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“Abusive tax practices and harmful tax regimes breed in the shadows; transparency and co-operation are their natural foes.” – Pierre Moscovici

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, endorsed the European Commission’s work on Tax Transparency Package, launched on 18 February. He  went further and stated “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.”  (IP/15/4436)

On 18 March, the European Commission is due to adopt a first set of tax transparency measures, as part of its ambitious agenda to tackle corporate tax avoidance and harmful tax competition in the EU.  The Tax Transparency Package will be presented at a press conference on 18 March and an off-the-record technical briefing will be held ahead of the press conference.

A key element of this Tax Transparency Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings. It will enable Member States to detect certain abusive tax practices by companies and take the necessary action in response.

President Jean-Claude Juncker has made the fight against tax evasion and avoidance a top political priority of this Commission, and the 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 of Commissioners that a particular focus must be on improving tax transparency in the area of corporate taxation.

Looking ahead

This 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.

Where Do We Stand Today

  • The Commission will present a Tax Transparency Package, including a legislative proposal for the automatic exchange of information on tax rulings on 18 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.
  • In February, 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.

Source: European Commission’s website

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