One key objective is to ensure companies cannot avoid paying their fair share of tax through tax planning


The EU has proposed steps to combat tax avoidance and aggressive tax planning to ensure a fairer and more transparent approach to taxation.

One key objective is to ensure that companies are taxed where their economic activities generating the profits are performed and cannot avoid paying their fair share through aggressive tax planning. In this respect, the EU decided to focus on improving tax transparency in the area of corporate taxation.

To this end, the College of Commissioners agreed to present a Tax Transparency Package in March.

“A prosperous Europe needs fair, transparent and predictable tax systems for businesses to invest and for consumers to regain confidence. As part of our work for a deeper and fairer internal market, we want to establish greater tax transparency and ensure fairer tax competition, within the EU and globally. It is not acceptable that tax authorities have to rely on leaks before they enforce tax rules,” said vice-president Valdis Dombrovskis, responsible for the Euro and Social Dialogue.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Abusive tax practices and harmful tax regimes breed in the shadows; transparency and co-operation are their natural foes. It is time for a new era of openness between tax administrations, a new age of solidarity between governments to ensure fair taxation for all. The Commission is fully committed to securing the highest level of tax transparency in Europe.”

The Commission will propose legislation next month to extend the automatic exchange of information on tax rulings. Under current EU rules, member states share very little information about rulings concerning their corporate tax regimes, which are often complex. This makes it difficult for tax authorities to assess where a company’s real economic activity takes place, and to apply tax rules fairly on that basis. As a consequence, many multinationals attempt to shift profits and minimise their tax bills, depriving EU governments of valuable tax revenues and undermining fair taxation.

The March proposal will be accompanied by a wider set of measures to increase tax transparency.

The Commission will present a second package of measures dealing with fair and efficient corporate taxation this summer, which will also take into account current initiatives by the G20 and OECD to tackle tax avoidance.