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Debates
Tuesday, 25 October 2011 - Strasbourg OJ edition

16. System of taxation applicable in the case of parent companies and subsidiaries of different Member States - Compatibility of the German and British tax agreements with Switzerland with the EU Savings Tax Directive (debate)
Video of the speeches
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  President. – The next item is the joint debate on the report by Sven Giegold, on behalf of the Committee on Economic and Monetary Affairs, on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (COM(2010)0784 - C7-0030/2011 - 2010/0387(CNS)) (A7-0314/2011) and

- the oral question to the Commission (O-000229/2011) by Sharon Bowles, on behalf of the Committee on Economic and Monetary Affairs: Compatibility of the German and British tax agreements with Switzerland with the EU Savings Tax Directive (B7-0635/2011).

 
  
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  Sven Giegold, rapporteur.(DE) Madam President, Mr Langen, it is strange to appear here both as rapporteur and as co-author of the written question to the Commission.

I would like to start with my report. This is all about the fact that the Parent-Subsidiary Directive must be revised and amended, in particular, in the light of the new Treaty of Lisbon. The aim of the directive is clear: avoiding double taxation in the internal market. If profits are returned by a subsidiary to the parent company, it is, of course, important to prevent the profits from being taxed twice within the internal market. That makes sense. The directive ensures that the country where the dividends are paid has no option of levying capital gains tax on the export. Conversely, the country where the profits are returned and where the parent company is based has the choice of whether to exempt these profits or to offset them against the national tax regime.

Unfortunately, this directive has given rise to various consequences. On the one hand, transnational companies are making use of the directive. In principle, it is, of course, right that profits should not be taxed twice even within closely associated companies. Unfortunately, the directive is constantly being abused. Profits subject to low rates of taxation in the country where the subsidiary is based are returned to the parent company’s country and then not taxed effectively there. Some of these profits are also transferred outside the European Union and are still not properly taxed.

I would like to give two current examples of this. Exxon Luxembourg made profits of EUR 3.6 billion and transferred them via Exxon Spain to the USA. No tax was paid at all on these profits. In contrast, Google is well-known for mainly using two tax regimes called Double Irish and Dutch Sandwich which allow it to pay tax on its profits at a rate of just 2.4%. These extreme forms of low taxation or less than single taxation represent an abuse of the directive and, at the same time, a crude form of unfair competition between transnational companies and small and medium-sized enterprises, which, of course, cannot use methods like this.

This is happening at a time when there are major problems with public budgets. We are in a great deal of difficulty and we have had to put in place austerity programmes and tax increases. Mr Rehn has been desperately trying to impose budgetary discipline on the different countries. At the same time, the revision of this directive has, unfortunately, been rubber-stamped by the Commission and has not been used as an opportunity to stop potential abuse. In contrast, the vast majority of the Member States have committed, as part of the Euro Plus Pact, to making progress on tax harmonisation. Unfortunately, that is not in the spirit of this revision. The European Parliament has voted within the Committee on Economic and Monetary Affairs with an overwhelming majority for an amendment to this directive beyond what has been proposed by the Commission. This would mean that profits would only be covered by this directive if they had been taxed in advance at a rate of at least 70% of the nominal average tax rate in the EU, which is a minimum rate of 16%.

For this reason, I can only say to the Council that it should reconsider whether this revision is really appropriate at the moment. The Council should make changes. I would also like to say to the Commission that it should rethink its plans. It should withdraw its proposal and make use of the potential of this directive to levy additional fair taxes.

 
  
 

(DE) Madam President, I am aware of the privilege and I will make the greatest possible effort. I just need to change my tone briefly, because I want to ask a question.

Firstly, I am presenting this on behalf of our Chair, Sharon Bowles. This is a question which has been raised on my initiative and formulated on the basis of a consensus among the members of the Committee on Economic and Monetary Affairs. It is an oral question in accordance with Article 116. It concerns the recently signed tax agreements between Switzerland, on the one hand, and Germany and the United Kingdom, on the other, and the issue of whether they are compatible with the European Savings Tax Directive.

These tax agreements have triggered a major debate. In Germany, it seems doubtful that there will be a majority in favour in the second chamber, the Bundesrat. In the United Kingdom, the Tax Justice Network has, in the meantime, published a list of 10 ways of circumventing the agreement. Both agreements have now been signed but not yet ratified.

