EU to consider tougher tax haven listing
09 Dec 2019

A group of European Union countries is calling for the bloc to cast a wider net when listing tax havens and to consider imposing stricter sanctions for countries facilitating tax avoidance, according to an EU document and an EU official.

The document, prepared by the Danish government and seen by Reuters, urges a discussion on whether “current criteria provide sufficient protection against tax avoidance and evasion” and pushes for “strengthened” standards and sanctions. Germany and France were among its backers.

It also calls for a discussion on how member states deal with the issue, asking “Do we internally have sufficient safeguards against tax avoidance and evasion?”

This potentially sets up a dispute with EU members Luxembourg, the Netherlands and Ireland, which widely use low tax and other sweeteners to host EU headquarters of foreign firms, depriving other EU governments of tax revenues from profits that corporations make on their territory.

At a meeting of EU finance ministers on Thursday, several EU states backed the Danish proposal, one EU official said, naming Germany, France, Spain and Austria among the explicit supporters.

Croatia, which holds the EU chair from January, said the review of the current criteria would be discussed during its six-month presidency, the official said. The review was likely to take place in February or March, the official added.

After revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills, the EU set up a blacklist in 2017, but its definition of tax havens was narrow. For example a 0% corporate tax rate is not a sufficient condition for being listed.

It also screens only non-EU countries, saying its 28 states were already applying high standards against tax avoidance.

Foreign jurisdictions are blacklisted if they do not meet EU standards on tax transparency and regulation. Countries that commit to changes are included in a so-called gray list until they deliver, and if they miss deadlines, they end up on the blacklist.

By Francesco Guarascio, Reuters, 6 December 2019

Read more at Reuters

Photo (cropped and edited): Thijs ter Haar [CC BY 2.0], via Wikimedia Commons

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