EU Agrees Twin Tax-Avoidance Measures
BRUSSELS–European Union finance ministers struck two separate deals on Tuesday aimed at cracking down on tax avoidance by multinationals, an issue that is high on Europe’s political agenda as a lackluster economic recovery fails to replenish crisis-hit state coffers.
At a meeting in Brussels, finance ministers agreed to update a 1990 law that was created to avoid double taxation in the bloc but has been used by some companies to avoid paying any taxes on cross-border payments from a subsidiary to its parent.
The ministers agreed to adopt a broad anti-abuse clause to ensure that corporations comply with the spirit of the 1990 law. They also agreed to the mandatory exchange of information between national EU tax authorities.
Pierre Moscovici, the EU’s tax commissioner, said the “breakthrough agreements” would “open up a new front in our fight against corporate tax avoidance and aggressive tax planning.”
Finance ministers had sought to vote on the changes last month, but the vote was delayed at the request of several national governments.
“I can confirm that remaining reservations have been lifted and the required unanimity has been reached,” Italy’s Finance Minister Pier Carlo Padoan said.
He said the move represented “a serious step forward in the fight against aggressive tax planning.”
The 28-member EU is mounting a broader crackdown on tax evasion and avoidance to boost budgets hit hard by the region’s financial crisis and to assuage voters angry over austerity measures that have forced cuts in public services and sparked tax increases for individuals.
When it announced the revision to its so-called parent-subsidiary directive a year ago, the European Commission, the EU’s executive arm, predicted the move would raise billions of euros for national governments.
“We can no longer afford freeloaders who reap huge profits in the EU without contributing to the public purse,” Algirdas Semeta, the EU’s then-tax commissioner, said at the time.
Since June, the commission has opened formal investigations into allegedly unfair tax deals granted to four multinational corporations– Apple Inc. in Ireland, Amazon.com Inc. and Fiat SpA in Luxembourg, and Starbucks Corp. in the Netherlands.
