Finance Minister Jeroen Dijsselbloem chaired a series of debates during the informal meeting of the Economic and Financial Affairs Council (Ecofin) in Amsterdam. The finance ministers of all the EU’s 28 member states discussed, among other things, ways to strengthen the European Banking Union, the Panama Papers and the financial sector´s contribution to a sustainable and stable economy.
The discussion of Banking Union considered the risk of countries in financial stress dragging down banks with significant holdings of sovereign debt. The Netherlands Presidency had placed this issue on the agenda. ‘We discussed the issue in depth,’ said Mr Dijsselbloem. ‘It’s reassuring to note that everyone recognises its importance.
Joint approach to tackling VAT fraud
The Ecofin meeting also addressed the fight against VAT fraud. The Netherlands would like EU member states to take more joint action and use innovative methods to combat criminal gangs. The ministers discussed ways to improve information-sharing and cooperation between the tax authorities of individual member states. State Secretary for Finance Eric Wiebes presented IT tools that EU member states can use to detect VAT fraud at an earlier stage.
Tax avoidence has been high on the agenda during the Presidency. After nearly 6 months the EU finance ministers reached an initial agreement on a comprehensive package of measures to stop tax avoidance on 17 June, subject to a ‘silence procedure’. The agreement was finalised during the Netherlands Presidency in the night of 20-21 June.
The package limits interest deductions and introduces a tax to prevent activities being relocated to low-tax countries without any tax being paid. A general anti-abuse rule will prevent artificial tax arrangements. Another measure will stop companies transferring passive income to subsidiaries in low-tax countries. Measures will also be taken to stop tax regime shopping.
As President of the Economic and Financial Affairs Council, finance minister Jeroen Dijsselbloem said, ‘The fight against tax avoidance has been high on the agenda during our six-month Presidency. It wasn’t easy because of the significant interests at play and the differences of opinion. But we succeeded in making agreements that I and my 27 counterparts will now turn into law in our own countries.’
Confidence in the tax system
The minister believes the EU must take the lead in the fight against tax fraud and tax avoidance. ‘If big companies don’t pay their fair share, the public will be unwilling to pay theirs. Revelations like LuxLeaks and the Panama Papers have knocked the public’s confidence in a fair tax system. I hope it will return now we are closing the escape routes for multinationals.’
What is Ecofin?
The Ecofin Council takes decisions on EU economic policy, taxes and the financial sector. There are two kinds of Ecofin Council. At informal meetings, the ministers debate new plans and solutions to complex problems. At regular Ecofin meetings, the finance ministers take decisions on legislative proposals drafted by the European Commission. Together with the European Parliament, they also prepare the Union's annual budget.