EU Parliamentarians want recovered companies’ tax avoidance to go to the EU budget

EU Parliamentarians adopted a non-binding resolution stating that the money recovered by EU member states from a company due to infringements of tax-related state aid rules should be returned to the EU budget or to the member states unfairly deprived of the money.

The motion, which is the answer to the 2014 Annual EU Competition Policy report by the Commission, has been adopted by 500 votes in favour, 137 against and 73 abstentions. The Christian-Democrat, Socialist, Liberal and Green Members voted in favour of the final text. The Conservative group, as well as the majority of the Eurosceptic and Nationalist Representatives opposed the resolution. The radical-left group GUE-NGL abstained.

Click here to see how each EU parliamentarian voted.

The report lists general recommendations to improve competition. As regards antitrust proceedings, the text calls on the Commission to increase its efforts to speed up investigations of instances of abuse of dominant market positions which damage EU consumers. The motion underlines the fact that anticompetitive practices and monopolies represent barriers to trade.

In this regard, special attention is given to the Google issue. Indeed, the parliamentarians in favour of the text called into question the duration of the investigations and denounce the lack of transparency and of definitive results. Therefore, it is asked to the EU Commission to conduct a “thorough investigation into the Google practice”.

The question of State aid is also mentioned in the resolution. It is recalled to the Commission to examine whether the banking sector has benefited, since the beginning of the crisis, from implicit subsidies and State aid.

Merger control is another important topic for the Members of the Parliament. They believe that new criteria for digital market mergers and acquisitions need to be applied. These new criteria should go beyond price-based approaches, market share, and turnover. The resolution explains that the current criteria are not sufficient to judge mergers or takeovers in the digital economy.

The resolution touches another very critical question, the one of financial aid and taxation. On this subject, the text emphasises that fair tax competition is essential to the well-functioning of the internal market and welcomes the investigations by the Commission into unlawful State aid and favourable “tax ruling” decisions to the benefit of certain individual companies like Starbucks (NL), Fiat (LU), Amazon (LU) and Apple (IE). The text invites the member states to cooperate fully with these investigations.

The members of the Parliament overwhelmingly voted in favour of a paragraph (76/3) stating, “that introducing a common consolidated corporate tax base (CCCTB) would help make the system more transparent”. Among the other measures to prevent unfair tax competition, the paragraph mentions the exchanges of information between tax authorities and the granting of an explicit legal right to control movements of capital.

The paragraph was pushed through by 533 votes in favour, 140 against and 37 abstentions. The members of the Conservative group and UKIP EU Parliamentarians opposed the provision.

Position of the EU Political Groups

The rapporteur on this report, Mr Werner Langen, seats with European People’s Party (EPP), the political family of President Juncker and Chancellor Merkel. He claimed: “Countries that play unfair tricks must not profit twice”. The EPP Group “wants tax clawbacks from tax dodging, as in the recent rulings against Starbucks, Fiat or 35 Belgian companies, to go to the EU budget, not to the budget of the state who engaged in the controversial tax deal[1].”

The European Conservatives and Reformists group (ECR), David Cameron’s EU political group, explained that “a fair and free competition policy is a prerequisite for a market economy to function” and that “they are therefore pleased that we have a commissioner who dare to take the fight with the big companies”. However, the groups does not fully share the approach taken by the resolution. They believe there is no need for extra EU regulation or of a common harmonized tax[2].

The Liberal group ALDE of Mr Verhofstad supported the resolution. In their opinion, “the Google antitrust case has to move ahead more quickly and the Commission should step up the pace”. They also believe that “this report should have pushed more regarding fair competition in the aviation sector, notably with third—country carriers such as the Gulf States[3].”

GUE-NGL: The radical left group close to the Greek Prime Minister Tsipras claimed that “competition policy should intervene against large private and financial oligopolies because these distort in their favor market rules.” They argued that competition policy “has been used sometimes to dismantle and privatize public services.[4]” and the group opposes this.

[1] http://www.eppgroup.eu/press-release/EPP-wants-tax-clawbacks-from-tax-dodging-to-go-to-EU-budget

[2] http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20160118&secondRef=ITEM-014&language=EN&ring=A8-2015-0368

[3] http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20160118&secondRef=ITEM-014&language=EN&ring=A8-2015-036

[4] http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20160118&secondRef=ITEM-014&language=EN&ring=A8-2015-036

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