European Parliament Signs Tax Evasion Resolution

May 22, 2013 International Tax CooperationTaxation in EU

Tax evasion in the EUBRUSSELS – The countries of the European Union need to work together to prevent tax evasion which is now costing as much as EUR 2 000 per person living in the EU.

On May 21st the European Parliament passed a new resolution to halve the “tax gap” in the EU by the year 2020.

The European Parliament currently estimates that the difference between the potential tax collections in Europe and the amount actually collected is about EUR 1 trillion, or an equivalent of about EUR 2 000 per person living in the EU.

The “tax gap” is primarily attributed to tax evasion committed by individuals and businesses, but also due to multinational businesses engaging in aggressive tax avoidance.

As part of the newly passed resolution, the European parliament agreed that the member states of the EU need to make greater progress towards reaching a common definition of a tax haven and to make a mutually agreed blacklist of such jurisdictions.

The EP also called for the EU member states to make greater use of third-party data like vehicle registries, yacht registries, and property registries to discover omissions in taxpayers’ data, and it was also suggested that tax authorities should provide better protection and incentives for whistleblowers and journalists who come forward with previously unknown information.

The Parliament also called upon each EU country to make greater efforts to create a harmonised tax system across the region, a move which will help minimize the occurrence of cross-border tax evasion exploiting differences in each country’s tax regulations.

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