European Union: Germany, Italy & France demand stronger stance on tax evasion
25 February 2015
Posted by: Author: Charles Savva
Author: Charles Savva (C.Savva & Associates Ltd)
The finance ministers of Germany, France, and Italy have requested in a joint letter to the EU, greater harmonization and a better strategy for the fight against tax evasion. Their statement issued last December in the wake of the Luxembourg leaks (reportedly, multinational corporations achieved favourable tax treatment on their profit following deals with the Luxembourg tax authorities), made it clear that tax avoidance and aggressive tax planning will no longer be tolerated by the three countries.
Since the revelations made towards the end of 2014, Luxembourg has immersed itself in an effort to defend its tax implementation practices against accusations of favorable arrangements between multinational corporations and tax authorities. New EC President Jean-Claude Juncker stated he will fight tax evasion through the implementation of greater automatic exchange of information.
The Luxembourg affair highlighted once more the way companies take advantage of various tax systems among EU member states, to pay considerably less tax. It is worth noting that similar revelations were made in the course of last year for other financial centers such as Ireland.
In their letter, the three ministers expressed their wish for the creation of EU-wide beneficial ownership registers for collecting information on the true identity of persons behind corporations. The aim being to limit the use of anonymous companies for tax evasion or money laundering purposes. Although seemingly an honourable step towards transparency, the implementation of beneficial ownership registers is thought to create more problems than it will solve, as such legislation would potentially infringe basic EU human rights, such as the right to privacy that is protected by EU-wide data protection laws.
This article first appeared on mondaq.com.