Activities of Ernest URTASUN related to 2020/2258(INI)
Shadow reports (1)
REPORT on reforming the EU policy on harmful tax practices (including the reform of the Code of Conduct Group)
Amendments (42)
Amendment 12 #
Motion for a resolution
Recital A a (new)
Recital A a (new)
A a. whereas an estimated EUR 36-37 billion of corporate income tax (CIT) revenue are lost due to tax avoidance per year in the EU 1a _________________ 1ahttps://op.europa.eu/en/publication- detail/-/publication/db46de2a-b785-11eb- 8aca-01aa75ed71a1/language-en
Amendment 13 #
Motion for a resolution
Recital A b (new)
Recital A b (new)
A b. whereas international tax competition leads to suboptimal global welfare outcomes because of inefficiently low tax rates as each country attempts to make its tax system more attractive than those of others 1a; whereas competition for foreign direct investment and real economic activities should therefore focus less on taxation and more on true value drivers such as good infrastructure, high levels of education, available workforce, legal certainty, independent judiciary, innovation, research and development, and quality healthcare for which tax revenues are needed; _________________ 1aIMF report, Taxing Multinationals in Europe, 2021: https://www.imf.org/en/Publications/Depa rtmental-Papers-Policy- Papers/Issues/2021/05/25/Taxing- Multinationals-in-Europe-50129
Amendment 16 #
Motion for a resolution
Recital B
Recital B
B. whereas anti-tax avoidance policies have led to a decline in preferential regimes all around the world, particularly in the Union; whereas new forms of HTP have emerged, notably through the transformation of preferential regimes into aggressive general regimes, but also through hybrid and transfer pricing mismatches, low or no withholding taxes, weak substance requirements, and rulings amongst others;
Amendment 24 #
Motion for a resolution
Recital C
Recital C
C. whereas aggressive tax planning means the deliberate exploitation of loopholes and mismatches within and between national tax systems to artificially reduce the tax contribution of companies, particularly multinational corporations, to national tax systems; whereas empirical evidence suggests that MNEs’ profits tend to be taxed less than profits of domestic peers, reflecting profit shifting from high- to low-tax affiliates1a; _________________ 1aIMF report, Taxing Multinationals in Europe, 2021: https://www.imf.org/en/Publications/Depa rtmental-Papers-Policy- Papers/Issues/2021/05/25/Taxing- Multinationals-in-Europe-50129
Amendment 37 #
Motion for a resolution
Recital E
Recital E
E. whereas the CoC Group was efficient in deterring preferential tax regimes; whereas it has nonetheless failed to prevent aggressive tax competition between Member States; whereas the CoC Group remains of purely intergovernmental nature;strong tax competition in Europe appears to have been a major driving force behind the steep decline in CIT rates that has brought the average European CIT rate below the average rate in OECD countries1a; whereas the implied reve-nue losses of such a large drop in CIT rates are significant for all countries involved2a; whereas the CoC Group remains of purely intergovernmental nature; _________________ 1aIMF report, Taxing Multinationals in Europe, 2021: https://www.imf.org/en/Publications/Depa rtmental-Papers-Policy- Papers/Issues/2021/05/25/Taxing- Multinationals-in-Europe-50129 2aIMF report, Taxing Multinationals in Europe, 2021: https://www.imf.org/en/Publications/Depa rtmental-Papers-Policy- Papers/Issues/2021/05/25/Taxing- Multinationals-in-Europe-50129
Amendment 41 #
Motion for a resolution
Recital E a (new)
Recital E a (new)
E a. whereas the failure to curb excessive tax competition has contributed to the shifting of the tax incidence from wealth to income, from capital income to labour income and consumption, from MNEs to SMEs and from the financial sector to the real economy; whereas women and low income group are most impacted by tax avoidance and an unfair and biased tax system;
Amendment 44 #
Motion for a resolution
Recital F
Recital F
F. whereas the CoC Group was successful in opening a dialogue with third-country jurisdictions that are invited to repeal their HTP in order to avoid being included on an EU list of non-cooperative jurisdictions for tax purposes (the ‘EU list’); whereas the current EU list only comprises 12 jurisdictions25 and regretfully leaves out notorious tax havens; whereas the EU list is established on the basis of criteria defined in the CoC; whereas the criteria applied to third-country jurisdictions are not the same as those applied to EU Member States leading to divergences; _________________ 25American Samoa; Anguilla; Dominica; Fiji; Guam; Palau; Panama; Samoa; Trinidad and Tobago; US Virgin Islands; Vanuatu; Seychelles.
