At the 'Economy/Finance' Council (ECOFIN) of Tuesday 21 February, the European Finance Ministers will take stock of the work to set in place a European blacklist of tax havens, with the letters to the 92 jurisdictions to be subjected to a fiscal examination having been sent out at the end of January (see EUROPE 11717).
At the meeting of the permanent representatives of the member states to the EU on Wednesday 15 February, the United Kingdom said that it was in a position to lift its reservation on the interpretation of criterion 2.2 aiming to define a tax haven on the basis of the tax competition it practises. However, its Minister intends to make a statement at the ECOFIN session, according to our information.
Readers may recall that discussions at the Council's 'corporate taxation code of conduct' group have been stumbling for several weeks over the reference to a zero rate as an indicator of a jurisdiction that facilitates offshore structures (criterion 2.2). This reference to a zero rate, which was initially presented as a criterion in its own right, was withdrawn from the raft of criteria by the finance ministers in November of last year (see EUROPE 11663), when the 'code of conduct' group was tasked with working on keeping the zero rate in as an indicator of a different criterion - the criterion that a jurisdiction supported offshore structures.
At the end of December 2016, it was agreed that a zero rate was not enough on its own to indicate that a jurisdiction favoured these structures. It was therefore planned to include a gateway test aiming to determine whether a jurisdiction facilitated the separation of a company's profits from its economic activity.
However, the member states have moved away from this solution since the meeting of 3 February. A stock take dated 10 February posits a somewhat convoluted explanation to sketch the outlines of the application of criterion 2.2 (on a jurisdiction that favours offshore structures).
The document explains that, in order for criterion 2.2 to apply, the absence of a taxation rate or a zero rate by the jurisdiction should be considered within the context of paragraph A of the code of conduct of 1997 (which basically states that the code of conduct covers measures that significantly affect or may significantly affect the location of business activity in the EU).
Criterion 2.2 would be a kind of addition to criterion 2.1 (on preferential tax regimes). This criterion 2.2 would be supported by the criteria of the code of conduct itself, which aims to define the point at which a tax measure becomes harmful (a regime applicable only to non-resident businesses, an advantage granted where there is no economic activity, etc.).
At Wednesday's Coreper, Sweden announced that it had a parliamentary reservation on the text. (Original version in French by Élodie Lamer)