EU member states have no sense of ‘wrongdoing’ over tax dumping

The TAXE committee, set up in the wake of the damaging ‘Luxleaks’ revelations to examine practice in the application of EU state aid and taxation law, has conducted on-site visits to the five EU member states and Switzerland.

Progressive Alliance of Socialists and Democrats spokesperson on the TAXE committee Peter Simon said, “Even though many [governments] demonstrated openness to changing company taxation rules together, it is shocking that most of those who are in charge in the examined countries have hardly any sense of wrongdoing.”

The German MEP said the countries argued that their “tailored tax avoidance models for companies are ‘not illegal'”, but stressed that this position did not change the fact that, “through these models, loopholes have been created on purpose, actively damaging other member states”.

“Also the repeatedly presented argument that small countries with few natural resources are only able to generate revenue by creating tax laws that are attractive for companies, is not convincing.

“In the single market there has to be fair competition between member states at all times and member states shall refrain from any measure which could jeopardise the attainment of the union’s objectives. In this case this means no illegitimate tax dumping.

Parliament’s co-rapporteur on the report of the special committee on tax rulings and other measures similar in nature or effect Elisa Ferreira said that even though MEPs had not visited all the member states, only the “most symbolic ones”, the missions had shown that tax policies across the EU were an “open battle [using] all possible means to catch investment and revenues from other countries”.

“This free rider practice has evolved to the detriment of the tax revenues of developing countries and of many countries of the EU. Changing this system depends mainly on the support of a new agenda and culture of tax justice and fairness from citizens and taxpayers who are presently, in many countries, submerged under very heavy tax pressure.”

Ferreira’s report is awaiting committee decision and is due to go before plenary on 24 November.