Amendment 46 #
Motion for a resolution
Recital F a (new)
Recital F a (new)
F a. whereas the State of Tax Justice 2020 report found that a mere 2% of global tax losses were caused by jurisdictions on the EU list in comparison, EU member states are found to be responsible for 36% of global tax losses, costing countries worldwide over $154 billion in lost tax every year1a; _________________ 1a https://www.taxjustice.net/2020/11/20/427 bn-lost-to-tax-havens-every-year- landmark-study-reveals-countries-losses- and-worst-offenders/
Amendment 47 #
Motion for a resolution
Recital F b (new)
Recital F b (new)
F b. whereas very high financial activity, as compared to the size of the economy, may indicate that a country is being used for tax avoidance purposes; whereas according to the latest Eurostat data the stock of Luxembourgish direct investment abroad represents nearly 65 times its GDP, while the stock of foreign direct investment in Luxembourg represents about 55 times its GDP; whereas to a lesser extent Cyprus, Malta, the Netherlands and Ireland also display stock of inward or outward foreign investment much larger than their respective domestic production1a; _________________ 1ahttps://op.europa.eu/en/publication- detail/-/publication/db46de2a-b785-11eb- 8aca-01aa75ed71a1/language-en
Amendment 48 #
Motion for a resolution
Recital F c (new)
Recital F c (new)
F c. whereas in some instances, direct investment via special purpose entities (SPEs) may be vehicle for tax planning; whereas Cyprus, Malta, Luxembourg and the Netherlands, along with Hungary, displayed a significant use of SPEs for both inward and outward FDI1a; _________________ 1ahttps://op.europa.eu/en/publication- detail/-/publication/db46de2a-b785-11eb- 8aca-01aa75ed71a1/language-en
Amendment 49 #
Motion for a resolution
Recital F d (new)
Recital F d (new)
F d. whereas some tax avoidance strategies involve (re)locating intangible assets to jurisdictions offering favourable conditions; whereas a high volume of royalty payments, particularly when relative to GDP, might be indicative of loopholes in tax legislation; whereas Ireland is the country that displays the highest ratio of outgoing royalty flows relatively to its GDP, with the Netherlands, Luxembourg and Malta also having high ratios; whereas in terms of incoming royalties, the Netherlands, Ireland and Luxembourg display the most significant flows relative to their respective GDP1a; _________________ 1ahttps://op.europa.eu/en/publication- detail/-/publication/db46de2a-b785-11eb- 8aca-01aa75ed71a1/language-en
Amendment 50 #
Motion for a resolution
Recital F e (new)
Recital F e (new)
Amendment 51 #
Motion for a resolution
Recital F f (new)
Recital F f (new)
F f. whereas some multinationals reroute their dividends to reduce taxation; whereas in the absence of withholding taxes, such payments can escape taxation if they are not taxed in the recipient jurisdiction which results in disproportionally high flows of outgoing dividend payments; whereas Malta, Luxembourg, Cyprus and, to a lesser extent, the Netherlands have a significantly high outgoing dividend-to- GDP ratio and, with the exception of Malta, incoming dividend-to-GDP ratio1a; _________________ 1ahttps://op.europa.eu/en/publication- detail/-/publication/db46de2a-b785-11eb- 8aca-01aa75ed71a1/language-en
Amendment 52 #
Motion for a resolution
Recital F g (new)
Recital F g (new)
F g. whereas Member States such as Netherlands, Luxembourg, Malta, Cyprus, Belgium, Ireland and Hungary have since 2018 received country-specific recommendations in the framework of the European Semester on the need to address risk of aggressive tax planning;
Amendment 62 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Notes the variety of EU instruments adopted to address HTP inside the Union, which include ATAD I and II, the Interest and Royalties Directive, the Parent Subsidiary Directive, the Directive on Administrative Cooperation in the Field of Taxation, and, in particular, DAC 3, 4 and 6 (on tax rulings, country-by-country reporting and mandatory disclosure rules for intermediaries), the various Commission recommendations to the Council, the CoC, and the Council recommendations in the framework of the European Semester dealing with aggressive tax planning; recalls that these instruments had to go through unanimity procedure in Council leading to weaker rules; also recalls that many of these instruments have undergone revisions such as the Parent Subsidiary directive; recalls as well that the revision of the Interest and Royalty directive is still blocked in Council; observes that as a result these EU instruments have not prevented an aggressive tax competition between Member States; therefore concludes that the difficulties encountered in Council to deal with taxation challenges demonstrates the need to move to qualified majority in tax matters;
Amendment 66 #
Motion for a resolution
Paragraph 2 a (new)
Paragraph 2 a (new)
2 a. Deplores that the procedure laid down in Article 116 of the Treaty on the Functioning of the European Union, under which Parliament and the Council act in accordance with the ordinary legislative procedure, in order to act when harmful tax practices lead to market distortion within the Union, has never been used so far;