The questions which we are asking here relate to the fact that these agreements provide for the payment to Switzerland of a withholding tax on the earnings on capital by private individuals. On the one hand, these payments are made retrospectively for profits which were not taxed in the past and, on the other, in relation to future earnings on capital. The point of all of this is that in return, Swiss banking secrecy will be maintained. Therefore, Switzerland will help to collect the across-the-board withholding tax at a rate of 26% or 48% on the basis of the respective agreements. Of course, this will result in inheritance taxes and capital taxes not being properly recorded. At the same time, other states are in negotiations about similar agreements or are considering introducing them.

The questions posed by our committee are as follows. The first question concerns compatibility with the Savings Tax Directive, in relation to the tax rate. From July of this year onwards, the Savings Tax Directive sets the tax rate at 35% for countries which do not take part in the automatic exchanges of information. In contrast, the rate is set at 26.375% in the agreement between Germany and Switzerland. Does that represent a breach of the Savings Tax Directive? The agreement with Germany attempts to compensate for this difference by allowing for tax credits under Article 20 of the agreement, while the United Kingdom provides for a higher withholding tax rate of 48%. Is that sufficient from the Commission’s perspective, particularly as far as the comparison is concerned, to compensate for the difference between each of the agreements and the Savings Tax Directive?

Our second question concerns the impact that these agreements will have on the negotiations concerning the revision of the Savings Tax Directive in the Council and also outside. What approach do these bilateral agreements take to the fact that we are planning to introduce greater tax coordination and harmonisation in the EU, including in the Euro Plus Pact? Then there is the question of whether these bilateral agreements are an obstacle to the development of the Savings Tax Directive which is currently being negotiated in the Council.

Therefore, the question we want to ask is: how do you, Mr Šemeta, and how does the Commission plan to defend the provisions of the Savings Tax Directive and how do you intend to make practical progress in the revision process?

Another series of questions relates to the issue of whether the Member States have the authority to enter into bilateral agreements in this area with third countries, in the light of the negotiations defined in the Savings Tax Directive which are already under way. Does the Commission plan to introduce prior checks in this area? Were you included in the current negotiations? Were you consulted and do you want to retain the right to be consulted in future?

Finally, we would like to know how the regulations which make up these bilateral agreements relate to Article 26 of the OECD Model Convention for double taxation agreements. What is the situation here? How does that affect the development of the automatic exchange of information which we all want within the EU? I look forward to hearing your answers, Mr Šemeta.

 
  
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  Algirdas Šemeta, Member of the Commission. – Madam President, I would like to thank the European Parliament and, in particular, Sven Giegold and Sharon Bowles, for their reports on the proposal to recast the Parent-Subsidiary Taxation Directive and for the oral question.

The report is a plea in favour of a minimum level of rates in the Member States, but it challenges their competences in this matter. Requiring the suggested minimum rate on the subsidiary distributing its profits would result in the exclusion from the directive’s scope of companies established in several Member States with rates below the threshold, namely Germany, Latvia, Lithuania, Bulgaria, Romania, Ireland and Cyprus.

This approach would lead to a partial integration of the national markets and a situation potentially challenging the Treaty freedom of establishment. In addition, pursuant to the interinstitutional agreement on the recasting of legal acts, the introduction of such substantive amendments to unchanged provisions in the Commission’s proposal requires a different legislative procedure. In this case, the Commission would have to follow the procedure for amending a directive. That requires a much more detailed political and technical assessment than the recast.

I fully understand the concern about aggressive tax planning, but the approach contained in the report does not ensure a level playing field, is not sufficiently targeted towards abusive practices, and thus not appropriate in this case. Next year, I plan to table an initiative addressing these issues, outlining possible approaches to tackle tax circumvention, particularly in case of double non-taxation.

Let me now reply to the questions related to the German-Swiss and UK-Swiss savings taxation agreements. Let me first emphasise that we have made, at this stage, only an initial comparison of both agreements with the EU-Swiss agreement. However, I can already share with you some elements. As regards the agreement with Germany, two aspects emerge at this stage of the analysis. First, the level of the rates. The withholding tax rate of 26.375% contained in the German-Swiss agreement differs from the rate of 35% of withholding tax fixed in the EU-Swiss agreement. This result is achieved through a refund of withholding tax.

