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BackFollowing the Luxleaks scandal last year, Commission President Juncker decided to go on the offensive and to tackle legal tax avoidance practices at the highest level. The first step towards this goal was introduced this week: from 2016, tax agreements between multinational corporations and national financial authorities shall be automatically forwarded to all other Member States. Some countries use special agreements with multinational corporations to establish enterprises, which results in loss of revenue in other Member States. The new transparency would lead to improved tax practices in all EU countries.
This week, the European Commissioner for Economic and Monetary Affairs, Pierre Moscovici presented amendments to the Directive on the administrative cooperation in the field of taxation. In future, information on all tax rulings of national tax offices for internationally active corporations has to be automatically exchanged between the national financial authorities and the European Commission in three-month intervals. Should one country fear to incur disadvantages through a tax ruling by another country, it is entitled to request more detailed information on the tax agreement. The Commission will supervise the exchange and prepare relevant analyses.
The new Directive shall come into force as early as 01.01.2016, which requires speedy action as it has to be adopted unanimously in the Council of Ministers and then transposed into national law by the Member States. This also affects all tax rulings between states and corporations, which are not older than 10 years and which are still in force.
The planned measure serves transparency as many countries are not familiar with “aggressive”, but legal tax practices in other EU states. The conclusions, which are drawn by the affected states, are not regulated by the Commission as tax law is a national competence. The only EU option to proceed against unfair tax agreements, is the European State Aid Law. Such investigations are currently taking place in respect of Starbucks and Amazon, in which the AK is also taking part in its capacity as an interested observer.
One Commission source emphasised that the charm of the measure would lie in its simplicity, which was one of the reasons why it would be accepted by the Member States. Obligatory transparency would create “peer group pressure” within the Union, which would reduce tax avoidance. The envisaged potential was EUR 150 billion p.a.
According to Moscovici, this was only a first step towards more effective taxation within a borderless Europe. The Commission intends to present an action plan with regard to further measures in the tax sector before the end of spring, which will also once again address the Common Consolidated Corporate Tax Base (CCCTB), after the debate on the matter had been shelved in recent months. However, another strategy could be the publication of some tax information of multinational corporations, which had been demanded by a number of MEPs. The basic idea is that profits shall be taxed where they are generated.
In addition, Commission President Juncker will support the notion within the scope of the G20 and the OECD tax debates respectively that the new EU regulation will become international standard.
The new Directive shall come into force as early as 01.01.2016, which requires speedy action as it has to be adopted unanimously in the Council of Ministers and then transposed into national law by the Member States. This also affects all tax rulings between states and corporations, which are not older than 10 years and which are still in force.
The planned measure serves transparency as many countries are not familiar with “aggressive”, but legal tax practices in other EU states. The conclusions, which are drawn by the affected states, are not regulated by the Commission as tax law is a national competence. The only EU option to proceed against unfair tax agreements, is the European State Aid Law. Such investigations are currently taking place in respect of Starbucks and Amazon, in which the AK is also taking part in its capacity as an interested observer.
One Commission source emphasised that the charm of the measure would lie in its simplicity, which was one of the reasons why it would be accepted by the Member States. Obligatory transparency would create “peer group pressure” within the Union, which would reduce tax avoidance. The envisaged potential was EUR 150 billion p.a.
According to Moscovici, this was only a first step towards more effective taxation within a borderless Europe. The Commission intends to present an action plan with regard to further measures in the tax sector before the end of spring, which will also once again address the Common Consolidated Corporate Tax Base (CCCTB), after the debate on the matter had been shelved in recent months. However, another strategy could be the publication of some tax information of multinational corporations, which had been demanded by a number of MEPs. The basic idea is that profits shall be taxed where they are generated.
In addition, Commission President Juncker will support the notion within the scope of the G20 and the OECD tax debates respectively that the new EU regulation will become international standard.