"More focus on financing companies within multinational groups", Ms Vestager tells TAXE II MEPs
Bulgaria, Greece, Croatia, Latvia and Slovenia don't use tax rulings in their dealing with multinational companies, all the other member states do. In some countries it is just about a handful of rulings, other countries issue thousands of them, Commissioner for Competition Margrethe Vestager told members of Parliament's Special Committee on Tax rulings II in a hearing on Monday in which she also commented on the 'Panama Papers' scandal.
The Commission has reviewed more than one thousand tax rulings over the last two years, some 600 of which originate from the so called 'lux leaks' revelations and it also carried out systemic reviews in all member states, Ms Vestager told TAXE II MEPs. "The good news is that in most cases the rulings are not part of aggressive tax planning practices, but are 'conformity rulings' - answers to yes or no questions -" she said, adding that she would soon discuss a working paper with the findings of the Commissions' examination of over a thousand rulings with high level representatives from the member states.
"The grey zone is rather big"
Based on the review so far, Ms Vestager said the Commission has a thorough reason to be concerned. "The grey zone is rather big and we have to navigate to where the issues of most concern are. We have looked at advanced transfer pricing arrangements first, mostly to see if they match the economic reality. And at the moment we are looking more into financing companies that are set-up by multinational companies for borrowing and lending within the same group", she said.
All in all Ms Vestager believes good progress has been made since September 2015: "We have closed loopholes; we assured that information will be disclosed to tax authorities and we have political agreement on further measures", she summarised.
Panama papers: "work for legislators and possibly interrogators"
Many MEPs asked the Commissioner about her take on the 'Panama Papers', a huge leak of confidential documents that revealed how individuals use tax havens to hide their wealth. Ms Vestager said that "this is about individuals and businesses using off-shore companies. There is no state aid involved and part of it might even be legal", adding that "Panama is on the black list of eight EU member states and that there is a lot of work to do for legislators and possibly for interrogators as well."