Second, the nature of the withholding tax. While it is in the nature of an advance payment under the EU-Swiss agreement, the German-Swiss withholding tax appears to be final. It is likely to be less efficient when it comes to deterring tax evasion.

The agreement between the United Kingdom and Switzerland was made public only on 6 October. Our first assessment indicates that it generally provides for higher rates of withholding tax than the EU-Swiss agreement. Moreover, no automatic refund appears to apply. However, we are still examining the details.

As to your second question, the proposed amendments to the directive are still being discussed in the Council. Germany and the United Kingdom are part of these discussions and are among strong supporters of the enhancement of the directive.

The Commission has already asked the Council for a mandate to negotiate amendments to the EU savings agreement with Switzerland to extend its scope in line with the proposed developments in the directive.

The Commission favours an ambitious agreement with Switzerland. I see no good reasons to further delay the adoption of the mandate. This position has been broadly supported by the Member States. It is important, however, that this ambition is not undermined by bilateral agreements. The recent developments, therefore, reinforce the importance of a common EU approach towards Switzerland and other third countries.

Your third question refers to the respective competence of the Union and the Member States in the area concerned. Member States are free to enter into international agreements with non-EU countries, but they must respect EU law and its principles governing exclusive EU competence. Taking into account their wide scope, the bilateral agreements may also cover aspects already covered by the EU Savings Directive and/or the EU-Swiss agreement. Insofar as the bilateral agreements may prove to cover areas of exclusive EU competence, the Commission would take this matter very seriously. It would not hesitate to take the corrective steps if necessary.

In general, Member States must ensure that any bilateral negotiations they foresee or conduct do not cover aspects which are a matter of exclusive EU competence. And likewise in particular, in the savings taxation regime, Member States must not include in such agreements any area covered by the EU Savings Directive or the EU savings agreements with third countries.

Unilateral action taken by Member States in this field should not affect future action on the part of the European Union that could comprise the amendment of one of these instruments. In this specific case, the Commission has not been associated with the negotiations. All along the process, Germany and the UK have consistently reaffirmed their attachment to the EU common rules and objectives. As a general principle, the Commission urges Member States to take the necessary precautions in the matter. In case of any doubt, they should consult with the Commission at the earliest possible stage.

Finally, as regards your question on how far the German-Swiss agreement potentially curbs the development of automatic exchange of information, I can assure you of the Commission’s continued commitment to automatic exchange of information. We will continue to strive to apply that standard across the EU, and we will continue to push for the highest possible enhanced standards of transparency and exchange of information with third countries.

 
  
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  Werner Langen, on behalf of the PPE Group.(DE) Madam President, I would like to thank Mr Šemeta for giving such a clear answer to the questions from the Committee on Economic and Monetary Affairs. I would also like to congratulate Mr Giegold on his report. A broad majority in Parliament has supported this report and we will also be adopting it. Mr Šemeta, you have the opportunity to put into effect the points that have been made in this report on the Parent-Subsidiary Directive as part of the process of tax harmonisation which you are working towards. We know that some of the problems in the euro area, for example, have arisen as a result of different taxation rates. The countries which you mentioned were almost all euro area states. We are asking you to have the courage to submit a corresponding proposal. You will have our support.

My second point concerns the bilateral tax agreement between Germany and Switzerland. Fortunately, you have been very restrained on this subject. All I can say is that this agreement does not contravene the EU agreement with Switzerland. I can remember when I first took my seat in Parliament in 1994 that there was already a lively debate going on about the standardisation of tax on interest. First Luxembourg tabled an objection, then Austria, then Luxembourg again and finally the Channel Islands. Once they had all been reconciled, we had to include Switzerland. After this, there were more delays. Things went to and fro for more than 10 years, because the principle of unanimity had to be preserved. You really do not have an easy job, Mr Šemeta, because it is difficult to reconcile the interests of all the Member States.

