There is extensive evidence that corporate tax evasion and tax avoidance are persistent in the EU. Yet, due to the clandestine nature of tax evasion, coupled with the absence of estimates in several Member States, precise figures are not available. The availability of data on the incidence and impact of tax evasion and avoidance would allow for better targeted policy measures and provide a yardstick for measuring their success. The importance of quantifying the scale of tax avoidance is such that one action in the BEPS (Base Erosion and Profit Shifting) action plan is dedicated to 'establishing methodologies to collect and analyse data on BEPS and the actions to address it' (action 11).

On 18 March 2015, the Commission presented a tax transparency package as part of its agenda to tackle corporate tax avoidance and harmful tax competition in the EU.

In that framework, the Commission intends to work with Member States, along with the EU Statistical Office (Eurostat), to explore ways of compiling more comparable and reliable data on the scale and economic impact of tax evasion and avoidance. To this end, a FISCALIS project group has been launched, with a view to encouraging greater transparency between Member States on their national tax gap data and the methodologies for calculating it.

In the beginning of 2016, the Commission published a study on 'Structures of Aggressive Tax Planning and Indicators'. Furthermore, in September 2015 and January 2016 the European Parliamentary Research Service carried out a study, which assessed the loss of tax revenue to the EU through aggressive corporate tax planning to be around €50-70 billion per annum. This figure is considered as a lower-end estimate of lost revenue. If other tax regime issues were added, such as special tax arrangements, inefficiencies in collection and other practices, the estimate for revenue losses due to corporate tax avoidance in the EU could amount to around €160-190 billion, again a conservative estimate.

References:

• European Commission, Communication on tax transparency to fight tax evasion and avoidance, COM(2015) 136
• European Commission, Study on structures of aggressive tax planning and indicators, Taxation Papers, Working Paper No. 61 - 2015
• OECD, Measuring and monitoring BEPS, Action 11 - 2015 final report, 5 October 2015

Further reading:

• European Parliament, EPRS, Bringing transparency, coordination and convergence to corporate tax policies in the European Union: I - Assessment of the magnitude of aggressive corporate tax planning, Study, 2015
• European Parliament, EPRS, Bringing transparency, coordination and convergence to corporate tax policies in the European Union: II - Evaluation of the European Added Value of the recommendations in the ECON legislative own-initiative draft report, Study, 2016

Author: Cécile Remeur, Members' Research Service, legislative-train@europarl.europa.eu