EU ministers fail to agree on anti-tax avoidance measures

Decision on proposals to clamp down on avoidance postponed until next month

Greece’s finance minister Euclid Tsakalotos and European commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici during an Ecofin meeting in Brussels on Wednesday. Photograph: Emmanuel Dunand/AFP/Getty

Greece’s finance minister Euclid Tsakalotos and European commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici during an Ecofin meeting in Brussels on Wednesday. Photograph: Emmanuel Dunand/AFP/Getty

 

European finance ministers failed to reach agreement on an anti-tax avoidance directive at Wednesday’s Ecofin meeting in Brussels, pushing back a decision until June.

Ireland was one of a number of European countries to raise concerns about the complex set of proposals that were announced by the European Commission in January as a way of clamping down on tax avoidance. The Minister for Finance, Michael Noonan, who was the first minister to address the meeting, said he had particular concerns about proposed hybrid and controlled foreign companies rules, noting that “several hundred pages of OECD consideration of hybrids have been reduced to a couple of lines in this directive”.

“We want to make sure the scope of what we are suggesting does not inhibit legitimate investment that could create jobs and create wealth in our economies.” Italy, Britain, Luxembourg, Belgium and a number of east European countries were among those who echoed Ireland’s concerns, though EU economics commissioner Pierre Moscovici urged the EU’s finance ministers to find agreement. “We cannot afford to lose momentum. Public opinion is watching us, is expecting decisive action.”

Funds for Greece

The discussion on corporate tax commenced just hours after euro zone finance ministers signed off on a new package of funds for Greece after almost 11 hours of talks in Brussels.

In a deal hailed by eurogroup chairman Jeroen Djsselbloem as a “breakthrough”, it was deemed that Greece had met the terms of its first review, and sanctioned the release of €10.3 billion to the country. In June, €7.5 billion will be released to cover Greece’s financing needs, including a €2.3 billion repayment to the ECB in July, with the remainder to be disbursed in the autumn.

In a significant development, the group of euro zone finance ministers also set out a series of measures to deal with Greece’s debt pile. Though the commitment is the strongest offer yet of debt relief to Greece, the measures will not kick-in until the end of the programme in 2018. The pledge was enough to secure IMF participation in the Greek bailout, however, a key requirement of euro zone countries, including Germany.

Greek banks, which have been relying on short-term emergency funding since February 2015, are now expected to access regular financing lines from the European Central Bank as early as next week.

Greek government bonds strengthened on the back of the deal, pushing the 10-year yield below 7 per cent for the first time since November.

While Greece entered its third international bailout in August last year, its first bailout review has been beset by delays. On Sunday evening the Greek parliament passed a fresh raft of measures, including a package of contingency measures which would be enacted if deficit targets are missed, which were approved by finance ministers on Tuesday.