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Eurodad press statement on EU Economic and Financial Affairs Council negotiation about cross-border rulings

Added 06 Oct 2015
Eurodad press statement on EU Economic and Financial Affairs Council negotiation about cross-border rulings

Tuesday 6 October 2015


EU ministers met in Luxembourg today to decide on how to exchange tax rulings and advance pricing agreements between EU tax administrations. Their main discussion was on how to exchange rulings from the past. The European Commission suggested that all rulings and agreements issued in the past 10 years should be exchanged – while the Luxembourg presidency suggested to include those issued in just the the last 5 years.

Tove Maria Ryding, Tax Justice Coordinator at the European Network on Debt and Development (Eurodad), said: "
The key question is whether this will solve the problems we saw exposed in the LuxLeaks scandal, and the answer to that is very clearly no. These rulings – also known as 'sweetheart deals' – are still top secret and only tax administrations will be allowed to see them. This means that the public will not be allowed to know what multinational corporations are really paying in taxes. What we really need is for multinational corporations to publish information about their business activities and tax payments on a country by country basis. The European Parliament has put a proposal on the table to achieve this, so that’s what the EU ministers should be agreeing to."

“In terms of the discussion about how many of the past rulings should be exchanged, both five and ten years are insufficient. It seems there are twenty year old rulings that are still in effect, and as long as this is the case, they still impact the tax payments of multinational corporations and should be covered by the system”.

Secret rulings – or 'sweetheart deals' - decide what multinational corporations will actually pay in tax. However, today’s decision doesn’t change the fact that the public is not allowed to get any information. It also completely ignores the fact that developing countries are losing billions of euros through corporate tax avoidance, and therefore they have a strong interest in seeing more information about the sweetheart deals that EU governments are issuing. Despite this, developing countries have great difficulties getting access to confidential tax information, because they don’t have the capacity to comply with all the requirements for getting access.

Ryding added: "This problem won’t go away just because our European tax administrations get more information. Unfortunately, it’s still completely legal for multinational corporations to avoid taxes, and what our tax administrations can do is very limited. Even worse, EU governments are strongly committed to what they call ‘tax competition’, which in reality means they’re falling over each other to offer multinational corporations the most attractive ways of avoiding taxes in hope of attracting multinationals to their country. This is a very dangerous race to the bottom and the exchange of secret tax rulings might mean that bad ideas spread more quickly from one EU country to another."

There are no legal consequences for multinational corporations who avoid taxation. The only consequence of LuxLeaks was that the whistleblower and one of the journalists have been sued in Luxembourg and now risk several years in prison for exposing the truth about what multinational corporations pay in taxes. Ryding said: "This is a highly unjust system, and today’s decision does nothing to change that."

ENDS

Fore more information or for an interview with Tove Ryding please contact Julia Ravenscroft, Communications Manager at Eurodad, on + 32 2 893 0854.

Notes to Editors:


Historic perspective:
· This is not the first time the EU decides to exchange rulings. In 1977, the EU decided that this information should be exchanged internally in the EU if there was a risk that they could impact the tax bases of other EU countries. However, not much happened, which is why the EU is now trying to decide that all rulings should be automatically exchanged between EU tax administrations.