Commission's proposals aim for a coordinated EU wide response to corporate tax avoidance, following global standards developed by the OECD. New rules are needed to align the tax laws in all EU countries in order to fight aggressive tax practices by large companies.
Billions of tax euros are lost every year to tax avoidance – money that could be used for public services like schools and hospitals or to boost jobs and growth. Therefore the Commission is rapidly making good on President Juncker's promise of delivering a comprehensive agenda to tackle corporate tax avoidance, ensuring a fairer Single Market and promoting jobs, growth and investment in Europe. For the Commission it is clear: companies must pay their fair share of taxes, where their actual economic activity is taking place.
As part of today's Anti Tax Avoidance Package the Commission adopted two legislative proposals that call on Member States to take a stronger and more coordinated stance against companies that seek to avoid paying their fair share of tax and to implement the international standards against base erosion and profit shifting.
The OECD has conservatively estimated that $100bn-$240bn is lost to global profit shifting every year – equivalent to between 4% and 10% of global corporate tax revenues. The European Parliamentary Research Service put the revenue lost to corporate avoidance at around €50-70 billion a year in the EU.
More precisely, the Commission proposed an Anti Tax Avoidance Directive with legally-binding measures to tackle some of the most prevalent tax avoidance schemes. Its Recommendation on Tax Treaties advises Member States on the best ways to protect their tax treaties against abuse, in a way that is compatible with EU-law.
The Commission also proposed a revision of the Administrative Cooperation Directive thatseeks to boost transparency on the taxes that companies are paying. Under the proposed rules, national authorities will exchange tax-related information on multinational companies' activities, on a country-by-country basis.
The two legislative proposals of the Package will be submitted to the European Parliament for consultation and to the Council for adoption.
Background: Major initiatives put forward by the Commission in 2015 to boost tax transparency and reform corporate taxation are already reaping results: the proposal for transparency on tax rulings was agreed by Member States in only seven months and a number of other substantial corporate tax reforms have been launched. The Commission will continue its campaign for corporate tax reform throughout 2016, with important proposals such as the re-launch of the Common Consolidated Corporate Tax Base (CCCTB).