European Commission's new plan to expose 'sweetheart' tax deals for multinational companies in EU countries

The proposals come amid mounting public anger at companies such as Apple and Starbucks exploiting complicated tax structures in some nations

Charlotte McDonald-Gibson
Tuesday 17 March 2015 19:08
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Jean-Claude Juncker, President of the European Commission
Jean-Claude Juncker, President of the European Commission

The European Commission will unveil new proposals to bring secretive “sweetheart” tax deals into the open on Wednesday, with governments asked to reveal details of any agreements with multinationals which could deplete the coffers of other EU nations.

A draft of the new proposals seen by The Independent highlights the problem of “aggressive tax planning”, whereby companies take advantage of loopholes in low-tax nations. While deals must adhere to EU law, it notes that “a lack of transparency regarding such rulings may impact on other countries”.

Under the new proposals, if a government reaches a deal with a company that may impact tax collection in other member states, it is obliged to automatically share details of the transaction with other governments.

The proposals come amid mounting public anger at companies such as Apple and Starbucks exploiting complicated tax structures in countries including Holland, Ireland and Luxembourg to shift their tax bills away from the nations where they do most of their business.

While governments defend the deals as technically legal, transparency campaigners question whether they are fair, especially as taxes for ordinary European citizens soar as part of punishing austerity drives. The EU estimates that one trillion euros a year are lost to tax evasion, tax fraud and aggressive tax planning.

The issue overshadowed the start of Jean-Claude Juncker’s presidency of the European Commission, after the “Lux Leaks” revelations last November detailed how hundreds of firms, including Apple, Pepsi and Ikea, had taken advantage of Luxembourg’s laws to pay as little as 1 per cent tax. Mr Juncker was Prime Minister of Luxembourg when many of the deals were signed.

While a number of these alleged deals are under investigation by the Commission, Mr Juncker has been under pressure to do more. The new proposals would mean “any other member state affected is in a position to take any necessary corresponding action,” the draft states.

All 28 member states need to approve the proposals for them to come into force in 2016, and transparency campaigners are urging governments not to water down the laws. Sophie in’t Veld, a Dutch MEP on the European Parliament’s economic affairs committee said: “The ball is in the court of EU member states, who will now be forced to show their true colours.”

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