EU states refuse to pass tax data to European committee, says report

In a letter seen by EU Observer, EU economics commissioner Pierre Moscovici told the European Parliament’s Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (the TAXE committee) that he is unable to provide 25 requested documents without the consent of the member states concerned.

Almost half of member states have said they will not consent to the documents being passed to the TAXE committee for confidentiality reasons, Moscovici said in his letter to the head of the committee, French MEP Alain Lamassoure, according to EU Observer.

The TAXE committee was set up in February to look into tax rulings by member states, following 'Lux leaks' revelations in late 2014 about tax rulings given to international companies by Luxembourg. Leaked documents showed that these tax rulings allowed over 300 companies to reduce their tax bills.

Documents obtained by the International Consortium of Investigative Journalists (ICIJ) showed some companies paying an effective 1% rate of tax on profits moved from higher tax jurisdictions to Luxembourg through the use of "complicated accounting and legal structures", the group said.

State aid expert Caroline Ramsay of Pinsent Masons, the law firm behind Out-law.com said: "This indicates another interesting development in the international tax rulings saga that has been ongoing for several months now. The EU is committed to try to tackle what it sees to be corporate tax avoidance and in March it launched a tax transparency package that will legally oblige member states to publish details of tax rulings."

"The legislation to implement that package needs to pass through the European Parliament and Council and then be agreed upon by member states. It was hoped that this would be agreed by the end of 2015 but if the TAXE committee is experiencing such difficulties from certain member states, it does not bode well for the European Commission," Ramsay said.

The TAXE committee issued a draft interim report on 20 July, setting out initial findings, conclusions and recommendations based on its investigation into the tax ruling practices of member states, and its final report is due in November.

The draft report said that member states have failed to notify the Commission of all plans for tax-related aid, and that an estimated €1 trillion of potential tax revenue is lost due to the combined effect of tax fraud, tax evasion and tax avoidance in the EU each year.

The committee proposed that member states adopt legislation on automatic exchange of tax information before the end of this year, and said that an EU-wise common consolidated tax base would help tackle transfer pricing – a way of allocating profits between subsidiaries in different countries, to reduce the tax paid.