On Monday 15 October, the TAX3 committee of the European Parliament held a public hearing on golden visas and special economic zones. During the first panel on golden visas experts pointed out the lack of exchange of information between Member States, corruption, the lower requirements to obtain citizenship, lack of due diligence and the opaque distribution of the revenues as some of the main problems posed by the programmes. The second panel on free ports and special economic zones revealed a low enforcement of existing rules in spite of the significant progress of new legislation aimed at combating money laundering.
On Tuesday 16 October, Pascal Saint-Amans, the OECD Director of tax policy expressed optimism that the task force in charge of creating recommendations on how to deal with digital tax issues would agree on some form of recommendation in the next few months. The progress could be made during the upcoming meeting of the task force at the beginning of December. It is worth noting that the task force issued an interim report in March that examined proposed rules for taxing the digital presence and taxes on revenue from digital players.
On 17 October, the European Commission published the Taxation Trend Report 2018, a yearly snapshot of tax systems in the EU, Iceland and Norway. The analysis highlights that tax revenues rose in 19 Member States in 2016 (as a percentage of GDP). However, the level of taxation in EU Member States differs greatly. The report also shows that the share of labour taxes in total tax revenues shrank progressively from 2010 to 2016 when it accounted for 49.8% - similar to its pre-crisis level. Corporate income tax revenues, on the other hand rose to 2.7% of GDP in 2016 compared with 2.6% in 2015, continuing their gentle increase since the crisis though not yet at pre-crisis levels.
On 18 October the European Parliamentary Research Service (EPRS) presented three studies on tax in the TAX3 committee. The first study analyses citizenship by investment and residency by investment schemes in the EU, so-called “golden visas”. The second study examines money laundering and tax evasion risks in connection to free ports. Thirdly the EPRS presented a study about shell companies in the EU. The studies are supposed to contribute to the TAX3 committee’s work and depict the policy options on how to deal with tax avoidance in the EU.
On Thursday 19 October Correctiv, a cross-border team of investigative journalists published a report that exposed the full scale of the Cum-Ex tax scandals first known in Germany in 2016. According to this report, “the biggest tax robbery in European history” cost the European taxpayers €55,2 bn, Germany being the country with the highest losses (€31,8 bn), followed by France, Italy, Denmark, Austria, Belgium, Finland, the Netherlands and Spain.
The results of the report shocked the MEPs of the TAX3 committee; especially the Greens and S&D Members voiced their resentment over this scandal. The MEPs called for more transparency and reinforced supervision of the financial markets as well as a broader exchange of information. They demanded a hearing on the Cum-Ex tax scandal to be held before the committee soon.