05 March 2015

European Parliament/European Voice: The European Parliament's tax ruling committee

Interview with committee chair Alain Lamassoure, a French member of the EPP group.

How would you explain to an ordinary citizen the difference between a tax ruling, tax evasion and tax fraud?

A tax ruling refers to a taxation situation involving one specific company or one specific person. It’s a completely legal procedure and offers every tax payer legal certainty and transparency.

Tax fraud involves deliberately circumventing the rules to avoid paying taxes. Unlike fraud, optimisation is legal, but could be seen as illegal from a legal point of view when it involves abusing a right (using legal mechanisms to avoid taxes) but in practice proving this remains difficult for tax authorities. Finally, tax evasion can include both optimisation and fraud. It’s difficult for tax services to prove this and requires painstaking work.

Many people believe multinational companies are getting away with not paying taxes, while they are increasingly having to tighten their belt due to public finances being cut. How should this perception be tackled?

Fiscal competition can be healthy when it contributes to sustaining a dynamic economy, especially by making companies more competitive, which in the end will lead to every European citizen enjoying better goods for a lower price.

However, this competition is harmful when it sparks a fiscal war between the different EU member states and leads to the fragmentation of the single market and the disintegration of the Union. This would be unacceptable.

It is up to the Parliament to bring forward proposals in favour of transparency and fairness.

We will soon work on concrete proposals regarding this.

What can we realistically expect from the parliamentary committee considering that all changes to taxation rules will have to be approved unanimously by all 28 member states?

The committee only has a short mandate and an obligation to produce results. Within six months it will have to come up with proposals for tackling practices that erode the tax basis , strengthen administrative cooperation between tax services and work on more ambitious agreements on increasing transparency with parts of the world where opacity and complacency still reign.

Full press release

European Voice: Lux Leaks committee to set ambitious schedule

The European Parliament’s response to the Lux Leaks affair – a cross-party special committee looking into member states’ tax rulings – is preparing an ambitious list of finance ministers that it wants to question about sweetheart tax deals granted to large corporations. However, with no powers to compel witnesses to appear, MEPs may find themselves facing empty chairs.

The special committee will meet on Monday evening (9 March) in Strasbourg and is expected to start compiling a list detailing which politicians it would like to appear at its hearings and what documents it will request from national governments, in a bid to understand more about the secretive world of favourable tax deals, some of which were offered to lure companies to invest in one EU country rather than another.

While there has been an EU regulation in place since 1991 stating that member states should share tax files, it is possible that national governments will not give the committee the access to the documents that it needs to understand how tax incentives have been used to lure large corporations. Suchm rulings traditionally remain secret.

However, there are now suggestions that the special committee on tax rulings is preparing to take its fight for access to documents and finance ministers to the court of public opinion. “There is momentum in this committee from the Lux Leaks scandal,” one parliamentary official said. “To avoid the committee will not be a good look in front of those small taxpayers who cannot sidestep their responsibilities.”

Full article on European Voice (subscription required)

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