On Tuesday 7 December, EU finance ministers failed to adopt a revised Code of Conduct for Member States on tackling harmful taxation, in place since 1997.
The draft submitted by the Slovenian Presidency of the Council of the EU extends the Code of Conduct to generally applicable tax characteristics of a Member State which create possibilities for double non-taxation or which may lead to the multiple use of tax advantages (see EUROPE 12843/16).
Hungary and Estonia maintained their reservations. Budapest is reportedly stalling due to difficult negotiations on its national recovery plan (see other news). Tallinn wants to see how the agreement reached at the beginning of October at the OECD on the ‘effective taxation’ part (Pillar 2) of the international corporate tax reform will be integrated in the EU.
“The global tax reform may have an unpredictable impact on tax systems and investment strategies, both within and outside the EU. We should monitor the results of its implementation before taking further important steps”, Estonian minister Keit Pentus-Rosimannus said in a statement.
“The Council did not reach an agreement. The working groups will now discuss this in the coming months”, said Slovenian Finance Minister Andrej Šircelj after the meeting.
See the draft recommendation: https://bit.ly/3D1SsU0
Disappointment in the European Parliament
French Socialist Aurore Lalucq said she was “deeply disappointed”, saying the Code of Conduct, the EU’s main tool to fight tax abuse, is “no longer up to the current challenges of digitalisation and globalisation”. “Realistic and strict criteria, such as a minimum effective tax rate and a minimum level of economic substance, as well as tough sanctions for tax havens are among the reforms that the European Parliament supported in my report” on the reform of the Code of Conduct, she added, in a statement (see EUROPE 12808/25).
In a joint letter prior to the Ecofin Council, the main political groups in the European Parliament had called on ministers to adopt the reform on the table, even if it fell short of the expectations of MEPs.
Claude Gruffat (Greens/EFA, France) called for an end to unanimity in the EU Council on tax issues, via Twitter. (Original version in French by Mathieu Bion)