Taxation will be key EU issue over next five years says Rehn

EU Commissioner Olli Rehn has said that tackling the issue of aggressive tax planning by multinationals will be one of the "key issues" for the European Parliament over the next five years.

Speaking at an event organised by European Movement Ireland and BDO this morning in Brussels, the outgoing Commissioner, who was elected as an MEP for Finland in last month's European elections, said there was a clear message from the European public on the issue during the elections: "If there was one unifying message in the European elections, at least based on my campaign trail . . . is that we have to continue to act intensively against tax fraud, against tax evasion and against aggressive tax planning by multi-national corporations."

While declining to comment on the details of yesterday's announcement by the European Commission that it is investigating Ireland, Luxembourg and the Netherlands about specific tax arrangements they offered companies, the Commissioner welcomed the move.

“I think it is very important that the Commission has acted here,” he said. “We have done a lot already in the past five years, in fact we have done more in the last five years than in the previous 50 years . . . I believe certainly than in the European Parliament in the next five years this will be one of the key issues and will we one of the key challenges for the Commission in the next five years.”

Speaking to representatives of the Irish and European business and political communities in Brussels this morning, the outgoing Commissioner praised the “strength and stamina” of the Irish people over the last few years. However, he said a number of challenges still remain for the Irish economy, including the country’s high public deficit and debt levels and the need to continue to address the problem of non-performing loans in the banking sector. Structural reform in the area of legal services, labour market policy and the Irish health sector were also necessary, he said.

Mr Rehn, who was one of the key figures in the handling of the euro zone crisis over the last five years in Brussels, is expected to assume a senior role in the European Parliament when he takes his seat next month. His comments come a day after the European Commission launched a probe into specific tax rulings offered by Ireland, Luxembourg and the Netherlands to three companies – Apple, Starbucks and Fiat – following an informal "information gathering" exercise.

It is examining transfer-pricing arrangements entered into by the countries’ tax authorities to check their compliance with EU state-aid rules.

While member states retain the right to set income and corporate tax rates, the competition division of the commission can examine individual tax arrangements of countries with companies, if they suspect such arrangements give a selective advantage to a company or group of companies.

The European Commission is also gathering information from Belgium and Britain, including the British protectorate of Gibraltar, on transfer-pricing arrangements with specific companies. The commission also sent requests for information to nine member states – not Ireland – on the use of patent boxes, which provide companies with tax relief on patent income.

Competition Commissioner Joaquin Almunia said yesterday that, in the current context of tight public budgets, it was particularly important that large multinationals pay their fair share of taxes. "Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way," he said.