Labour MEPs vote against tighter controls on tax evasion

Commission proposal to clamp down on companies cheating tax by opening subsidiary companies in different member states supported by vast majority of MEPs.

On Wednesday Labour MEPs were part of a very small minority of 32 MEPs who voted against a resolution backing the Commission’s proposal to tighten the Parent-Subsidiary Directive to remove loopholes, which have been exploited by aggressive tax planners enabling some companies to escape corporate taxation by opening subsidiary companies in different member states.

The new directive ensures that companies will no longer be able to exploit differences in the way intra-group payments are taxed across the EU to avoid paying any tax at all.

Labour MEPs Claudette Abela Baldacchino, Joseph Cuschieri and Marlene Mizzi voted against the resolution in direct contrast with the vast majority colleague in the Socialists and Democrats Group.

Apart from the 3 Maltese Labour MEPs, one other Socialist MEP voted against.

On the other hand Nationalist MEP Roberta Metsola voted in favour in line with her parliamentary group the EPP.

While voting in favour of the final resolution supported by both the EPP and the Socialists, Metsola voted against an amendment supported by the socialists, greens and leftists to further tighten the regulations.

On this particular amendment the Labour MEPs voted with Metsola and against the advice of the Socialist group.

David Casa and John Attard Montalto were not present for the vote.

The resolution was backed by all groups except the Nordic Green Left, which abstained, as it wanted even tighter regulation.

Most of those voting against were non-affiliated MPs including National Front MEPs Marie Le Pen and her father Jean Marie Le Pen and UK National Front representative Nick Griffin.

“This proposal is a cornerstone in our campaign to clamp down on corporate tax avoidance. By closing loopholes and strengthening measures against abusive tax planning, it will help ensure that every company pays their fair share,” EU Tax Commissioner Algirdas Šemeta said.

The revised directive is aimed at creating a common system of taxation applicable in the case of parent companies, which have subsidiaries in different member states.

The Parent Subsidiary Directive is aimed at preventing double taxation of same group companies in Europe. However the Commission therefore proposed to tighten up the Directive in order to cut off specific opportunities for corporate tax avoidance. In particular, companies will no longer be able to exploit differences in the way intra-group payments are taxed across the EU to avoid paying any tax at all.

Around one trillion euros is lost to tax evasion and avoidance every year in the EU.