European Interest

Parliament: More than 200 recommendations against financial crimes


The European Parliament on Tuesday adopted a detailed roadmap towards fairer and more effective taxation, and tackling financial crimes.

The recommendations, adopted by 505 votes in favour, 63 against and 87 abstentions, were prepared over a year by Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3). They range from overhauling the system to deal with financial crimes, tax evasion and tax avoidance, notably by improving cooperation in all areas between the multitude of authorities involved, to setting up new bodies at EU and global level.

Following continued revelations over the last five years (Luxleaks, the Panama Papers, Football leaks and the Paradise papers), the European Parliament decided to establish a Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3), on 1 March 2018.

The report adopted concludes the committee’s year-long mandate, which saw it hold 18 hearings dealing with particular topics of interest, 10 exchange of views with finance ministers and European Commissioners, and four fact-finding missions – to the US, the Isle of Man, Denmark and Estonia, and Latvia.

The numerous findings and recommendations include:

The Commission should start work immediately on a proposal for a European financial police force and an EU financial intelligence unit;

An EU anti-money laundering watchdog should be set up;

A global tax body should be established within the UN;

There is a lack of political will in member states to tackle tax evasion/avoidance and financial crime;

Seven EU countries (Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and The Netherlands) display traits of a tax haven and facilitate aggressive tax planning;

Golden visas and passports should be phased out, with those offered by Malta and Cyprus singled out for their weak due diligence;

Denmark, Finland, Ireland and Sweden criticised for maintaining their opposition to the digital services tax;

Several European banks have been involved in the Russian ‘Troika Laundromat’ money-laundering, including Danske Bank, Swedbank AB, Nordea Bank Abp, ING Groep NV, Credit Agricole SA, Deutsche Bank AG, KBC Group NV, Raiffeisen Bank International AG, ABN Amro Group NV, Cooperatieve Rabobank U.A. and the Dutch unit of Turkiye Garanti Bankasi A.S;

The Netherlands, by facilitating aggressive tax planning, deprives other EU member states of EUR 11.2 billion of tax income;

The cum-ex fraud scheme clearly shows that multilateral, not bilateral, tax treaties are the way forward;

Whistleblowers and investigative journalists must be much better protected and an EU fund to help investigative journalists should be set up.

How to stop losing €825.000.000.000 a year to tax evasion

“Member states are not doing enough and in the EU, the Council is clearly the weakest link. Without political will, there can be no progress. Europeans deserve better,” said the chair of the special committee, Petr Ježek (ALDE, CZ).

“The growing interconnectedness of our economies as well as the digitalisation of the economy need to be addressed more systematically as they affect taxation. Yet many areas of taxation must remain a member state competence and those who pay their taxes must not face extra red tape,” said Co-rapporteur, Luděk Niedermayer (EPP, CZ).

“This report is the result of the most comprehensive work ever done by the European Parliament on tax evasion and avoidance. Within the EU we need a minimum corporate tax rate, an end to tax competition and to make it more difficult to bring dirty money in,” said Co-rapporteur, Jeppe Kofod (S&D, DK).

EPP Group warns against Britain becoming tax haven

The EPP Group calls on the United Kingdom to remain a reliable partner in the fight against corporate tax evasion, even after Brexit.

“With Prime Minister May announcing that ‘the lowest level of corporation tax in the G20’ would be introduced in Great Britain, we fear and regret that the UK itself might become a tax haven on the EU’s doorstep”, said the EPP Group’s Luděk Niedermayer MEP and Dariusz Rosati MEP today.

“I am strongly concerned about possible divergences that may emerge even shortly after Brexit between Britain and Europe in the area of financial crimes and tax evasion that would bring new economic, fiscal and security risks. I believe in healthy tax competition among countries and in their right to set their corporate tax rates, but I also hope that the UK will remain a strong partner in the global effort towards fair and efficient taxation and will cooperate with all OECD initiatives on this issue”, said Niedermayer, Parliament’s Co-Rapporteur of the Report adopted today.

Rosati pointed out Britain’s role in EU taxation policy so far: “For many years, Britain had its foot on the brakes to hinder stronger EU rules against tax evasion. And very recently, the United Kingdom has been hampering some of its overseas territories from appearing on the so-called tax havens blacklist”, said Rosati, the EPP Group’s Spokesman in the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance.

