Addressing MEPs who hit out at the reluctance of the member states to take resolute action against tax optimisation during a plenary session debate on the Paradise Papers scandal on Tuesday 14 November, the European Commissioner for Taxation, Pierre Moscovici, opened “two areas of work for the future”. Firstly, we have to “help the European states and others which have made a bit of evasion a state business to develop a different economic and social model”. Secondly, we need to decide “to move taxation issues to qualified majority before the European elections” of 2019.
The Parliament intends to hit the ground running. French member Pervenche Berès (S&D) explained at Tuesday lunchtime that her group had proposed to set up a special committee on Paradise Papers under this mandate, and a permanent sub-committee in the next one. The current discussion is focusing on setting up a sub-committee during this legislative period, she explained.
As for the possibility that the Commission may use the intricacies of the Treaties to propose a taxation text by qualified majority, she stressed that the legal basis would have to be rock-solid, as the most reluctant member states would go straight to the Court of Justice of the EU. If the Commission was ruled against in this matter, this would be a “blow” to any progress on tax, she said, referring to the Commission's experience over the Schneider-Legrand merger, when a CJEU decision left its hands tied for several years.
Council feels Parliament's wrath
During the plenary debate, Moscovici opened the charge against the member states. Last week, the Council had the opportunity to discuss its future European list of tax havens. However, the United Kingdom is protecting the jurisdictions under the British Crown, even though they all apply a zero-taxation rate and have no corporate taxation system. Luxembourg, backed by Malta and Ireland, is refusing to allow the list to be accompanied by sanctions. Without referring to any of these countries by name, Moscovici had something to say about each of them. “Not having any tax on profits, yes, that's a problem”.
According to our information, the national ambassadors to the EU (Coreper) will have the job of deciding on the list in the last week of November. “If the blacklist doesn't cut the mustard, if it is not credible and substantial enough, if the sanctions are not enough of a deterrent, then I will say so”, the Commissioner promised. “We have to hit fraudsters and tax havens in the wallet”, he added. He also called upon the member states to adopt his transparency proposal for tax advisory firms, once again at the centre of a scandal with the Paradise Papers, within the next six months (see EUROPE 11813).
The Commission also told the Council that there was “nothing to fear with public, I stress, public, country-by-country reporting”, which is making slow progress, partly because certain countries are calling for a change in legal basis so that the text can be negotiated as a taxation matter (unanimity, Parliament simply consulted). Lastly, he called for an agreement on common rules on the corporate tax base in 2018.
The MEPs gave short shrift. Frank Engel (EPP, Luxembourg) criticised the “ridiculous and frantic race to secure the establishment of the headquarters of multinationals”, in which European countries compete with each other to offer their favours.
Tom Vanenkendelaere (EPP, Belgium) said that it was time to make a “political choice in favour of true tax justice”. The chair of the S&D, Gianni Pittella of Italy, stressed that there was nothing new in the Paradise Papers revelations, just the “same old cancer of our economies”. “What is the Council waiting for to take action and eradicate the injustice facing the citizens every time the press exposes new scandals?”, he asked.
On behalf of the Estonian Presidency, the deputy minister for European affairs, Matti Maasikas, told the MEPs that there was no need to “make a list of all the constraints upon the Council”. Earlier, he had pointed out that work had to be done in the context of 28 different tax systems, which fall under the exclusive competence of the member states, using the unanimity rule. The Commission will look at this second point next year, Moscovici pledged.
Expected breakdown of round of talks on tackling money-laundering
During the debate, Judith Sargentini (Greens/EFA, Netherlands) took the opportunity to criticise the Council's attitude to the negotiations for the “anti-money-laundering” directive. “We want public registers (of information on the beneficial owners of trusts and shell companies: Ed), but the member states do not want to negotiate with us”, she said, going on to explain that the Estonian Presidency of the Council of the EU had no mandate for the negotiation round to be held in the late afternoon of the same day.
According to our information, Coreper tackled the dossier on Wednesday 8 November. During this meeting, Luxembourg is reported to have expressed concerns and asked for more preparatory work at Coreper or the technical group on the many outstanding issues. It was supported by Cyprus, Malta, Poland and Ireland. These countries are reported to have expressed concerns regarding the legal water-tightness of the text and its proportionality.
The Czech Republic, the Netherlands, the UK, Hungary and Denmark also voiced hopes that Coreper could revisit this dossier. The Estonian Presidency asked for written comments on the text on the table, but in light of the responses received, has not had time to put a new compromise together. It is hoping for an agreement in early December. On Thursday 16 November, Coreper will have an information agenda point on this Tuesday's trialogue. (Original version in French by Élodie Lamer)