Brussels, 12/11/2014 (Agence Europe) - On Wednesday 12 November, the President of the European Commission, Jean-Claude Juncker, said that he had both a “duty to abstain” from the investigations carried out by the Competition services of the European institution into the tax decisions taken by Luxembourg, and a duty to act to move forward with tax harmonisation within the EU.
The former Prime Minister of Luxembourg pledged that he would not interfere with the investigation carried out by the Commission, and conducted the debate arising from the 'Luxleaks' affair on a resolutely political level.
The Commission is currently carrying out investigations into the 'tax rulings' of the Netherlands for Starbucks and those of Ireland for Apple to determine whether these countries gave these companies an undue advantage. These 'tax rulings', or anticipated decisions in taxation matters, are in the hot seat following a media leak last week of several hundred of these decisions between Luxembourg and 340 multinational companies, which were able to reduce their tax bill by a considerable amount.
Tax harmonisation and tax transparency. Under the impetus of Juncker, who took the initiative of meeting the press on Wednesday, the Commission has decided to steal a march on the G20. It has asked the Commissioner for Taxation, Pierre Moscovici, to draft a directive which will extend the automatic exchange of information to 'tax rulings'. This initiative is only one part of the BEPS project of the OECD, which is designed to fight tax optimisation and which provides for the spontaneous exchange of information on these 'rulings'. This is one of the points on which the OECD is anticipating an agreement later this week at the G20 summit in Brisbane.
The spokesperson to the German finance ministry, quoted by AFP, said on Wednesday that the German authorities had written to Moscovici to state that they were “highly in favour of a Commission initiative” to divulge these tax documents. The German minister is reported to be hoping to “speed up the work substantially” and to take the view that the EU cannot “afford to wait until the end of 2015”, the international timetable under the OECD framework.
Last week, the Luxembourg minister, Pierre Gramegna, spoke in support of the idea of an exchange on these 'rulings”, but added that this debate had to be carried out at global level to prevent it from becoming a solely European initiative (EUROPE 11192). Juncker promised to support this concern in Brisbane, arguing that Europe must be a “source of proposals” at international level.
On Wednesday, Juncker also said that “work on a common tax base (should) be continued” the 'CCCTB' (common consolidated corporate tax base) has been at stalemate within the Council for years. “If we manage to agree”, this will help us to “get rid of a good many taxation engineering possibilities”, he explained. He argued that it is the many differing national sets of rules which leave the system open to abuse.
The day before, when questioned by the 'economic and financial affairs' committee of the European Parliament, the European Competition Commissioner, Margrethe Vestager, said that the states would reconsider the CCCTB. During a debate held later with the MEPs, Gianni Pittella (S&D, Italy) called for a clear timetable on fighting tax evasion. Speaking before the EP, Commissioner Moscovici said that taxation issues were dealt with unanimously at the Council, stressing that although it is not new, the EU's commitment was “more resolute than ever”.
Juncker will not interfere in the competition investigation. Juncker sees no conflict of interests between the investigations underway within the Commission into the tax relationship between Luxembourg and the companies Fiat Finance and Trade and Amazon and his position as President of the Commission. “I will not be discussing the problems concerning Luxembourg with Ms Vestager and Frans Timmermans will not be talking to her about the problems concerning the Netherlands”, he explained, going on to stress that he would make himself available if Vestager had any questions to ask him. Juncker reiterated that the 'tax ruling' was a practice used in 22 countries. “Frequently, the Commission declared the rules and advantages related to the anticipatory decisions to be compliant with Community law, as long as they were exercised in a non-discriminatory way”, he said.
During the debate at the EP, Guy Verhofstadt, leader of the Liberal group at the EP, called for an investigation, not into these specific cases, but into this tax practice in general, by setting in place a special investigation committee. On behalf of the Greens/EFA, Belgium's Philippe Lamberts called on the President of the Commission to make all possible resources available to Vestager “to widen and deepen” the investigations underway. Kay Swinburne (CER, UK) said that the leaked documents should be included in the investigations underway. “Ms Vestager needs neither your advice nor my instructions to know what it is she has to do”, said Juncker at the end of the debate. (EL)