European bloc agrees to swap tax deal information

EUROPEAN Union (EU) ministers agreed yesterday that national authorities would exchange information on tax deals with multinationals, but critics said failing to make them public meant the tax avoidance practices that led to the LuxLeaks scandal would continue.

The new measure passed despite resistance and comes as European competition authorities investigate the tax affairs of Apple in Ireland and Starbucks in the Netherlands.

“We have a political deal,” said Luxembourg Finance Minister Pierre Gramegna. “Europe is showing the way, is a pioneer and is sending a strong signal to the world in tax matters.”

Under the plan, the bloc’s 28 countries would share information about the deals agreed with multinationals so as to help rein in tax avoidance in Europe.

The deals would remain out of the public eye, with the exchange of information strictly limited to tax authorities.

“We chose not to have a public transparency but to have exchange between administrations and this will be respected,” said EU economic affairs commissioner Pierre Moscovici.

The LuxLeaks scandal last year revealed that some of the world’s biggest companies — including Pepsi and Ikea — had reduced their tax rates to as little as 1% in secret pacts with the authorities in Luxembourg.

The information, unearthed by a group of investigative journalists, was a huge embarrassment to European Commission head Jean-Claude Juncker, who served almost two decades as Luxembourg prime minister.

Mr Juncker tasked the commission to push through the automatic exchange of tax rulings in response to the scandal.

But critics said the measure would prove ineffective.

“We absolutely don’t think this will make what we saw in LuxLeaks go away,” said Tove Ryding, a tax specialist for the NGO Eurodad.

Instead, Ms Ryding warned that EU countries would continue to compete to attract businesses and use the new information to “offer the company

Transparency is a necessary condition to end two decades of abuses

something even better”. The measure now goes to the European Parliament for approval.

Eva Joly, an influential Green MEP, welcomed the move but said the deals must be made public. “Transparency is a necessary condition to end two decades of abuses,” she said.

Luxembourg has defended the legality of the secret tax rulings that allowed multinationals to know in advance how much they would be taxed.

The deal comes after advanced economies announced on Monday a long-awaited plan to close the loopholes on taxavoiding multinationals that cost countries more than $100bn a year.