The model chosen by Switzerland, which does not involve exchanging information, but instead adopting its own taxation measures, does not conflict with this bilateral agreement. Firstly, as you yourself have said, you were not involved, but you were informed. Secondly, this is not about having the same basis for taxation. It is about ensuring that what may possibly be dirty money, which has not been subjected to taxation, is taxed retrospectively at a different tax rate. It is also about a payment in the future. This goes further than the EU agreement with Switzerland. The tax rate chosen there corresponds to the current level in Germany, in other words, 25% plus the solidarity surcharge, which amounts to exactly 26.57%. I have read a passage in the agreement which clearly states that if the tax rates in Germany are changed, then the agreement will be amended. If Switzerland does not comply with this, the agreement will be terminated within six months. In other words, this is a completely new situation. I understand that people see problems here, particularly in Germany, where there have been fierce political debates on the subject. However, this agreement represents an initial step which does not attack Swiss banking secrecy in general. We do not anyway have the powers to implement a new dimension of interest taxation with a third country, in this case Switzerland. If other states follow suit, this could be a model for the ongoing development of the bilateral agreement with Switzerland. I agree that there is a need to ask questions, but I believe that the criticism that has been made is unjustified.

(The speaker agreed to take a blue-card question under Rule 149(8))

 
  
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  Sven Giegold (Verts/ALE).(DE) Madam President, Mr Langen, I do not want to get into discussions on European law with the Commission. I just want to put one direct question to you. You have just referred to the consequences in Germany. Are you aware that the German Police Federation has significant concerns regarding the effect of this agreement on the enforcement of the law? Are you aware that the German Tax Union has significant concerns regarding the outsourcing of the authority to levy tax? Finally, are you aware that the churches will receive nothing from this tax and that you are creating a loophole in church tax regulations? What is your response to this?

 
  
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  Werner Langen (PPE).(DE) Madam President, Mr Giegold, your last point is correct. Church tax has been excluded. I do not know whether we can include this in subsequent negotiations. This is a point which is open to discussion.

In answer to your objection that, of course, the tax officials and others are complaining about this, I would like to ask the simple question – Madam President, you are familiar with the case of Greece – of whether there is a legal option for introducing supplementary taxation and for transferring the tax revenue to the German national budget. The alternatives are either nothing at all or a sensible regulation in future. Politicians in Germany will also have to choose one of these two possibilities. They will not be facing the question of whether to allow the agreement to lapse again. Instead, they must ask themselves what is the better route to take, including for Europe as a whole: a bilateral agreement in future with Switzerland?

 
  
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  Liem Hoang Ngoc, on behalf of the S&D Group.(FR) Madam President, Commissioner, ladies and gentlemen, there will be no political Europe without a fiscal Europe. Unfortunately, the two issues that we are debating today demonstrate the Commission’s lack of ambition on that subject.

As regards the system of taxation for parent companies with subsidiaries in other Member States, under the current directive, these groups are undertaxed, which is detrimental to public finances in the Member States. It has been a boon for transnational groups.

In order to remedy this, I proposed in the Committee on Economic and Monetary Affairs that a parent company should only be exempt from paying tax on profits generated by subsidiaries on two conditions. Firstly, the parent company must hold the statutory minimum of 15% of company equity in another Member State for an uninterrupted period of at least two years in order to benefit from this tax regime. Sadly, the Committee on Economic and Monetary Affairs did not accept that minimum period.

Secondly, the profits distributed by a subsidiary to the parent company used to be taxed at a rate of 75% or more of the average tax rate in the EU Member States. I am pleased to say that the Committee on Economic and Monetary Affairs did agree to maintain the threshold of 70% of the average tax rate.

The European Commission chose not to comment during our discussions, which was a pity. Consequently, Commissioner, we are left hoping that you will act on the message that we are sending, since Parliament is still not a colegislator on tax matters.

The second symptom of your lack of concern about taxation is your failure to act when the Council quashed the directive on taxation of savings income. The ensuing vacuum has resulted in pick-and-mix bilateral agreements on the exchange of banking information, such as those concluded by the United Kingdom and Germany with Switzerland. Yet the Savings Tax Directive paved the way for automatic exchanges of information with several different tax havens, including Switzerland. The directive was the subject of a report that was adopted by a resounding majority in plenary. Although Mr Barnier has explained that there is no more money available to promote growth, applying the directive would allow us to generate EUR 200 billion for the public purse. A fiscal tool is essential if we are to recover from the crisis. Harmonised taxation is vital for an effective single market. Combating fraud and tax avoidance is crucial if we are to rebalance public accounts.

For all these reasons, Commissioner, I can only urge you to do all you can to promote a fiscal Europe, in order to put an end to the Member States’ self-destructive rivalry. The main casualties of that rivalry are growth, public finances and solidarity among European citizens.

