Following the revelations concerning “Lux-Leaks” and the “Panama Papers” and the establish-ment of an enquiry committee, the European Parliament adopted a report on the work of the Second Special Committee on Tax Rulings (“tax rulings and other measures similar in nature or effect “), which specifies findings, progress and demands in the fight against tax avoidance practices. At the same time, the Commission presented a review of the Anti-Money Laundering Di-rective.

Report on the work of the special committee

The report states that in recent months progress had been made with regard to transparency, based on the directive as regards mandatory automatic exchange of information in the field of taxation and public accounting. Nevertheless, there are still some issues, which have to be tackled as soon as possible, such as the implementation of a common EU list of non-cooperating states (“tax havens“), a Common Consolidated Corporate Tax Base, a register of beneficial owners of companies, measures against patent boxes and unfair transfer pricing, a common withholding tax regime, a code of conduct for accounting firms and better protection for whistleblowers. The shadow rapporteurs also criticised the approach of the Council. Certain measures against tax practices of the Commission had been watered down in places or were altogether removed from the original legislative proposal. In doing so, the recommendations of the Parliament, which provided for tightening the original directive, had not been taken into account. A number of representatives of banks, multinational companies and countries had been invited to hearings since the Committee was set up. Even though one gained important insights during these debates, vague answers also threw up new questions. Due to the fact, that they were not able to consult a number of documents, MEPs found gaining access to information difficult.

Review of the Anti-Money Laundering Directive

Apart from that, the Commission has revised its original Directive on combating terrorism, tax avoidance and money laundering. This Directive, which shall be implemented by the Member States at the end of 2016, provides for the publication of certain data of the register of beneficial owners of companies and the linkage of these registers in the sector of “measures against tax avoidance”.

Effects tax avoidance practices

According to estimates, the Treasury loses up to 1 billion Euro in tax due to tax avoidance practices; however, as a study by ETUC shows, some multinational companies are using letter box companies not only to reduce their tax bill but also to pay lower wages, thereby being responsible for worse working conditions.

Further information:

Report

Press release of the Commission on the revision of the Anti-Money Laundering Directive

ETUC Study