BRUSSELS--European Union finance ministers struck two separate
deals on Tuesday aimed at cracking down on tax avoidance by
multinationals, an issue that is high on Europe's political agenda
as a lackluster economic recovery fails to replenish crisis-hit
state coffers.
At a meeting in Brussels, finance ministers agreed to update a
1990 law that was created to avoid double taxation in the bloc but
has been used by some companies to avoid paying any taxes on
cross-border payments from a subsidiary to its parent.
The ministers agreed to adopt a broad anti-abuse clause to
ensure that corporations comply with the spirit of the 1990 law.
They also agreed to the mandatory exchange of information between
national EU tax authorities.
Pierre Moscovici, the EU's tax commissioner, said the
"breakthrough agreements" would "open up a new front in our fight
against corporate tax avoidance and aggressive tax planning."
Finance ministers had sought to vote on the changes last month,
but the vote was delayed at the request of several national
governments.
"I can confirm that remaining reservations have been lifted and
the required unanimity has been reached," Italy's Finance Minister
Pier Carlo Padoan said.
He said the move represented "a serious step forward in the
fight against aggressive tax planning."
The 28-member EU is mounting a broader crackdown on tax evasion
and avoidance to boost budgets hit hard by the region's financial
crisis and to assuage voters angry over austerity measures that
have forced cuts in public services and sparked tax increases for
individuals.
When it announced the revision to its so-called
parent-subsidiary directive a year ago, the European Commission,
the EU's executive arm, predicted the move would raise billions of
euros for national governments.
"We can no longer afford freeloaders who reap huge profits in
the EU without contributing to the public purse," Algirdas Semeta,
the EU's then-tax commissioner, said at the time.
Since June, the commission has opened formal investigations into
allegedly unfair tax deals granted to four multinational
corporations-- Apple Inc. in Ireland, Amazon.com Inc. and Fiat SpA
in Luxembourg, and Starbucks Corp. in the Netherlands.
Write to Tom Fairless at tom.fairless@wsj.com
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