On 22 September 2015, members of the special TAXE committee met the Luxembourg Finance Minister Pierre Gramegna in Brussels, in his capacity as Luxembourg Presidency representative of the Ecofin Council. They discussed the fight against fraud and tax evasion and the work of the Council during the Luxembourg Presidency.
Before giving the floor to Pierre Gramegna, Alain Lamassoure, President of the TAXE Committee, congratulated the Council and its Presidency for its "spirit of cooperation".
The Finance Minister reiterated, as he had already done on 15 July 2015 before the Committee of Economy and Financial Affairs (ECON) of the European Parliament, that the Luxembourg Presidency is focusing on the fight against tax fraud and tax avoidance and that this is a key priority of the Ecofin Council.
In the light of the discussion on tax rulings he said that: "The Finance Ministers have agreed to acknowledge that they cannot lose revenue while budgets are limited and tax payers pay a lot of taxes, and therefore the tax burden must be redistributed. An agreement must be reached between supporters of tax competition and those who advocate that multinational enterprises pay their fair share of taxes." The Presidency wants to reach an agreement and a code of conduct in a "pragmatic spirit". The adoption of the Directive on the exchange of information on tax rulings is one of its key priorities. Generally, the fight against tax fraud and all forms of tax avoidance was the subject of a debate at the Informal ECOFIN Council Meeting of 11 September in Luxembourg.
Pierre Gramegna then reported on the various cases.
Directive on the exchange of information on tax rulings: Commission work in progress and Council moving forward rapidly. At the next ECOFIN meeting on 6 October in Luxembourg, an agreement could be finalised, and could then be adopted before the end of 2015.
The OECD's BEPS initiative (Action Plan on Base Erosion and Profit Shifting): the findings of which should be released within a month, and those in the EU are being finalised.
The revision of the Interest and Royalties Directive: this was on the agenda of the informal meeting of 11 September and Pierre Gramegna described the debate as "productive", while admitting that "sensitive issues" arise and should be integrated in the work that will continue.
Regarding certain aspects of harmful tax competition, Pierre Gramegna discussed the implementation of the principles of a code of conduct and discussions with Liechtenstein in particular, on harmful tax systems.
As for the minimum effective level of taxation in the EU and in third countries, Pierre Gramegna said that the Council was working on governance principles and resources to promote these principles in third countries through non-double taxation agreements signed by the Member States.
Responding to MEPs, Pierre Gramegna reiterated that for the Presidency, "the key priority" is the agreement on tax rulings at the ECOFIN Council on 6 October. Consensus shall be reached through the mandatory automatic exchange of tax rulings that were finalised five years ago. The Commission may obtain a lot of information, but some rules prevent it from getting all the information, including names. This stumbling block should therefore be resolved quickly to allow the entry into force of the Directive. It will initially allow the automatic exchange of information, and only then will there be a discussion about what is an aggressive ruling. On the other hand, the code of conduct will include this issue.
When questioned about the "Commission's Action Plan on Corporate Taxation" of June 2015, which provides a framework for reforming corporate taxation in the European Union, fighting tax evasion, ensuring sustainable income and supporting the improvement of the environment for businesses in the Internal Market, Pierre Gramegna said that "we take it seriously", and the proof is that it was discussed in Luxembourg on 11 September. He went onto say that: "The discussion was not public, but the discussion in itself represented progress. The subject is topical now and will reappear in other directives, including the one on interest and royalties. Everything cannot be done immediately, because many countries are not happy."
With regard to adopting a system based on country-by-country reports on tax policies, Pierre Gramegna said that we need to wait for the results of the Commission's findings of the analysis and impact, including the assessment of the latter and its recommendations.
As for access to the "Code of Conduct" group documentswhich handle corporate taxes, Pierre Gramegna said that given the type of information that the group receives, full and open access could undermine its work.
Pierre Gramegna believes that the Presidency should maintain relations with the European Parliament's TAXE committee to find solutions that are satisfactory to all. He then discussed the increasing tax coordination level in the EU within the framework of third countries and corporate taxes, referring to a "regulatory mechanism". According to him, third countries must ultimately respect the BEPS rules. "We are setting up equivalent rules for everyone" he stated, as BEPS is an initiative of the G20 and OECD which ensure a "level playing field".
The Chairman of the TAXE Committee, Alain Lamassoure, concluded by commenting on the dialogue held with Pierre Gramegna: "The Luxembourg Presidency is a window of opportunity, and there is hope that an agreement will be reached on tax rulings before the end of 2015. We also expect an agreement to be reached for the CCCTB (common consolidated corporate tax base)". In response to a question as to whether to include the rulings that date back 10 or five years, for Alain Lamassoure it is an "odd problem, because all the rulings in force must be taken into account, even if they were decided three centuries ago". According to him, the issue will "be the subject of a trialogue debate".He then echoed Pierre Gramegna's position, saying that the debate at the informal ECOFIN meeting on corporate taxation constitutes "progress", because taxation falls within the competence of Member States and their national parliaments who vote the tax. But the discussion at the ECOFIN Council should continue publicly and democratically.