Brussels, 26/10/2015 (Agence Europe) - The European Parliament will have two opportunities to make its voice heard this week on the fight against excessive tax optimisation, with votes on complementary reports in plenary and in committee.
At this stage, Tuesday's plenary vote on the Ferber Report on the automatic exchange of information on tax rulings will be the more concrete opportunity. Basically, this report criticises the fact that the Council of the EU has watered down the European Commission's proposal regarding the scope of application, and the role of the Commission in the exchange and retroactivity (see EUROPE 11409). The report has already been adopted by a large majority in the Parliament committee (see EUROPE 11410). On the scope of application, the MEPs wanted all rulings to be included, not just cross-border arrangements. The Commission itself proposed only an exchange of cross-border rulings. The MEPs also feel the period of retroactivity decided upon (five years instead of ten) was too short. It is the validity of the rulings which counts, argues Markus Ferber (EPP, Germany), calling for all rulings still in force when the directive enters into force in 2017 to be exchanged. Lastly, the delimitation of the Commission's role in the exchange (Ed: it will have access only to limited information and may use it only to verify whether the exchange has indeed taken place) also comes in for criticism. The recent discussions of the Commission rejecting the tax rulings concluded by Fiat Finance and Trade in Luxembourg and Starbucks in the Netherlands has shored up the MEPs in their view that the Commission should have been able to use the information exchanged in order to open competition investigations (see EUROPE 11415). “Compromises had to be made, but none of them has had the effect of watering down our proposal” was, however the view of European Commissioner for Taxation Pierre Moscovici, speaking at the plenary session debate on Monday 26 October.
On Monday evening, the European Parliament's special TAXE committee was expected to adopt the Theurer/Ferreira Report, which is similar in structure to the Commission's action plan on corporate taxation, but which goes further on each point (see EUROPE 11365).
On Monday, the GUE/NGL announced that its six members in the TAXE committee would abstain, on the grounds of lack of access to key documents and the refusal of a number of multinationals to attend hearings before the MEPs (see EUROPE 11417).
Among its key recommendations, the report states that there should be sanctions in the event of any illegal state aid granted by means of a tax advantage, in order to have a deterrent effect. It argues that the Commission should establish a definition of “tax haven”, based on clear criteria available in advance, and “urges” the Commission to assess whether the European jurisdictions are keeping to these criteria.
The text goes on to state that the Commission has failed to play its role of guardian of the Treaties, as it did not ensure that the existing provisions for the spontaneous exchange of information on tax rulings have been respected (see EUROPE 11471). According to Moscovici, the states currently have a certain amount of leeway to decide whether an anticipatory tax decision may be relevant in another country of the EU.
The report also calls upon the Council to look into the possibility of setting up a tax committee under its own aegis, of a similar stamp to the Economic and Financial Committee (EFC), which is answerable to the European Parliament. The report reiterates the need for country-by-country public reporting. The first trialogue on the Shareholders' Rights' Directive, where the Parliament plans to introduce this provision, will be held on Tuesday 27 October. However, the Luxembourg Presidency of the Council of the EU seems to feel that it is too early to hold a substantial discussion on this reporting, as the results of the Commission's impact study on this point are not expected until early 2016 (see EUROPE 11394). The Parliament wants the Commission to produce a proposal, by June 2016, to protect whistleblowers. It also wishes the Commission to propose a framework for the work of tax consultants, to include fines in the event of any encouragement to adopt excessive tax optimisation measures.
Lastly, the report stresses the need for withholding tax to ensure that outgoing financial flows are taxed at least once in order to avoid profits leaving the EU untaxed. This could be achieved via the Parent/Subsidiary and Interest/Royalties Directives. Work is underway at the Council on the latter directive.
It is worth noting that the Parliament will also be voting on the report by Molly Scott Cato (Greens/EFA, UK) on the cancellation of the Savings Tax Directive (see EUROPE 11395) and on the report by Jeppe Kofod (S&D, Denmark) on the EU/Switzerland agreement on the exchange of information on financial accounts. (Original version in French by Elodie Lamer)