Thursday 20 July 2017

Brussels in new assault on tax deals

The Commission’s vice-president in charge of tax, Valdis Dombrovskis, said yesterday that the EU had to be “more ambitious and go beyond the OECD initiative” given the scale of corporate tax avoidance in Europe. REUTERS/Olivier Hoslet/Pool
The Commission’s vice-president in charge of tax, Valdis Dombrovskis, said yesterday that the EU had to be “more ambitious and go beyond the OECD initiative” given the scale of corporate tax avoidance in Europe. REUTERS/Olivier Hoslet/Pool

Sarah Collins in Brussels

Brussels is taking another potshot at big companies that shirk their corporate tax bills.

New rules to be published today by the European Commission will force countries to close legal loopholes that allow multinationals to shave an estimated €50-70bn off their corporate taxes in Europe.

The Government here had hoped the EU would stick to the non-binding minimum standards set by the Organisation for Economic Cooperation and Development (OECD) last year.

But the Irish Independent understands that the Commission will not only bring all of the OECD's recommendations into law - but will go even further in some cases.

For instance, from 2017, EU governments will have to tell each other about all the new tax deals they do with multinationals, to prevent companies shopping around the bloc for special treatment.

They will also have to share selected financial data on those multinationals with each other, though the information will not be made public - for now.

Governments will be asked to charge multinationals a special tax if they shift income from patents or intellectual property out of the EU to low-tax countries.

And they will not be allowed to grant companies tax exemptions on dividends or profits that have not been taxed properly abroad.

The Commission's vice- president in charge of tax, Valdis Dombrovskis, said yesterday that the EU had to be "more ambitious and go beyond the OECD initiative" given the scale of corporate tax avoidance in Europe.

Ireland's 12.5pc corporate tax rate won't be affected by today's move.

However, the EU will bring in new rules later this year on how corporate taxes should be calculated, affecting the so-called common consolidated corporate tax base.

The rules will have to be adopted unanimously by all 28 EU countries before they become law.

The Irish Government will then have two years in order to work them into national legislation.

Aggressive

The Commission's campaign against so-called "aggressive tax planning" has seen it clamp down on individual sweetheart deals between multinationals and EU governments.

Last year, Luxembourg and the Netherlands were told to claw back €30m each from Fiat and Starbucks, and just this month Belgium was asked to recover €700m from 35 multinationals that had been allowed to under-declare their profits.

Separately, the Commission is also investigating Ireland's tax deal with Apple and Luxembourg's agreements with Amazon and McDonald's.

Irish Independent

Promoted articles

Also in Business