The EU’s tax commissioner has called on the bloc’s governments to be ambitious when they decide on a common blacklist of tax havens next week and said European funding to countries on the list should be frozen.
In the wake of disclosures of offshore tax avoidance schemes by corporations and wealthy individuals, EU states launched a process to list tax havens to try to discourage setting up shell structures abroad which are in many cases legal but could hide illicit activities.
After about one year of talks, EU finance ministers are expected next Tuesday to adopt the blacklist, although governments remain divided over which jurisdictions to include on the list and on sanctions.
“I invite member states to urgently adopt before the end of the year the European list of jurisdictions that refuse to reform their tax rules to comply with European standards,” Moscovici told EU lawmakers at a hearing in the European Parliament.
EU states have their own national lists of non-cooperative jurisdictions on tax matters, though many of them are empty. Under public pressure following the Panama Papers and other leaks of financial documents, EU governments agreed to set up a common blacklist.
They have screened 92 jurisdictions worldwide against a set of criteria meant to measure tax transparency, use of harmful tax practices and co-operation on fiscal matters.
Moscovici told lawmakers that some countries have changed their tax rules after EU pressure and “half (of the 92) have committed to do so in 2018”.
It remains unclear how many countries will end up in the EU blacklist. Those who are not compliant but have committed to change their tax rules are likely to be included in a separate, grey list, as several EU officials call it, which might not be made public.
Some islands recently hit by hurricanes will also be given more time to comply.
It is also undecided which sanctions could be applied.
A withholding levy could, for instance, be charged on transactions to blacklisted countries, but some EU states could decide not to apply countermeasures — a discretion that could create loopholes. Some states, such as Luxembourg and Malta, have opposed sanctions saying that the mere listing would amount to an important reputational blow.