Amendment 73 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Welcomes the internal and external dimension of the work conducted by the CoC Group on HTP; notes that the external dimension of HTP is mainly dealt with by the CoC Group with the application of the ‘Fair Taxation’ criterion; deplores the lack of coherence between the criteria on HTP applied to Member States and the tougher criteria, in particular on economic substance, applied to third-country jurisdictions in the listing process; welcomes in this regard the proposal by the European Commission in its Communication on Business Taxation for the 21st century to initiate a legislative proposal to enforce substance rules on shell companies in the EU; still regrets that third jurisdictions with a 0 % corporate tax rate or with no taxes on companies’ profits are not automatically listed; in addition, deplores the fact that the ‘Transparency’ criterion in the EU list of non-cooperative jurisdictions leads to unequal outcomes between EU Member States, most notably Malta, and third- country jurisdictions; calls on the Commission to launch infringement procedures to ensure EU Member States fully comply with tax transparency standards in order to avoid a situation in which third-country jurisdictions are listed whereas EU Member States failing the same criteria face no consequences;
Amendment 82 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Recalls that a Forum on Harmful Tax Practices (FHTP) was created within the OECD in 1998 with the task of monitoring and reviewing tax practices, and with a focus on the characteristics of preferential tax regimes; highlights that the FHTP evaluations have a determinant impact on the qualification of harmful regimes in the EU listing process; calls the CoC to remain independent from the Forum on Harmful Tax Practices when assessing HTP;
Amendment 89 #
Motion for a resolution
Paragraph 5
Paragraph 5
5. Welcomes the proposed Pillar II reform of the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework), which aims to address remaining BEPS challenges and to set out rules giving jurisdictions a right to tax back where other jurisdictions have not exercised their primary taxing rights or the payment is otherwise subject to low levels of effective taxation, to combat harmful tax practices and impose an effective tax rate28 ; notes that to effectively combat tax avoidance and harmful tax practices the effective tax rate needs to be set as close as the average statutory corporate income tax rate and be applied without exemptions and on a per country basis; _________________ 28 OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges Arising from Digitalisation – Report on Pillar One Blueprint: Inclusive Framework on BEPS, OECD Publishing, Paris, 2020, p. 12. Available at: https://www.oecd.org/tax/beps/tax- challenges-arising-from-digitalisation- report-on-pillar-two-blueprint.pdf
Amendment 97 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Welcomes the fact that the proposal put forward by the US Administration for ‘The Made in America Tax Plan’ could facilitate a deal on Pillar II by mid-2021; welcomes that the GILTI proposal includes a minimum effective tax rate of 21%, applied on a per country basis, without thresholds and exemptions; notes that ‘The Made in America Tax Plan’ includes a shift to more effective R&D investment incentives instead of profit- based incentives;
Amendment 108 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Calls for the current scope of the CoC to be progressively updated in order to look intoupdated as soon as possible in order to look into all aggressive tax planning indicators at Member State level, including the general characteristics of a tax system to determine whether they have harmful effects;
Amendment 117 #
Motion for a resolution
Paragraph 8
Paragraph 8
8. Calls for the adoption of a definition of ‘minimum level of economic substance’, preferably based on a formulaic approach, and which would evolve progressively as reported income increases, which could be used to assess whether a tax regime is potentially harmful; highlightwelcomes as a first step the economic substance requirement included in the EU list’s ‘Fair Taxation’ criterion in particular those for high risk intellectual property; however deems these economic substance requirement already included in the EU list’s ‘Fair Taxation’ criterioninadequate and too weak; believes that the economic substance requirements as they stand in the ‘Fair Taxation’ criterion have proven to be too focused on legalistic requirements and too little on real economic substance proportionate to the size of the domestic economy and the profits booked, in addition there is a lack of EU guidance and the substance requirements are insufficiently monitored in their effective enforcement leading to the situation in which the Cayman Islands and Bermuda, amongst others, manage to be out of the list while being extremely harmful to EU tax revenues;
Amendment 121 #
Motion for a resolution
Paragraph 9
Paragraph 9
Amendment 132 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. NotWelcomes that the Commission recognises that a future minimum global taxation standard would have to be integrated into the EU actions on fair tax competition, and that if no consensus is found at global level on such a standard, it should nonetheless be included in the CoC29 ; calls on the Commission to already assess the legislative proposals that will be necessary to implement Pillar II at Union level, including a revision of ATAD and of the Interest and Royalties Directive, and the reform of the CoC and of the criteria in the EU listing of non-cooperative jurisdictions; welcomes in this regard the Communication on Business Taxation for the 21st Century as a first important step; _________________ 29 COM(2020)0313.
