Germany, France and Italy have launched a campaign to tighten EU tax rules that appears aimed at practices in Luxembourg and will add political pressure on the new European Commission president Jean-Claude Juncker, the Grand Duchy’s former premier, reports The Financial Times.
The three countries are calling for an EU-wide law by the end of next year that would outlaw “aggressive tax planning” and close some common loopholes used by companies and member states to limit their tax bills.
In a key phrase, Berlin, Paris and Rome are demanding “stricter conditions and rules” for unilateral tax rulings, a clear reference to the techniques employed in Luxembourg, where officials repeatedly struck tax deals with big multinationals, such as Amazon and Fiat, that have now become a source of controversy.
“The lack of tax harmonisation in the European Union is one of the main causes allowing aggressive tax planning, base erosion and profit shifting (Beps) to develop within the internal market,” say the three finance ministers – Germany’s Wolfgang Schäuble, France’s Michel Sapin, and Italy’s Pier Carlo Padoan – in a letter to Pierre Moscovici, the European economy, finance and tax commissioner.
In a thinly veiled swipe at Luxembourg and other low-tax jurisdictions, they add: “This situation may lead to uncooperative behaviours between member states, which directly affects the establishment and functioning of the internal market and the benefits provided by Treaty freedoms.”