In a resolution adopted on Thursday MEPs say that much more can be achieved through sharing tax information if member states and the Commission step up their game.
Adopting the resolution authored by Sven Giegold (Greens, DE), which evaluates the last 10 years of structured exchange of tax information, MEPs conclude that numerous shortcomings are down to insufficient implementation of the existing provisions and that the Commission should also use the next update to the rules for a comprehensive overhaul, contrary to the piecmeal approach it has adopted over the last decade.
After the vote Mr Giegold said:
“For eleven years, this Directive provides the basis for tax administrations to support each other in the fight against tax avoidance, evasion and fraud all across Europe. However, this progress in European tax law has not been matched with equal ambition when it comes to the effective implementation of these rules in the Member States. Despite documented shortcomings in many Member States, the Commission has not opened a single infringement case to ensure the effective implementation of EU tax cooperation. Following Ursula von der Leyen’s public commitment to tax justice yesterday, the Commission must launch infringement proceedings immediately. Unfortunately, the Council and Commission refused to grant the Parliament access to the documents needed. The European Parliament must use all legal means at its disposal to receive the information it needs to carry out its democratic control functions, including by going to court.”
Must do better
The resolution says that one of the main problems is that national authorities are not applying the existing rules sufficiently enough. Too little use is being made of the information exchanged, there is too little information exchanged on certain types of income and assets, and the lack of proper implementation of anti money-laundering rules harms the effectiveness of the exchange of tax information. The resolution also says that the quality of the information exchanged is below par and the control of such quality must be better ensured.
The Commission also comes under fire from MEPs. As the watchdog of proper implementation of EU law, it is criticised for not launching any infringement proceedings against any member state for incorrect implementation of this directive.
Looking ahead, the resolution also provides some pointers for what the next priorities should be.
Information should be exchanged more consistently and with a better eye towards quality. Also, it should become obligatory to exchange more types of information on income and assets, coupled with a further requirement for the beneficial owners to be divulged. National authorities should also be required to systematically check the information provided by financial institutions and levy fines when information is incorrect. This increase in work for national authorities will necessitate increases in the financial and personnel capacities of the tax administrations, the resolution adds.
The Commission is called upon to use the next update to the directive not only to make small additions but to also close the existing loopholes and harmonise data collecting and sharing standards. As a matter of urgency the resolution also calls on the Commission to immediately initiate infringement proceedings against member states which fail to implement the directive correctly.
The resolution criticises the Commission and all Member States except Sweden and Finland for having been uncooperative with the European Parliament during the exercise of evaluating the effect of the directive. Notably, they refused to give access to crucial information on the implementation of the Directive. The resolution therefore invites capitals and the Commission to be more cooperative in the future in the interest of all citizens and taxpayers.
The resolution was adopted with 561 votes in favour, 12 against and 116 abstentions.
In place since 2011, the Directive on Administrative Cooperation (DAC) in the Field of Taxation (DAC) is the basis for Member States’ tax administrations to support each other in the fight against tax avoidance, tax evasion and tax fraud. It has already been updated six times – and the Commission is currently working on a proposal for the eighth version of the directive. The report adopted today constitutes an evaluation of the effectiveness of the directive and its subsequent amendments.