Tax Gaps Corrode the EU Single Market

February 12, 2014 International Tax Cooperation

Joaquin AlmuniaBRUSSELS – The European Commission has finally confirmed that some EU countries intentionally provide excessive tax opportunities for multinational corporations.

In his speech delivered on February 11th at the European Competition Forum the Vice-President of the European Commission Joaquin Almunia said that some of the tax regimes offered in the EU may be legally regarded as being state aid or selective tax treatment, and may, in that case, contravene the EU Single Market principles.

According to Joaquin Almunia, certain tax rules currently enforced in some countries of the EU contain large gaps which may be exploited by multinational companies engaging in overly-aggressive tax planning to shift profits out of jurisdictions in which they were earned.

He indicated that in some cases such regulations may have been purposely and intentionally put in place by governments in order to attract large multinational corporations.

Joaquin Almunia concluded by saying that over the last few months the European Commission has already begun to requests information from several tax authorities regarding their tax policies, and the collected information will be used to ascertain which countries have intentionally broken the Single Market principal by opening an opportunity for large multinational corporations to avoid paying their fair share of tax.

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