During an exchange of views with the newly formed European Parliament Subcommittee on Tax Matters (FISC) on Thursday 24 September (EUROPE 12566/26), EU Commissioner for Taxation Paolo Gentiloni assured MEPs that the European Commission would tackle the aggressive tax planning practices that cause financial losses of up to €140 billion every year.
He said that the issue will be specifically addressed in the Commission communication on “Business Taxation for the 21st Century” which will be adopted in the autumn.
It will, however, also be addressed as part of the EU's economic recovery strategy and national recovery plans, which will be required to take into account socio-economic policy recommendations, the Commissioner said. The recommendations, issued in May, called on Cyprus, Malta, Hungary, Ireland, Luxembourg and the Netherlands in particular to curb their aggressive tax planning practices (EUROPE 12491/12).
“We are not competitive because we are attracting investments with aggressive tax planning against the other members of the European family, or if we are competitive in that way, it is a wrong way to be competitive”, he said.
Gentiloni also revisited the use of Article 116 TFEU, which allows the European Commission to present a legislative proposal on taxation by qualified majority voting instead of a unanimous vote, if it finds a distortion of competition in the single market.
“We will not change the system through Article 116, but we can give the clear message that there are limits than cannot be exceeded”, he said. He explained that the Commission was continuing its work to find an “extremely strong legal case of distortion of the single market” so that it could be sure that no mistakes would be made when the article is used for the first time.
German MEP Sven Giegold (Greens/EFA) also suggested that the FISC subcommittee should become a forum for “constructive embarrassment for Member States” and proposed organising a hearing with reluctant countries and the Commission on each tax matter that is blocked in the Council of the EU - an idea that the Commissioner seemed to like.
He also asked Gentiloni to commit to setting up an annual dashboard of Member States’ tax practices, along the lines of the rule of law dashboard.
The Commissioner would not make any promises on this specific proposal, but pledged to “find the right way to formalise a method for ‘screening’ the various Member States’ tax policies”, in the belief that this would be a good “tool for exerting pressure”. (Original version in French by Marion Fontana)