On 12 February 2016 the Council will discuss proposals from the Commission aimed at preventing corporate tax avoidance. Without discussion, it is expected to approve the signing of an agreement with Andorra aimed at improving tax compliance by private savers. The agreement will require EU member states and Andorra to automatically exchange information on financial accounts held by each other's residents. The signing ceremony is scheduled for 14.00, after the Council.
Measures to prevent corporate tax avoidance
The Commission will present a package of proposals, issued on 28 January 2016, aimed at strengthening EU rules to prevent corporate tax avoidance. The Council will hold an exchange of views on the proposals and on a timetable for work on the package, set out in a note from the presidency. The package is intended as a coordinated EU response to aggressive tax practices deployed by large companies. It sets out to ensure that companies are effectively taxed where they make their profits, improve the exchange of information between member states and ensure fairer competition for all businesses. It also sets out to implement standards approved by the OECD in autumn 2015, particularly to address tax base erosion and profit shifting (BEPS).
Substantial progress on the package is a priority for the Netherlands presidency, especially as
concerns two legislative proposals. Swift implementation will make the EU a front-runner in
implementing OECD conclusions.
The package is composed of:
- a communication on next steps for delivering effective taxation and greater tax transparency in the EU;
- a proposal for a directive establishing rules to tackle some of the most prevalent tax avoidance practices, and implementing anti-BEPS measures developed by the OECD;
- a proposal to amend directive 2011/16/EU as concerns the mandatory and automatic exchange of information between tax administrations. This proposal sets out to implement an OECD standard on the exchange between national authorities, on a country-by-country basis, of tax-related information on the activities of multinational companies. It will enable the member states to identify risks of tax avoidance and to better target their tax audits;
- a communication proposing a common approach to third country jurisdictions for good governance in tax matters. This communication proposes that good tax governance clauses be inserted in agreements with third countries, and that a common EU approach be developed for assessing and listing third countries for tax purposes. It also proposes that the link be reinforced between the investment of EU funds and good tax governance in third countries.
- a recommendation to member states on the best ways to protect their tax treaties against abuse.
Presentation by the Commission of its proposals follow a number of initiatives taken in 2015, including adoption by the Council of a directive on cross-border tax rulings. This directive imposes the exchange of information on the assurances given by member states to companies about how their taxes will be dealt with.
Adoption of the two directives requires unanimity for adoption by the Council, after consulting the European Parliament. (Legal basis: articles 113 and 115 of the Treaty on the Functioning of the European Union.)