TAX3 Update: MEPs Push for Financial Police Force in Europe

Following continued revelations over the last five years (the Panama Papers, Luxleaks and the Paradise papers to name a few); the European Parliament have decided to establish a Special Committee to take positive action to reduce financial crimes, tax evasion and tax avoidance within Europe. As part of the TAX3 decision, which was created last year in March 2018.

This financial year in 2019, the European Parliament have adopted a detailed roadmap towards fairer and more effective taxation, and tackling financial crimes within Europe.

The recommendations were prepared over a year long consultation using the European Parliament’s Special Committee on Financial Crimes, Tax Evasion & Tax Avoidance (also known as TAX3). The suggestions range from overhauling the current system to dealing with financial crimes, tax evasion and tax avoidance in Europe. Many suggestions notably improve cooperation in all areas between the tax authorities involved, to setting up new bodies at EU and global level.

The adopted report have summarised the committee’s findings and beliefs, after taking into account over 20 hearings dealing with particular topics of interest, 10 interest declaration and exchanges with Finance Ministers; Commissioners, and five countrywide reports to Latvia, Estonia, the US, the Isle of Man and Denmark.

The report found several conclusions and recommendations, the most notable include:

  • Proposals for a Commission-led Financial Police Force and an European financial intelligence unit.
  • An EU anti-money laundering watchdog should be established.
  • A global tax entity should be established within the United Nations.
  • The lack of member states political motivations to tackle tax evasion/avoidance and financial crime.
  • Increased protection for whistleblowers and investigative journalists; with further suggestions of an EU fund to help investigative journalism.

The recommendations were adopted by 505 votes in favour, 63 against and 87 abstentions.

Several MEPs made comments about the steps:

The chair of the special committee, Petr Ježek said: “Member states are not doing enough and in the EU, the Council is clearly the weakest link. Without political will, there can be no progress. European citizens deserves the best.”

Luděk Niedermayer, EU Rapporteur speaking on behalf of the members stated: “the growing interdependence of our economies as well as digital taxation issues need to be addressed more systematically. Many areas of taxation must remain an EU competence and those who pay their taxes should not face extra red tape.”

Rapporteur, Jeppe Kofod said: “This report is the result of the most comprehensive work ever done by the European Parliament on tax evasion and avoidance. Within the EU we need a minimum corporate tax rate, an end to tax competition and to make it more difficult to bring laundered funds into Europe.”

 

Member States Potentially Harbouring Harmful Practices

  • The Netherlands has been facilitating aggressive tax planning; depriving other member states of an accumulated EUR €11.2 billion in income tax.
  • Golden visas schemes and passport programmes should be phased out; with those offered by Malta and Cyprus singled out for their weak client due diligence procedures (CDD).
  • Denmark, Finland, Ireland and Sweden have also been criticised for maintaining an opposition to the digital services tax.

Seven EU countries currently displaying tax haven traits and potentially facilitate aggressive tax planning:

  • Ireland.
  • Cyprus.
  • Malta.
  • Belgium.
  • Hungary.
  • Luxembourg.
  • The Netherlands.

 

European banks that have been involved in the Russian ‘Troika Laundromat’ money-laundering were mentioned, namely:

  • ING Group NV.
  • Credit Agricole SA.
  • Danske Bank.
  • Swedbank AB.
  • Nordea Bank.
  • Deutsche Bank AG.
  • Raiffeisen Bank International AG.
  • ABN Amro Group NV.
  • KBC Group NV.
  • Cooperatieve Rabobank UA.

 


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