Press conference by Pierre Moscovici on the Tax Avoidance Package on January 28, 2016 / ec.europa.eu

The European Commission on Thursday (January 28) proposed new measures to fight corporate tax avoidance. Tax-related informations on multinationals will be shared between members states but not disclosed to the public.

The European Commission presented its Anti-Tax Avoidance Package aiming to prevent multinationals to shift their profits and avoid paying their fair share of tax.

According to the EU executive, this tax avoidance represents a loss of over 70 billion euros a year in Europe.

Under international proposals by the Organization for Economic Cooperation and Development (OECD), this package “will put legally-binding measures to block the most methods used by companies to avoid paying tax and will also give recommendations to member states how to prevent tax treaty abuse,” the Commission stated.

Among the proposals, multinationals will need to report their revenue, profit and taxes to the national tax authorities in all the countries in which they operate.

But this so-called “country-by-country reporting” will not be disclosed to the public.

Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs, explained to Euranet Plus that before going further and towards a public country-by-country reporting, an impact assessment is needed to ensure that at the end of the day more transparency will not affect the competitiveness of the companies. (audio in French)

“It is really simple: Is it good for the economy? Is it good for competitiveness? Is it good for investment? If there is no contradiction between public transparency and competitiveness? Then let’s go, and let’s go quickly,” Moscovici said.

“If it penalizes our companies in any way, then let’s wait. However, I want to be clear that the question is not about ‘if we are going to have this publishing,’ but to know ‘when we will have it.’ Because I am convinced that the transparency movement that we are facing today will not end and that actually it is not necessary to stop this movement.”

The European Commission is expected to come back to this public transparency point by March 2016.

But according to Philippe Lamberts, a Belgian member of European Parliament (MEP) for the Greens/EFA, the Commission is still not able to “take the easiest measure, which is simply imposing on multinationals, in all sectors concerned, to report publicly their results country-by country.”

Lamberts said that the impact assessment is simply a way to “gain time.” (audio in French)

“What justifies an impact assessment if we only demand the companies to simply publish their results, which means publishing accounting data. So where is the problem?” Lamberts asked.

“In fact, there are delaying tactics ordered by multinationals which don’t want to suffer from a reputational impact coming from a country-by-country reporting. So, it is not a question about workloads or about difficulties of collecting data, it is just a question of reputation. And this is why we want the country-by-country reporting. If the multinationals cheat, they should assume it.”

The European Conservatives and Reformists (ECR) Group in the European Parliament was satisfied with the Commission’s new proposals.

The EU executive should not “impose additional obligations, which go beyond what has been agreed internationally at OECD level,” stated MEP Sander Loones. “This could risk weakening the competitiveness of EU countries and would have a negative impact on employment.”

Loones added that “in no way extra administrative burdens will be put on the shoulders of SMEs [small and medium sized enterprises].”

Another crucial point is that the country-by-country reporting will only apply to companies with an annual turnover of over 750 million euros.

The socialist MEP Emmanuel Maurel stated that “with a threshold of 750 million euros, by the admission of the Commission themselves, 80-90 percent of multinationals will be exempt from this transparency measure.”

The word "Google" in the hall of the main entrance of the "Google Partner Plex" in San Francisco / ec.europa.eu

“Google Partner Plex” in San Francisco

Google-UK tax deal

On the same day the European Commission presented its anti-tax avoidance package, the Scottish National party (SNP) called Margrethe Vestager, the EU antitrust and competition Commissioner, to investigate a “sweetheart” deal that Google has made with the British tax authorities.

Based on this agreement, Google accepted to pay back a tax amount of 170 million euros to the British government.

Stewart Hosie, deputy leader of the SNP, wrote to Vestager asking “to investigate whether this agreement was so generous to the technology company that it constituted illegal state aid,” reported the Financial Times.

Commissioner Moscovici said that this case shows that not only EU citizens, but also worldwide people are fed up with the tax avoidances practices of companies. (audio in French)

“Citizens cannot stand anymore that multinationals could take advantage of differences existing in legislations, or weaknesses in legislations, to avoid paying their taxes. And there, if there is a deal, on which we don’t know the details, between the British government and Google, this proves that there was indeed a problem that should have been resolved,” Moscovici explained.

“And this is what the tax avoidance package proposes  that I presented this morning, because with this package this situation would not happen anymore as we will have some binding measures, which will allow to tax profits where they are made, so we will not have anymore ex-post judgements, it would just require to apply our common legislation.”

  • Author: Laeticia Markakis, Euranet Plus News Agency