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21-05-2013

MEPs call for EU-wide action to collect tax lost to fraud and evasion

Plenary Session - Economic and monetary affairs.  

EU member states should join forces to halve the €1 trillion uncollected "tax gap" by 2020, says Parliament in a resolution voted on Tuesday. MEPs want governments to agree measures to clamp down on tax havens, close avoidance loopholes and combat aggressive tax planning. Other ways in which EU countries could benefit by better coordinating their tax systems are set out in a separate resolution, also voted on Tuesday, on the annual tax report.

"The scope for cross-border tax fraud is scandalous, and unilateral national measures will not suffice to defeat it" said Mojca Kleva Kekuš (S&D, SI), the lead MEP on the resolution on tax evasion.

'We need a common platform to exchange tax information in years to come and tax systems that foster growth. What we need is not more taxes, but more people and more companies paying them'', said Ildiko Gáll-Pelcz (EPP, HU), the lead MEP on the annual tax report.

Close the tax gap

The key need is to close the "tax gap", i.e. revenue lost to tax fraud and evasion, which are illegal, but also to legal tax avoidance and aggressive tax planning that exploits loopholes, mismatches between tax systems and a lack of intra-EU and international cooperation, says the Kekuš text.  Uncollected taxes amount to roughly €2,000 per EU citizen per year, it adds.

Tax haven blacklist

To combat tax fraud and avoidance, the resolutions urge member states to agree a clear EU-wide definition of "tax haven" and draw up a joint blacklist of these jurisdictions.

No public funding for tax cheats

The duty placed upon member states seeking financial assistance to improve their capacity to collect taxes and tackle tax fraud should be extended to money laundering, tax avoidance and aggressive tax planning, say MEPs.

No EU funding or state assistance should go to firms that breach EU tax standards, and any firm bidding for a public procurement contract should be required to disclose details of any tax-related penalties or convictions. Public authorities should also be entitled to terminate the contract if a supplier subsequently breaches tax compliance obligations, they add.

Finally, to help nail tax evasion, member states should use data bases on motor vehicles, land and yachts and use protected whistleblowers and journalistic sources, say MEPs.

Customs and VAT

As taxes are not administered at EU level, it is mainly up to member states to step up the fight against the tax fraud. MEPs urge them to work together to harmonise tax bases, enforce measures to prevent  firms from shifting profits to tax havens to avoid paying tax and improve the cross-checking of customs and tax data so as to reduce VAT fraud.

Finally, MEPs urge the EU to lead the efforts of multinational fora to improve tax transparency and information exchange. It notes that tax avoidance forces upon developing countries an estimated loss of €125 billion a year, i.e. almost twice what they receive in international aid.

To boost the potential for EU economic growth and keep harmful tax competition to a minimum, in the annual tax resolution MEPs propose a "tax-snake" system to facilitate EU coordination, provide tax information and keep track of cuts and increases made within each country's tax structure.

Both resolutions were approved by a show of hands.

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