Amendment 136 #
Motion for a resolution
Paragraph 10 a (new)
Paragraph 10 a (new)
10 a. Observes the current distortions of the single market due to an increasing and unregulated tax competition in the field of personal income, capital and wealth taxation; notes the ongoing competition in the EU for high net-worth individuals through preferential regimes such as expatriate and investment regimes; also notes the competition for pensioners and so-called ‘digital nomads’; furthermore notes the large differences among Member States in the tax treatment of capital gains, inheritances and gifts leading to easily exploitable loopholes for companies and individuals;
Amendment 145 #
Motion for a resolution
Paragraph 11
Paragraph 11
11. Insists that the future implementation of new EU tools against HTP should prioritise the recourse tobe implemented through legislative instruments and explore the provisions of the TFEU allowing decision- making to be facilitated, such as qualified majority voting; urges the Commission to use the procedure laid down in Article 116 of the TFEU in order to act when harmful tax practices lead to market distortion within the Union; believes that Article 116 TFEU can be used to set minimum standards and harmonize tax rules in the EU;
Amendment 151 #
Motion for a resolution
Paragraph 11 a (new)
Paragraph 11 a (new)
11 a. Notes that beyond HTP a significant amount of government funding is channeled through tax expenditure in the form of exemptions, deductions, credits, deferrals and reduced tax rates 1a _________________ 1a The tax-expenditure-to-GDP ratio is on average 4.5 percentage points in the EU; https://www.cepweb.org/reforming-tax- expenditures/; IMF, ‘Tax Policy for Inclusive Growth after the Pandemic’, 16 December 2020, https://www.imf.org/en/Publications/SPR OLLs/covid19-special-notes#fiscal
Amendment 153 #
Motion for a resolution
Paragraph 11 b (new)
Paragraph 11 b (new)
11 b. Calls on Member States to revise tax expenditure in all tax areas; calls on Member States to perform annual, detailed and public cost-benefit analyses of each tax provision; notes that tax incentives should aim at attracting investments in the ‘real’ economy, profit- based tax incentives, such as patent boxes, should be avoided as these often lead to abusive schemes and loss of revenues;
Amendment 156 #
Motion for a resolution
Paragraph 12
Paragraph 12
12. Calls on the Commission to evaluate the effectiveness of patent boxes and other intellectual property (IP) regimes under the new nexus approach defined by Action 5 of the BEPS Action Plan on HTP; calls on the Commission to come forward with a legislative proposal in case the evaluation confirms the ineffectiveness of patent boxes; recalls that so far evidence suggests that ‘output-based’ R&D tax incentives such as patent boxes have mostly been used by firms for profit shifting purposes and have had little impact on real economic activities 1a _________________ 1aIMF report, Taxing Multinationals in Europe, 2021: https://www.imf.org/en/Publications/Depa rtmental-Papers-Policy- Papers/Issues/2021/05/25/Taxing- Multinationals-in-Europe-50129
Amendment 159 #
Motion for a resolution
Paragraph 12 a (new)
Paragraph 12 a (new)
12 a. Calls on the Commission to provide an assessment of all ineffective tax expenditures leading to negative economic distortions; calls on the Commission to establish a screening framework for tax expenditures in the EU and oblige member states to publish the fiscal costs of tax expenditures;
Amendment 162 #
Motion for a resolution
Paragraph 12 b (new)
Paragraph 12 b (new)
12 b. Calls on the Commission to produce guidelines on how to design tax incentives with fewer risks of distorting the Single Market;
Amendment 163 #
Motion for a resolution
Paragraph 12 c (new)
Paragraph 12 c (new)
12 c. Welcomes the Commission’s integration of the country-specific recommendations to the assessment of the national recovery and resilience plans; calls on the Commission to make the country-specific recommendation regarding aggressive tax planning a regular feature of the European Semester and to further expand beyond corporate income taxation;
Amendment 164 #
Motion for a resolution
Paragraph 13
Paragraph 13
13. Welcomes the fact that the CoC has assessed 480 regimes since its creation, deeming around 13030 harmful31 ; recognises the positive effect of the Union’s work on HTP, which has led to a quasi-disappearance of preferential tax regimes within the Union; regrets, however, that in parallel aggressive and harmful non-preferential regimes leading to low effective tax rates have significantly grown in the EU and general, potentially aggressive and harmful, characteristics of tax systems have remained untouched; observes that in 2018 17 Member States had a patent box regime, 11 Member States had R&D super deductions in place and 12 Member States had R&D tax credits 31a _________________ 30Exchange of views of the Subcommittee on Tax Matters (FISC) with Lyudmila Petkova, Chair of the Code of Conduct Group, held on 19 April 2021. 31 https://data.consilium.europa.eu/doc/docu ment/ST-9639-2018-REV-4/en/pdf 31a https://oxfamilibrary.openrepository.com/ bitstream/handle/10546/620625/bn-off- the-hook-eu-tax-havens-070319-en.pdf
