Germany, France, Italy urge EU to curb tax havens
BERLIN--Germany, France and Italy are pressing the European Union to tighten curbs on tax havens, urging that some measures are proposed by the end of this year and concrete rules adopted by the end of 2015.
A joint letter from the finance ministers of the three leading EU countries to European Economics Commissioner Pierre Moscovici argues that new measures should ensure greater transparency and hinder companies from gaming Europe's divergent tax laws.
The commission should work to rein in "aggressive tax planning" and "profit shifting" by companies, according to the letter, which calls for stricter rules, more disclosure requirements and better coordination between European states.
"Our citizens and our companies expect us to cope with tax avoidance and aggressive tax planning. It is our common duty to meet their expectation by ensuring that everyone pays its fair share of tax to the state where profits are generated," Germany's Wolfgang Schäuble, France's Michel Sapin and Italy's Pier Carlo Padoan wrote in a joint letter seen by The Wall Street Journal.
"Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted. This development is irreversible."
The move by Berlin, Paris, and Rome is an open challenge to new European Commission President Jean-Claude Juncker, who was premier of Luxembourg until 2013 and worked with companies wanting to reduce their tax bill
Mr. Juncker came under pressure last month after the release of confidential documents highlighted Luxembourg's generous tax breaks to multinational corporations during his time as the country's prime minister, which critics say have turned the country into a corporate tax haven. Mr. Juncker has played down his role in matter.
But Luxembourg isn't alone in facing criticism of its tax system. EU authorities are also looking into corporate-tax regimes in Ireland and the Netherlands over complaints about low tax rates paid by global corporations such as Amazon.com Inc., Google Inc. and Starbucks Corp.
"The lack of tax harmonization in the EU is one of the main causes allowing aggressive tax planning, base erosion and profit shifting"--known as BEPS--to develop in the bloc's internal market, the three ministers said, calling for the 28-EU member states to adopt a "comprehensive anti-BEPS Directive" to fight tax loopholes before the end of next year.
"The diagnosis is made and the solutions are already known, so we should act without any delay," they wrote. "The European Union needs to protect its internal market from tax avoidance through the use of tax havens...This strong initiative taken by the EU, which could be proposed by the end of 2014, would give Europe the leading place that it deserves at the international level."
In the wake of the financial crisis, pressure on European countries to stop using loose tax laws to attract corporations has grown. Germany has been especially vigilant in seeking more tax harmonization across the EU, seeing it as a step toward ensuring more stable finances and hindering smaller countries from using tax policy to attract foreign capital.
The move also comes as the Organization for Economic Cooperation and Development and the Group of 20 leading nations aim for a final adoption of the BEPS rules to eliminate loopholes that allow companies reduce their tax bills by the end of 2015.
--Matthew Karnitschnig in Berlin contributed to this article
Write to Andrea Thomas at andrea.thomas@wsj.com and Chase Gummer at Chase.Gummer@wsj.com
http://www.marketwatch.com/story/germany-france-italy-urge-eu-to-curb-tax-havens-2014-12-02?mod=mw_share_twitter