAXE Committee, which had been set up because of such publications, was faced with the problem that representatives of large corporations were not very approachable - an enquiry committee would probably more effective. Transparency, as proposed by the Commission, would be a first step to finally make “deals” more visible.

OECD self-criticism with regard to Double Taxation Agreements – paradigm change demanded

Marlies STUBITS, Ambassador, Permanent Representation of Austria to the OECD, gave a presentation on the activities of her organisation in the field of taxation. Her proposition was that Austria had seen so many changes with regard to bank secrecy over the past years because a lot of political pressure had been put on among other by the OECD and the G20. Naming and shaming had proven to be very effective also in other cases.

The OECD was currently very self-critical and was considering old paradigms: after all, the previous commitment to Double Taxation Agreements and transfer pricing directives had only made the current problems possible and led to “double non-taxation”. These practices, whose impact are summarized with BEPS (base erosion and profit shifting), would not only result in national loss of revenue but would also disadvantage companies, which would only operate at national level (which indeed had to pay corporation tax) and in general damage the tax moral.

Heinz ZOUREK, Director General for Taxation and Customs Union, European Commission, talked about the current “excesses” of tax competition, as no genuine internal market would exist in the fiscal sector. Due to the refusal of the Member States to adopt European solutions in the field of taxation, a paradigm change would be unavoidable. He confirmed that the reduced revenue from corporate taxes (due to lower tax rates and avoidance practices) had been compensated by other taxes – on labour and in the consumption sector. The Commission would aim at implementing counter measures, which are to be embedded in the Community Law; however, the greatest challenge would be the Council as the principle of unanimity would prevail in matters of taxation. He regarded minimum tax rates as a rather unlikely venture.

The panel discussion was hosted by Silvia ANGELO of AK Wien.

Further information:

Photos of the event

AK study “Tax Avoidance, Tax Evasion and Tax Havens” 

EU Commission introduces further measures against tax avoidance (19.6.2015)

„Stand der Dinge im Kampf gegen Steuervermeidung“ (blog.arbeit-wirtschaft.at by AK and ÖGB, in German only)

EU Commission draws first conclusions from Luxleaks – legal tax avoidance to be tackled (3/19/2015)