 
  
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  Olle Schmidt, on behalf of the ALDE Group.(SV) Madam President, tax evasion, fraud and lack of transparency cost the EU and its Member States many millions of euro in lost tax revenue every year. I therefore welcome this debate. It is important to discuss how we can enhance the EU’s regulations in order to prevent tax evasion and ‘double non-taxation’.

As has been pointed out, it is particularly important right now in view of the economic and financial crisis and the huge increase in public debt in Europe. Comprehensive and lasting budgetary consolidation is needed, because the debt crisis is also a tax crisis. The lack of coordination of tax policy is contributing to a deepening of the debt crisis. The necessary, but painful, reduction of debt requires expenditure restraints, increased cuts in public spending and, in many cases, also tax rises. Taxes are necessary to enable us to finance the common welfare system, but taxes must also be viewed as legitimate and used effectively.

In the European Parliament, there is obviously broad support for the need to tackle tax evasion, double taxation and non-taxation. I have tabled a few proposals in this area myself in the European Parliament’s Annual Tax Report, for which I am rapporteur, and which will be debated in the Committee on Economic and Monetary Affairs in November and then afterwards in plenary.

I am particularly concerned about the exploitation of loopholes in European legislation, whereby international companies operating within the EU attempt to avoid paying tax within the Union, a matter that Mr Giegold also addresses. The aim must be for every euro in tax that is intentionally withheld from the state through clever tax arrangements in future to be paid to the tax authorities.

I therefore understand the amendments that Mr Giegold has tabled with regard to parent companies and subsidiaries, which we are debating today. It is a question of tackling tax evasion and double taxation, even though the Treaty limits the EU’s decision-making ability, as pointed out by Commissioner Šemeta.

However, Mr Giegold goes further than this, and this is where I have a slight problem. In his text, he recommends the introduction of a Common Consolidated Corporate Tax Base (CCCTB) for all companies in the EU and wants a common minimum tax rate to be levied. I believe that, in the current situation, companies should sign up to the system voluntarily. The aim, of course, is to create a competitive tax system that benefits cross-border operations. It is also important to permit and encourage institutional competition. Forcing a European system onto small and medium-sized enterprises that only do business nationally runs the risk of causing considerable costs for these enterprises. I believe that the Member States must continue to set their own tax rates. That is important from a budgetary perspective. Different tax rates could potentially promote healthy tax competition and lead to increased European competitiveness.

With regard to the bilateral tax agreements that Germany and the United Kingdom have concluded with Switzerland, I welcome the debate. We have to admit that it has not been an easy task to reach an agreement with Switzerland, at least not for some countries until recently.

As we know, there are conflicting aims within tax policy and we always have to find a balance between the different objectives. That is not the easiest thing to do, and it is that debate that clearly needs to continue. I would like to conclude by congratulating Mr Giegold.

(The speaker agreed to take a blue-card question under Rule 149(8))

 
  
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  Werner Langen (PPE). (DE) Madam President, Mr Schmidt, are you aware that under this agreement between Germany and Switzerland, it is not the earnings which will be taxed retrospectively, but the capital, at a rate between 19% and 34%? It is the capital, not the earnings. This puts things in quite a different perspective.

 
  
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  Olle Schmidt (ALDE). – Madam President, I did not get the question; it was just a statement. What was the question?

 
  
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  Werner Langen (PPE).(DE) Madam President, Mr Schmidt has said that we need to evaluate the agreement critically. I would like to ask whether he knows how it is structured and that there are two parts: one for interest earned in the future and the other for deductions from capital in the past. It is important that he is aware of this for the purposes of the evaluation.

 
  
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  Olle Schmidt (ALDE). – Madam President, yes of course, if I am able to. What I said was that I think we should be glad that it has been possible to conclude some sort of negotiations and agreements with Switzerland. It has not been easy, as you know, Mr Langen. Now we have an agreement; it could have been better, but we have an agreement, and I think that is useful and helpful.

 
  
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  Jürgen Klute, on behalf of the GUE/NGL Group. (DE) Madam President, Mr Šemeta, I would like to make a few comments on the tax agreement between Germany and Switzerland, as other speakers have done.

