The European Commission today launched its work on its ambitious agenda to combat tax avoidance and aggressive tax planning. The College of Commissioners held a first orientation debate on possible key actions to ensure a fairer and more transparent approach to taxation in the EU.
President Jean-Claude Juncker has made the fight against tax evasion and avoidance a top political priority of this Commission, and today's discussion centred on the most pressing measures that need to be taken in this field. It was agreed that a key objective is to ensure that companies are taxed where their economic activities generating the profits are performed and cannot avoid paying their fair share through aggressive tax planning. In this respect, there was strong consensus in the College that a particular focus must be on improving tax transparency in the area of corporate taxation.
To this end, the College of Commissioners agreed to present a Tax Transparency Package in March.
"A prosperous Europe needs fair, transparent and predictable tax systems for businesses to invest and for consumers to regain confidence. As part of our work for a deeper and fairer internal market, we want to establish greater tax transparency and ensure fairer tax competition, within the EU and globally. It is not acceptable that tax authorities have to rely on leaks before they enforce tax rules," said Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "Abusive tax practices and harmful tax regimes breed in the shadows; transparency and co-operation are their natural foes. It is time for a new era of openness between tax administrations, a new age of solidarity between governments to ensure fair taxation for all. The Commission is fully committed to securing the highest level of tax transparency in Europe."
The Commission is rapidly making good on the pledges it made in its Work Programme last December: it will propose legislation next month to extend the automatic exchange of information on tax rulings. Under current EU rules, Member States share very little information about rulings concerning their corporate tax regimes, which are often very complex. This makes it difficult for tax authorities to assess where a company's real economic activity takes place, and to apply tax rules fairly on that basis. As a consequence, many multinationals attempt to shift profits and minimise their tax bills, depriving EU governments of valuable tax revenues and undermining fair taxation.
The March proposal will be accompanied by a wider set of measures to increase tax transparency; today's orientation debate considered various legislative and non-legislative options.
Next month’s Tax Transparency package is just the beginning, with more work to come in this area during 2015. The Commission will present a second package of measures dealing with fair and efficient corporate taxation this summer, which will also take into account current initiatives by the G20 and OECD to tackle tax avoidance.
The Commission will present a Tax Transparency Package, including a legislative proposal for the automatic exchange of information on tax rulings, in March.
The Commission stated in its Work Programme in December that it would clamp down on tax evasion and tax avoidance, to ensure that taxes are paid in the country where profits are generated.
In his Political Guidelines presented to the European Parliament on 15 July 2014, President Juncker stated: "We need more fairness in our internal market. While recognising the competence of Member States for their taxation systems, we should step up our efforts to combat tax evasion and tax fraud, so that all contribute their fair share."
At the same time, the Commission is pursuing four in-depth state aid investigations (see also here) into tax rulings issued by Ireland, Luxembourg and the Netherlands. Earlier this month, it launched an investigation into a Belgian tax scheme, which allows multinational companies to substantially reduce their corporation tax liability in Belgium. The Commission also already asked all Member States to provide information about their tax ruling practices to help it identify if and where competition in the Single Market is being distorted through selective tax advantages.