Subject: Tax evasion in the EU, fair taxation and new own resources
Each year, some 40% of the profits of multinationals are transferred to tax havens, depriving tax authorities in the EU as a whole of 20% of their revenue. While France loses 22%, Italy 15% and Spain 14%, Ireland gains 67%, Luxembourg 58%, the Netherlands 39% and Belgium 19% 1 .
In the world ranking of tax havens, the jurisdictions that do most to facilitate aggressive tax planning include the Netherlands (in 4th place), Luxembourg (6th), Ireland (11th) and Belgium (16th) 2 .
Italy and Spain lose USD 10 billion per annum in tax revenue to the Netherlands alone 3 .
In view of the above, can the Commission answer the following questions:
1. Is it drafting a proposal to the Council to establish a new category of own resources in the budget, financed by the Member States that display the characteristics of tax havens, to compensate for the loss of revenue in other EU Member States?
2. Is it continuing to press for the creation of a new own resource based on the adoption of a harmonised system of company taxation?
3. Will it update the EU list of non-cooperative jurisdictions for tax purposes so as also to include those in Europe?
1 https://missingprofits.world/
2 https://www.corporatetaxhavenindex.org/introduction/cthi-2019-results
3 https://www.taxjustice.net/2020/04/08/revealed-netherlands-blocking-eus-covid19-recovery-plan-has-cost-eu-
countries-10bn-in-lost-corporate-tax-a-year/
Answer given by Mr Hahn on behalf of the European Commission
(10 August 2020)
In May 2018, the Commission proposed (4) to introduce a new own resource to finance the EU budget, as part of the proposal for the Multiannual Financial Framework 2021-2027, based on the Common Consolidated Corporate Tax Base legislatio n (5) proposed in 2016. Acknowledging some delays in the Council discussion of the 2016 legislative proposal, the own resource was planned to enter into force in 2023.
The communication ‘The EU budget powering the recovery plan for Europe’ (6) reaffirms the need to reform the own resource system. In particular, it argues that large companies that draw huge benefits from the EU single market and which weather the crisis also thanks to direct and indirect EU and national support, could directly contribute to rebuilding it in the recovery phase.
The Commission actively supports the ongoing work of the Organisation for Economic Cooperation and Development on the reform of corporate taxation aimed at better aligning taxing rights with the new realities of value creation by reallocating a share of multinationals’ profits to market jurisdictions, and to introduce an effective minimum tax rate to curb tax avoidance and put a floor to tax competition. If the global discussions do not come to a satisfactory fruition, the strong rationale for EU action will remain.
The EU list of non-cooperative jurisdictions for tax purposes is a tool for Member States to deal with external threats to their tax bases and to promote tax good governance internationally. Member States are required to comply with the same standards and their compliance is scrutinised through different instruments, including the Code of Conduct Group and the European Semester process.
⋅1∙ https://missingprofits.world/
⋅2∙ https://www.corporatetaxhavenindex.org/introduction/cthi-2019-results
⋅3∙ https://www.taxjustice.net/2020/04/08/revealed-netherlands-blocking-eus-covid19-recovery-plan-has-cost-eu-countries-10bn-in-lost-corporate-tax-a-year/
⋅4∙ COM/2018/325 final.
⋅5∙ COM/2016/0683 final.
⋅6∙ COM/2020/442 final.
