Europe Auditor: EU rules against tax avoidance incomplete

According to the European Court of Auditors, EU regulations to protect companies from tax avoidance are not sufficient. According to the auditors based in Luxembourg, international corporations are using increasingly complex strategies to reduce their tax burden. According to a report by the EU Commission, the loss of tax revenue in the EU due to profit shifting by corporations is estimated at up to 100 billion per year.

Different tax systems in the member states

For example, corporations exploit loopholes and differences in the tax systems of different countries, which, according to the Court of Auditors, can lead to unfair competition between companies and an uneven playing field between member states. "As some EU countries could suffer significant tax losses as a result, other taxpayers would ultimately have to compensate for the lost revenue through higher contributions."

Nevertheless, the member states would continue to design their own tax laws and systems. The EU Commission could only take action if the EU internal market was suspected of being distorted. "The Commission should make full use of its limited powers in this area: it should close the existing loopholes, further develop its guidelines for EU countries in order to put a clear stop to harmful tax practices and ensure the rapid development of a common performance monitoring system," demanded ldikó Gáll-Pelcz from the Court of Auditors.

EU Commission: combating tax avoidance is a priority

According to the auditors, EU legislation in this area is being expanded. In recent years, three new EU directives have aimed, among other things, to establish common rules across the EU to curb harmful tax practices. However, the EU Commission has left open how these regulations are to be applied in practice, they criticize. Gaps and unclear definitions led to different interpretations in the individual member states.

The EU Commission states: "Combating tax avoidance and ensuring fair tax competition remain among the EU's top priorities." Although many measures have been taken, the EU cannot rest on its laurels as tax competition continues to develop. Various laws and directives are in the works. The Commission is supporting the member states in analyzing tax loopholes.

SDA