Instead of stopping tax evasion and blocking the loopholes for tax evaders, which would have been sensible, the result that has been produced here is a Swiss cheese full of large holes. The proposed transition period of five months gives tax evaders plenty of time to transfer their money from Switzerland to other tax havens. As foundations and trusts are not governed by the agreement, it is also possible to transform assets which have been stashed away in Switzerland into the assets of a foundation. Forms for doing this can be obtained from Swiss banks. Tax investigators in Germany have recently received information about a number of tax evaders who have hidden their assets away in Switzerland. The agreement gives these people an amnesty and the tax investigators can no longer use the information that has been made available to them. What sort of agreement is it that restricts the activities of tax investigators? An advertising video produced by Swiss banks says about this agreement that customers will benefit even more in future from the values of Switzerland as a financial centre.

The agreement obviously not only lacks the necessary coordination at EU level, but also counteracts the efforts of the EU to bring more transparency into tax issues, to make the collection of tax in the Member States more efficient and, above all, to combat and to prevent tax fraud. Therefore, this agreement is, in our view, not acceptable. We are calling on the EU to oppose it, if there is any doubt.

 
  
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  John Bufton, on behalf of the EFD Group. – Madam President, the problem being expressed is faced by the EU as a whole but should be regarded and tackled domestically. In the UK, for example, management of offshore banking in British Crown dependencies is intrinsically tied with reciprocal contributions to the liquidity of the domestic market. I demand that the Commission heed caution when seeking to harmonise corporate taxation and when taking such bold legislative leaps as to criminalise tax avoidance by enshrining it as tax evasion within EU law.

In a global marketplace, there will always be tax havens, offshore banking and questionable yet astute financial handling by the most profitable multilaterals. It is estimated that some 15% of countries in the world are tax havens. These countries tend to be small and affluent, with the most successful well-governed and regulated. It is fair to suggest that over-regulation drives away commerce and investment.

However, both over-regulated and mismanaged tax systems are often the product of sprawling tax bases too large to effectively manage or allow necessary economic elasticity. Many multilateral conglomerates are turning their backs on the European market due to the eurozone crisis and the burden of EU law. Raising this issue now will only deter corporations from establishing headquarters in the EU, and they will instead look to Asia or South America.

Taxation must remain the prerogative of Member States better placed to manage and enforce their own systems, allowing for increased flexibility while also promoting the sort of competition that helps catalyse recovery. It would be foolhardy for any Member State outside the common currency to sign up to such corporate fiscal union.

 
  
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  Astrid Lulling (PPE).(FR) Madam President, having taken part in them for so long, I am very aware that the debates and discussions around taxation on savings in Europe tend to be fairly emotive, with prejudices prevailing rather than objective analysis. Consequently, it has always been deemed good form to speak out against withholding tax, which works, and to laud the system of exchanging information, which has failed in so many cases.

As I see it, far from setting a dangerous precedent for the Savings Directive, the bilateral agreements between Switzerland and Germany and between Switzerland and the United Kingdom constitute a promising starting point for finally putting an end to the quarrelling and talking at cross purposes, which has gone on far too long.

The new system that is taking shape would actually apply a withholding tax to a far broader tax base at rates agreed by the two parties. This effectively means taxing interest income and capital revenues in accordance with the tax system in the State of origin. The upshot would be that the revenue services in the State of origin would receive far more than they do at present. In these times of austerity, finance ministers should be the first to welcome any such move. Its commonsensical arguments lead me to think that what can be done with third countries should also be feasible within the European Union.

Commissioner, why not apply this system across the board, in the name of efficiency, since withholding tax produces good results? Let us apply the system across the board, ladies and gentlemen, given that taxpayers would then be taxed entirely in line with the tax system in their country of origin.

So, unlike my colleagues, I am arguing in favour of a dispassionate analysis of the facts. Although the bilateral agreements seem to me to be compatible with the Savings Directive, given that they have not contravened any of its provisions, I do recognise that the directive needs to be amended. So let us proceed on a sound basis.

(The speaker agreed to take a blue-card question under Rule 149(8))

 
  
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  Werner Langen (PPE).(DE) Madam President, Ms Lulling, you are an expert on tax in every respect. In past years, your expertise related to delays in taxation and now it concerns the implementation. Wonderful! Therefore, I have a question for you. You have described this as a highly promising approach. Would you advise the Greek Government to enter into a similar bilateral agreement so that it can finally access its interest earnings?

 
  
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  Astrid Lulling (PPE).(DE) Madam President, yes, of course.

