The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has embarked on its first ever implementation report, assessing the application of the Directive on Administrative Cooperation in the field of taxation (DAC) and its subsequent amendments.
Already rapporteur on the DAC 7 Directive (see EUROPE 12675/12), MEP Sven Giegold (Greens/EFA, Germany) has been appointed to tackle it.
The Commission has already announced that it is working on a new revision of the Directive (DAC 8) and the MEP expects an ambitious proposal to close the loopholes identified in the report, not just an extension of the scope to cryptocurrencies, he told EUROPE ahead of the presentation of his report.
The report shows poor results. “While Europe has made great progress with the exchange of tax information, often also because of external pressure, we find that still too little data is exchanged and what is exchanged is too little used by the authorities of the Member States”, he told the ECON Committee on Thursday 18 March.
The most important loophole, he says, is that beneficial ownership information on real estate and companies is not exchanged effectively and that the exchange of tax information is based on anti-money laundering information, and therefore the weaknesses of the anti-money laundering regime are directly transferred into bad exchanges of information and often lead to a bad result.
The rapporteur’s ambition seems to be shared by MEP Lídia Pereira (EPP, Portugal), who also called for the DAC 8 proposal to be a thorough revision of the rules in order to avoid, as in the past, several successive changes.
Eugen Jurzyca (ECR, Slovakia) said that the focus should be on improving data quality rather than extending the scope of the Directive. “Broadening the scope does not necessarily address inefficiencies of the current information exchange”, he said.
The MEP also considered inappropriate the mention of the need to move to qualified majority voting in the EU Council on tax issues in the text and called on his colleagues not to “politicise” the issue.
Member States’ refusal to cooperate
This first implementation reporting exercise was perilous, and for good reason: all Member States, except Finland and Sweden, refused to grant Parliament access to the relevant data.
The Chair of the ECON Committee sent a letter to the European Commission requesting access to documents relating to the implementation of the Directive - a request that was rejected on 19 November 2020 on the grounds that a large majority of Member States had objected to the Commission passing on these documents to Parliament.
The Council of the EU justified its refusal by saying that this constituted an undue encroachment on a competence that the Treaties clearly conferred on the Commission.
“This is not only about pointing out a total lack of political will to work together on tax matters, this is a clear violation of the principle of sincere cooperation, embedded in the Treaty”, said Lídia Pereira.
As it stands, therefore, the report has significant data limitations. Its main sources were public information and a study prepared by Economici Associati in the context of the Commission’s evaluation of the Directive in 2019. However, this only covers the 2015-2017 period and Parliament was therefore not able to assess more recent developments.
The draft text calls on Member States and the Commission to end their refusal to share relevant documents and stresses that Parliament is ready to use “all legal means at its disposal” to this end.
The rapporteur presented a short version of his draft report respecting the number of characters imposed, as well as a long version which includes the amendments he intends to table.
See the short version: https://bit.ly/3cMzohu and the long version: https://bit.ly/3trUbxo (Original version in French by Marion Fontana)