Communication on further measures to enhance transparency and the fight against tax evasion and avoidance

The European Commission is pursuing an ambitious agenda for fairer, more transparent and more effective taxation in the EU, in line with its wider objective of sustainable growth and investment supporting job creation within a deeper Single Market. Companies should pay taxes in the country where their profits are generated. The fight against tax evasion and avoidance is central to this agenda.

Tax evasion and avoidance deprive public budgets of billions of euros in revenues each year, distort competition between businesses and erode the fair and level-playing field for all taxpayers. They undermine the concept of growth-friendly tax systems and hamper a successful Capital Markets Union. Innovation and competitiveness risk being stifled as small and medium sized enterprises (SMEs), which are the main source of employment in Europe, end up paying proportionately more taxes than larger companies that can afford to engage in aggressive tax planning. Tax avoidance can also increase the tax burden on labour, as governments compensate for the lost revenue by increasing taxes elsewhere, to the detriment of employment and a healthy labour market. Fair taxation is also essential for the social contract between citizens and their governments.

There is a strong public call for action to combat aggressive tax practices which reduce the revenues available to governments for other purposes. Due to the cross-border nature of tax evasion and avoidance, purely national action to tackle these problems is generally ineffective. In fact, uncoordinated national measures to combat tax abuse can exacerbate the situation, by fragmenting the Single Market, creating new burdens for tax payers and opening new loopholes for aggressive tax planners to exploit. A coordinated approach to tackling tax abuse – at both EU and international level – is essential.

To this end, the Commission has presented a number of proposals for a stronger and more coordinated EU stance against tax abuse, aligned to the international agenda and going further where necessary for the Single Market. These initiatives have already resulted in a number of landmark achievements, which should fundamentally improve the tax environment for citizens and businesses in Europe. The Commission has also launched investigations under state aid rules into whether certain Member States granted tax advantages to selected multinational companies.

Despite these important advances, more remains to be done to fight tax avoidance and evasion, and to limit opportunities for large-scale concealments of funds exposed in recent media leaks. This Communication outlines the progress made so far and the priority areas for action in the coming months, at EU and international level, to strengthen the fight against tax evasion, avoidance and illicit financial activity.

See also:
- Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC
- Proposal for a Council Directive amending Directive 2011/16/EU as regards access to anti-money-laundering information by tax authorities

ESO: Background information: Commission strengthens transparency rules to tackle terrorism financing, tax avoidance and money laundering http://www.europeansources.info/showDoc?ID=1214536

ESO: Background information: Commission gathers views on future rules to deter promoters of aggressive tax planning schemes http://www.europeansources.info/record/commission-gathers-views-on-future-rules-to-deter-promoters-of-aggressive-tax-planning-schemes/

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