 
  
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  Saïd El Khadraoui (S&D). (NL) Madam President, ladies and gentlemen, Commissioner, in response to the oral question, I would again refer to the very serious crisis that the European Union is currently undergoing. The European Union’s response so far – very much criticised by my group – has, amongst other things, rather fiercely been focused on savings, and penalties if those savings are not made rapidly enough. Look at the current restructuring efforts being made in Greece, but also in Portugal and Spain, and which are in preparation in many other countries. It is usually very ordinary people who are the first victims of this. They have the feeling that they are paying the price for the failures of the system.

In that context, what is obviously crying out for reform is the fact that, meanwhile, some of the most well-off Europeans are being allowed to violate laws, evade their responsibilities and park billions of dollars without taxation in Switzerland and other tax havens. That is how as much as EUR 80 billion of Greek funds are said to be stored in Switzerland. Several Member States are now trying – and I think very rightly – to do something about that and tax those billions in some way. However, we believe they are using the wrong methods, by regulating those matters bilaterally. This allows the Swiss to conduct a policy of divide and conquer and defend their own interests all the more easily by, amongst other things, insisting on levies lower than those that should normally be paid, and, on top of that, cementing the anonymity of their customers.

It is patently obvious that, in the interests of all our Member States’ tax authorities and, therefore, in the interests of ordinary people, we need to be pulling in one single direction and that the European Union as a whole should negotiate a global agreement with Switzerland and others, if only to ensure coherency with our own efforts to tighten the interest rates directive, for example. This could perhaps be based on the approach taken by the United States. There, they are threatening banks that do not want to budge with penalties of up to USD 2.5 billion. More than ever, we need to do away with tax havens. Banking secrecy should not take precedence over the principle that everyone should simply follow the same rules.

I am pleased, Commissioner, that you have made it very clear tonight that bilateral initiatives could undermine the community approach of the European Union. As a result, it is important that the Commission adopt a slightly more proactive strategy on the issue of Switzerland, where automatic exchange of information and the closing of various loopholes are crucial. Commissioner, I therefore wish you a great deal of courage and good luck, but I think that we in Europe ought to centralise things, negotiate collectively and, in that way, achieve better results.

 
  
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  Jaroslav Paška (EFD). (SK) Madam President, by modifying the Council directive on a common taxation system, we could help to tax profits of supranational parent companies that go to the state of the parent company from the subsidiaries, from countries which attract capital flows, so that the capital coming from the third countries is not properly taxed. Such profits most often come from tax havens and are often declared as licence payments for the use of intellectual property. The profit then goes through the country of the subsidiary to the parent company with a head office in a Member State of the EU, often with no tax whatsoever. Supranational companies thus avoid paying tax on profits, and so do not contribute a fair share towards funding the social needs of their state. A similar mechanism also applies to the dividend which parent companies obtain from their subsidiaries in neighbouring Switzerland.

The proposed solution of the rapporteur, Mr Giegold, therefore raises the requirement that a tax of approximately 25% be levied in the state to which the profit goes, if the profit was not previously taxed in the country from which it came. At a time when the state coffers of our countries need every euro they can get, this proposal may appear to be one way of boosting the budget.

 
  
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  Sławomir Witold Nitras (PPE).(PL) Madam President, I would like to compliment Mr Giegold on his report. It is a report which I can endorse, although this is not easy, because I am opposed to the harmonisation of direct taxation. While I am an ardent supporter of European economic integration, I would like to remind everyone that an organisation, an economic organisation like the United States, for example, which we cannot say is economically integrated, does not have harmonised taxation at all. We should use taxation to compete, whereas we should harmonise procedures and rules; we should create a single market and eliminate barriers in the single market.

Why, then, is it that I can endorse the report? It is because I do not perceive it as an attempt to harmonise taxation. I see it, in fact, as an attempt to fight against unfair tax dumping, because there is a difference between a rate of 30-something per cent or 40%. By the way, there is by no means a great difference between Germany and Poland if we are talking about personal taxation, because the German system of tax reliefs makes this tax very similar in the German system. However, a rate of 10% is dumping and there is no doubt that this should be resisted.

