There is probably a perception outside of continental Europe that the vast majority of EU member states toe the line come what may, committing themselves blindly to the principle of “ever closer union” and doggedly standing by EU initiatives even when they are found to be quite bad ideas. It’s only the pesky, rebellious Brits that think they’re so special, isn’t it? It is perhaps an assertion that’s unfair.
Many member states have serious misgivings about such initiatives as the FTT and the proposed common corporate tax base. And even Luxembourg, which was ruled for many years by arch-Europhile Jean-Claude Juncker, the current President of the European Commission, is prepared to rebel occasionally.
Luxembourg has shown by its recent actions that it fundamentally opposes the European Commission’s assertions that certain tax rulings between its tax authority and multinational companies are a form … Read More »
It is possible to have sympathy for governments on occasion; there seem to be instances when they just can’t win. They’re constantly being told by the likes of the OECD and the IMF to eradicate special tax regimes, widen their tax bases, reduce income taxes where possible, and shift the tax burden onto consumption. Luxembourg is one country doing just that. Last year, the Government decided to phase out its patent box regime – exactly the sort of special tax regime the OECD sees as largely responsible for BEPS – and late last month it announced reductions in income tax for companies and low- and middle-income workers. These measures come after a 2 percent increase in the standard rate of value-added tax in 2015. Yet, according to the IMF, this is still wrong – the tax cuts are viewed as … Read More »
The EU Commission’s rather curious attack on countries hosting multinationals smacks of politicking, although the machinations of the Berlaymont (have they finished extracting the asbestos yet?) make the word Byzantine seem like an exercise in transparency. At all events, Ireland has hit back quickly and effectively, sensing yet another concealed attack on its low tax rate, which probably does make up a certain proportion of the Commission’s logic. The other two countries in the Commission’s sights, Luxembourg and the Netherlands, are also “the usual suspects,” with low-tax credentials. It may be significant that the Commission has chosen to act in this way at the end of its current term, possibly wishing to send a pro-OECD message to show that it has taken the BEPS initiative seriously, and it is not difficult to imagine that the OECD, which has seen its … Read More »
So the European Court of Justice, supposedly the guardian of the sacred freedoms of the European Union, has chickened out of one of most important issues currently confronting the EU, at exactly the moment when it should have taken centre stage and erected or reaffirmed some principles for the Union to follow.
In recusing itself from any involvement in the structural legislative processes of the Union over the question of the Financial Transactions Tax, the Court has diminished itself and the Union, sending a message that administrative convenience is a more important principle than judicial rectitude. It will be many a long day before it recovers from this piece of egregious cowardice, if it ever does.
There are multiple theories to explain the court’s behaviour (I hereby deprive it of its capital letter – it no longer deserves it), but the most … Read More »
Why does Luxembourg want to deny that’s it’s a “tax haven”? “Profiting ‘fiscally’ from other countries.” Well, we know why: because in dying Europe it’s not politically correct to compete against other countries any more, so Luxembourg has to pretend that it doesn’t have an advantageous tax regime. But it does! And its efforts to cling on to that regime are the reason for giving it a prize. While pretending otherwise, Luxembourg is engaged in fighting a rearguard action against the extension of the Savings Tax Directive and AEI (automatic exchange of information). It refuses, quite correctly, to give in to the EU’s demands for a much more encompassing Directive until all of its competitor nations (Switzerland, Singapore, Hong Kong etc) sign up to similar rules, which hopefully will never be the case. Let’s be clear: people should pay their … Read More »
The EU’s ECOFIN (Finance Ministers of the 28 Member States) had another futile discussion on the Savings Tax Directive last week. Futile not because the target of universal information exchange is unachievable – after recent events, most countries have already accepted it, at least at the level of individual taxation – but because the planned expansion of the Directive to cover companies, trusts and other “personnes morales” is something that the EU will be unable to impose on the third party jurisdictions which were browbeaten into operating the original Directive. And imposition on the third parties is something that would be self-defeating even if it were feasible, because it would only cover those jurisdictions such as Jersey and Guernsey over which EU Member States have some control, and there are plenty of options for wealth-owners in other parts of the … Read More »