Amendment 169 #
Motion for a resolution
Paragraph 14
Paragraph 14
14. Highlights the non-binding nature of the CoC; deplores the fact that Member States could maintain a harmful regime without facing any repercussions; notes that the political nature of the Code, together with ‘broad consensus’ rule for reaching decisions on harmfulness, has given too much leeway for procrastination and blocking of decision-making by Member States; notes further that in some cases, the Group's work has, therefore, led to inconsistent and unsatisfactory results such as the inadequate prevention of unfair tax competition 1a; recalls, for example, how for a significant amount of time notional interest deduction schemes remained largely untouched leading to significant tax revenues losses and negative spillover for both EU and non- EU countries; _________________ 1aInside the EU Code of Conduct Group: 20 Years of tackling Harmful Tax Competition, PhD, Martijn F. Nouwen
Amendment 181 #
Motion for a resolution
Paragraph 15
Paragraph 15
15. Calls for a complete revision of the criteria, the governance and the scope of the CoC through a legally binding instrument that should replace the current intergovernmental arrangements and allow for a transition to qualified majority voting; deeply deplores the inaction by the Council to comprehensively revise the criteria after two decades; believes the revision of the CoC should be conducted in a democratic, transparent and accountable process instead of the current secretive technical one; requires that Parliament be included in the process of designing and adopting new policies and criteria to combat HTP;
Amendment 198 #
Motion for a resolution
Paragraph 16
Paragraph 16
16. Considers the reform of the criteria of the CoC to be a matter of urgency and that it should assess, as a first step, all regimes proposing a tax rate below the future internationally agreed minimum effective tax rate in the framework of Pillar II of the Inclusive Framework as being potentially harmful, unless the revenues qualifying for a deduction or a reduced tax rate comply with robust and progressive economic substance requirements;
Amendment 199 #
Motion for a resolution
Paragraph 16 a (new)
Paragraph 16 a (new)
Amendment 204 #
Motion for a resolution
Paragraph 17
Paragraph 17
17. Urges an enlargement of the scope of the CoC, notably by including preferential aggressivepersonal income or capital tax regimes, or personal income and wealth tax regimes that could lead to significant Single Market distortions such as expatriate and investment regimes for high net worth individuals and preferential treatment of pensioners and ‘digital nomads’; notes that such enlargement should also include aggressive characteristics such as low rates and small tax bases for capital gains, inheritances and gifts amongst others;
Amendment 212 #
Motion for a resolution
Paragraph 17 a (new)
Paragraph 17 a (new)
17 a. Understand that the CoC is working on a new 3-step approach to assess the harmfulness of general characteristics in tax systems: (1) whether the characteristic leads to double non- taxation or double tax relief; (2) if yes, whether the characteristic has an effect on the place of residency or the place of economic activity and (3) whether there is a causal effect between step 1 and step 2; welcomes the CoC’s work on this, however, urges the CoC to aim at a full revision of the CoC as outlined in this report;
Amendment 213 #
Motion for a resolution
Paragraph 17 b (new)
Paragraph 17 b (new)
Amendment 218 #
Motion for a resolution
Paragraph 18
Paragraph 18
18. Requires that the CoC Group appears at least ontwice a year before Parliament to present its biannual progress report to the Council;
Amendment 220 #
Motion for a resolution
Paragraph 19
Paragraph 19
19. Welcomes the publication of the biannual reports of the CoC Group to the Council; believes that a dedicated online tool should be created to avoid relying only on Council conclusions to retrieve essential information about tax policy at EU level; considers that the methodology for assessing EU Member States should be fully disclosed; invites the Code of Conduct Group to systematically release a comprehensive summary of its assessments of EU Member States; calls for the public information to be made available on a user-friendly platform;