Abolish the Golden Visa

The Report recommends a multitude of measures: “Abolish Golden Visa schemes, step up the fight against money laundering, collaborate more closely to fight tax avoidance and tax fraud and update tax regimes to the age of digitalisation. These are the main conclusions the EPP Group draws from the work of the Special Committee”, said Niedermayer.

Golden visas and passports should be phased out, with those offered by Malta and Cyprus singled out for their weak due diligence

Rosati also warned about the part Russia plays in several scandals investigated by the Special Committee: “Money laundering cases, including ING Bank, ABLV Bank, Danske Bank as well as Deutsche Bank were linked to Russian capital or citizens. In addition, the infamous Golden Visa programmes very often benefit Russian oligarchs. Our work in the committee has proven that Russians and Russia play a disreputable role in tax avoidance, tax evasion and money laundering within the EU”, said Rosati.

S&Ds: the most ambitious report

According to the Socialists and Democrats, the most ambitious report from the European Parliament so far on how to tackle tax evasion, tax avoidance and money laundering has been voted on Tuesday. Tax justice in Europe comes one-step nearer to stopping €825 billion of tax evasion – which represents a loss of €1.600 on the shoulders of each EU citizen. In addition, the EU is losing €160 to €190 billion due to tax avoidance each year.

“Our demand for a common European minimum effective corporate tax rate was on the agenda today. This proposal would ensure that all companies in Europe pay a minimum effective tax rate of no less than 18%. Unfortunately, a liberal-conservative majority refused to stop the harmful corporate tax race to the bottom in Europe. Instead they safe-guarded low and no-tax deals for multinationals, while workers in OECD countries pay more than one quarter of wages in tax,” said  Jeppe Kofod, S&D vice-president and co-rapporteur on the final TAX-report.

“I am very proud to see that today, the European Parliament highlighted the fact that 5 EU countries represent a threat when it comes to tax avoidance and decided to name them. Yes, EU member states are acting as tax havens, and yes, we must initiate a transition that would end these practices and also benefit local populations,” he added.

“We need to end corporate impunity. The €200 billion money-laundering scandal of Danske Bank and the Cum-Ex revelations shows that Europe continues to be woefully ill equipped to prevent, detect, stop and prosecute scandals linked to financial crimes and tax evasion. That is why we are happy to have also won today our political aim to support a European Financial Intelligence Unit (EU FIU) which will contribute to the fight against serious cross-border economic crimes,” Kofod concluded.

Left: Parliament vote marks important first step for tax justice in Europe

Having been engulfed by numerous tax evasion scandals over the past decade, a vote on Tuesday in the European Parliament has finally laid out a roadmap that may begin to bring about tax justice for millions of EU citizens says GUE/NGL.

The Lux Leaks, Panama Papers and Paradise Papers revelations shamed EU leaders and several governments in recent years, showing how corporations and individuals have resorted to dirty tricks and legal loopholes to dodge billions upon billions in taxes. As a result, the Parliament set up a special committee on financial crimes, tax evasion and tax avoidance with the aim of tackling money laundering and corporate tax crimes.

Although the structural problems that currently exist in the EU which facilitate tax evasion and money-laundering are not fully addressed in the final proposals, critical references on the protection of whistleblowers and journalists – so crucial to our understanding of the issues at heart – have been included, according to a GUE/NGL press release.

“The TAX3 committee has produced the most powerful text on tax evasion and tax fraud to date. However, the right-wing EPP group is once again trying to water down the text by separating some of its most important paragraphs – even though they have had a Rapporteur responsible for drafting the text. In our view, it’s essential and pleasing that the text kept its call for severe sanctions on enablers such as banks and tax advice offices, and that it highlights that tax havens exist inside the EU,” said Commenting after the vote, Miguel Urbán (Podemos, Spain).

For Martin Schirdewan (DIE LINKE., Germany), such a report is long overdue: “Citizens have long demanded tax justice – and rightly so.”

“Four years on from the scandalous leaks that laid bare the tax tricks of multinationals, member states continue to lose hundreds of billions of euros every year due to the tax dumping strategies by big corporations. This ongoing unscrupulousness goes to show that we have to continue our investigative work in the next legislative term. The report supports the call for a permanent sub-committee dealing with tax flight and financial crime. The new Parliament must support this demand,” Schirdewan added.

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