I would like to compliment Mr Giegold on the provisions which speak of a rate of 70%, and I would also like to endorse the hopes which you expressed with reference to the Commission, Mr Giegold, although these remarks should have been directed to the Council – which I regret to note is not here. I hope that the Commission will tackle this problem and that in this matter, we will, in fact, manage to go a step further – the step proposed by the European Parliament but which was missing from the document the Council presented to us. Thank you very much. Madam President, I would like to point out that so far, I am the only speaker who has not exceeded the allotted speaking time.

 
  
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  Elena Băsescu (PPE).(RO) Madam President, I think that membership of the single European market implies that harmonisation is carried out in a number of areas, including tax matters. In order to ensure the completion and smooth operation of the internal market, the European Union must stipulate neutral tax regulations for groups of companies from different Member States.

I think that the tax provisions should not hinder companies’ activities by means of restrictions, disadvantages or distortion. This would make it difficult for companies to adapt to the requirements of the internal market and reinforce their competitive position globally.

I think that double taxation on revenues paid by subsidiaries to parent companies must be ended. Payment of interest and charges between two affiliated subsidiaries must be exempt from taxes applied by the source state. I should point out that these dividends are not liable for tax in Romania.

 
  
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  Algirdas Šemeta, Member of the Commission. – Madam President, I would like to thank you for this debate on such an important subject. The Commission is seriously concerned about the situation, as the lack of international coordination permits abusive practices. It leads to unfair and inefficient taxation, and my services are working hard to deal with these questions.

Next year, I plan to table an initiative addressing these issues. Although I share the concerns expressed in the report by Sven Giegold, it is more appropriate to address them via the planned initiative. I would greatly welcome your continued support in this area.

As regards bilateral savings taxation agreements, I understand the Member States’ wish to find solutions to consolidate their budgets. Concluding bilateral agreements in order to tax hidden savings income in third countries might appear very attractive. However, the competence of the Union and the Member States in this area needs to be respected.

I am convinced that only a coordinated EU approach towards third countries will allow Member States, big and small, to reach a level playing field in the taxation of savings. I would therefore like to repeat my call to rapidly reach a unanimous agreement on the revision of the Savings Taxation Directive and on the mandate to negotiate tax agreements for the European Union as a whole.

Some of you mentioned that the Commission has to be brave enough to make proposals. This year, you have received a number of proposals which are probably out of step with what would normally have been suggested in previous years. I can reassure you that subsequent proposals will follow, on the issues of abuses and double non-taxation. We are working on this very seriously, since this subject has to be fully addressed one way or another.

In terms of savings taxation, the Commission will ask the Council to extend a mandate to us to negotiate with Switzerland. Without this mandate, no negotiation is possible.

I am convinced that by acting together, we can achieve much more than with bilateral agreements, so I once again urge Member States to extend this negotiating mandate and immediately allow the Commission to start negotiations with Switzerland.

 
  
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  Sven Giegold, rapporteur. – Madam President, I have just a few comments. First, I would like to thank Mr Nitras, because he analysed totally correctly my report, which does not take a position on the principled question of whether there should be minimum tax rates. It is very clearly only saying – and this is also in answer to you, cher Olle – that it should not be used for someone to repatriate and then get away with no taxation.

So the report does not take a position on the question of whether we want European minimum tax rates. It does not say that certain countries are basically excluded; it is only saying that, if profits are then repatriated, they can be taxed according to the laws of the home state rather than having to take this directive into account.

(DE) I would just like to say a few words in German to you, Mr Langen. One thing is clear. Given that inheritance tax and capital tax do not interest you, I find the fact that you are not interested in church tax either highly questionable. However, if you are concerned, we should renegotiate this. I would just like to say one thing and you can pass this on to Mr Schäuble: I would like him to renegotiate this agreement. That would please me a great deal.

One final point concerning the answer to the question about the double taxation agreement. Mr Šemeta, you have already heard this in the question put by Ms Lulling. In the light of this bilateral agreement, Luxembourg and Austria, which are currently blocking this mandate, are asking themselves whether they should move to the automatic exchange of information and what would happen when they negotiate with third countries. You have already heard the answer, which is ‘Of course not’.

When you draw up the written version of your answer, please think carefully about whether you are missing the last opportunity to prevent this bilateral approach to tax on interest. You have heard exactly what the provisions are and it is in your hands.

 
  
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  President. - The joint debate is closed.

The vote will take place tomorrow, Wednesday, 26 October, at 12.00.

 
Last updated: 7 February 2012Legal notice