EU ministers attack commission over ‘unfair’ comments on tax

Ireland among seven states denying policies undermine integrity of single market

Minister for Finance Paschal Donohoe (right) with Greek finance minister Euclid Tsakalotos (left) and  Luxembourg’s finance minister Pierre Gramegna at a meeting of EU finance ministers in Brussels. Photograph: Emmanuel Dunand/AFP/Getty Images

Minister for Finance Paschal Donohoe (right) with Greek finance minister Euclid Tsakalotos (left) and Luxembourg’s finance minister Pierre Gramegna at a meeting of EU finance ministers in Brussels. Photograph: Emmanuel Dunand/AFP/Getty Images

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The European Union was “unhelpful” and “unfair” in singling out individual member states and accusing them of “undermining the integrity of the European single market” through their lax tax policies, a number of finance ministers have said.

The European Commission criticised the tax policies of seven countries in regular reviews of their national budgets published last week. Those criticisms were later echoed by the economic affairs commissioner Pierre Moscovici.

Seven ministers, including Minister for Finance Paschal Donohoe, rounded on the commission’s approach at Tuesday’s Ecofin meeting of EU finance ministers. Their attack came as the EU ministers stepped up their campaign against tax avoidance.

The charge was led by Luxembourg, which was joined by Belgium, Cyprus, Hungary, Ireland, Malta and the Netherlands.

Mr Donohoe is reported to have argued that the tax references were unfair. Ireland, he said, had transposed all relevant EU and OECD tax transparency legislation, he said.

Luxembourg minister Pierre Gramegna said the tax issues were not relevant to the semester reviews and were anyway outdated. Luxembourg had also transposed the EU legislation and he accused the commission of singling out smaller countries for its criticism.

Directive

Ministers endorsed a directive clamping down on aggressive tax planning which requires tax advisers, lawyers and banks to notify national tax authorities of any new cross-border tax schemes they are proposing to clients. Member states are also required to share the new schemes which each other.

Mr Donohoe welcomed the directive but told ministers that Ireland had already introduced mandatory reporting. So too has the UK and Portugal.

Mr Moscovici said the measure represented further important progress towards tax justice and showed that the EU was the world leader in tax transparency.

It showed, he said, that the council could agree by unanimity on tax measures. He raised the prospect of similar unanimity on other measures, such as the common consolidated tax base, before quickly withdrawing the comment.

Mr Moscovici will next week publish new proposals for the taxation of digital companies ahead of the leaders’ summit..

The Ecofin worked on a package of measures to further European banking union, which aim to reduce risks in the banking sector. But Valdis Dombrovskis, the commission vice-president responsible for financial stability, financial services and capital markets union, said there was some way to go before agreement.

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