Brussels, 23/09/2015 (Agence Europe) - Italian, French, German and Spanish finance ministers did not turn up to their hearing on Tuesday 22 September in order to flatter the ego of the special committee on tax rulings (TAXE) of the European Parliament. This temporary committee seems to feel that it has been pushed aside in the teeth of the refusal of the states to send it certain documents, and the persistence of the multinationals in failing to appear before it, when they do not hesitate to court the MEPs on other dossiers. No, the ministers did not make any promises regarding access to the documents and no, they did not give any clear commitments on country-by-country public reporting, a few days ahead of the start of the trialogue on the 'shareholders' rights' directive (which is not technically within their competence). The four ministers above all wished to show that they were all singing from the same hymn sheet, having even got together ahead of the meeting to divide up the taxation issues to be discussed, in order to avoid repeating each other and to make it crystal clear that each one spoke for all four.
For instance, the German minister, Wolfgang Schäuble, argued in favour of minimum taxation rates. When asked about Schäuble's position, the German Ministry of Finance had not yet replied as we were going to press. The French minister, Michel Sapin, reiterated his position on the concept of effective minimum taxation. “In practice, it's about making sure that the exemption from withholding tax provided for by the directive does not apply when interest or royalties are taxed little or not at all in the state of the company which collects”, the French minister explained. He added that in other words, “if a state which is currently entitled to tax chooses not to or to do so at an extremely low rate, the other state would regain the right to tax, which it does not currently have”.
Wolfgang Schäuble and his Italian opposite number, Pier Carlo Padoan, called for a reinforcement of the 'Code of conduct' group (corporate taxation). It was in this context that the German minister referred to abandoning the unanimity rule. Within the group, decisions must be made by a majority, Schäuble explained, but we have to stick to “the treaties as they currently stand”. However, in order to drop the unanimity rule at the Ecofin Council for taxation issues, treaty change would be necessary.
Michel Sapin said it straight: we need to move forward so that qualified majority will allow taxation issues to move forward.
Still referring to the group, Schäuble went on to say that it was not possible to proceed by 'soft law' alone. He supported the idea of the President of the Commission, Jean-Claude Juncker, to bring in a tax committee within the Council, along the same lines as the economic and financial committee, to replace the 'Code of conduct' group.
When this group came into being, in 1997, the states all agreed that “different rates of taxation did not violate the principle of fair competition”, Schäuble pointed out; “minimum rates must be defined”, he added.
These words may strike fear into the hearts of those who are most reluctant about the idea of harmonising the tax base, with the Commission unrelentingly repeating that this will not be a means of harmonising rates. And it is precisely because he suspects that some states are hiding behind this concern in order to do nothing that the French minister is calling for the common consolidated corporate tax base (CCCTB) to be left out of the debate on fighting tax optimisation (see also EUROPE 11303).
“Naturally, I stress this distinction between the immediate introduction into European law of the principle of effective taxation and, additionally, the desire to harmonise corporate taxation”, a project for the medium term, said Sapin.
The chair of the TAXE committee, Alain Lamassoure of France, urged the ministers to seize the current “window of opportunity” to make progress on the common tax base.
Padoan supported the revival of the CCCTB. “This could help to iron out the differences between the various member states, businesses could take advantage of this, as it would make administrative procedures easier and give them greater administrative and legal security and help to promote growth”, the Italian Minister said.
The Portuguese MEP Elisa Ferreira (S&D), co-rapporteur for the TAXE committee, asked the states why they did not apply the automatic exchange regarding tax rulings as provided for by European legislation since 1977. Schäuble replied by explaining that a binding exchange would make the difference and that there was still a certain amount of reluctance among the member states to look like inquisitors.
In response to questions on country-by-country reporting, notably from Poland's Danuta Hübner, who asked the ministers if they were prepared to get the rest of the world to go in the same direction, the answers were unequivocal. Michel Sapin and his Spanish colleague, Luis De Guindos, explained that they would follow the recommendations of the OECD (declarations to tax administrations). Ireland is furthermore currently preparing to legislate for reporting to the administrations, the Irish Times reported on Tuesday. Schäuble pointed out that taxation is a regional competence in Germany. “I am subject to the approval of the Länder, and they don't want” public reporting, he explained. For his part, the Italian minister said that he was not opposed to the principle of reporting, but he did not specify his preference for public reporting or reporting to the administrations.
At this stage, therefore, nobody really knows how the trialogue on the 'shareholders' rights' directive, for which the EP has included public reporting in its negotiating position, will go. A discussion on this specific point was held at senior EU civil servant level. The Luxembourger Presidency of the Council has prepared an informal document on the issue, but has declined to comment on it. Another source said that the vast majority of states take an extremely dim view of the EP's strategy of using non-taxation dossiers to try to influence developments on tax policy. Nor do the states like seeing tax issues included in dossiers which are not subject to voting by unanimity. (Original version in French by Elodie Lamer)