EU Pressured to Include Bloc States in Tax Haven Net

The EU is coming under mounting pressure to include countries within the bloc in its global crackdown on tax havens.

In the European Parliament, the socialists and democrats group has tabled an amendment demanding that Luxembourg, the Netherlands, Ireland and Malta—all EU members—should be written into the EU tax haven list, news outlets reported.

Richard Murphy of Tax Research said: “There is plenty of evidence to suggest there are companies in those countries that have no economic substance and are established for tax purposes only.”

He added: “If we want to fight tax avoidance credibly on a global stage, we must also put our own house in order. Why should we care less about states inside of our union that have turned stealing our taxes into their business model?”

The UAE, Bahrain and Tunisia were among 17 countries named as facing sanctions following the EU probe. But critics have said the list is undermined by being too selective and turning a blind eye to a number of other countries that should also have been penalized.

Peter Simon, on behalf of the socialists and democrats group in the European Parliament, said according to the most recent OECD data on foreign direct investment, Luxembourg and the Netherlands together have more inward investment than the US, “and that the vast majority of these investments are in special-purpose entities with no substantial economic activity.”

He pointed out that of all the corporate investments ending up in tax havens, a total of 23% passed through the Netherlands, according to research by the University of Amsterdam.

Simon said the data provided clear indication that EU member states were “facilitating excessive profit-shifting activities, which comes at the expense of other European member states. We therefore call on the European Commission to regard Luxembourg, the Netherlands, Ireland and Malta as EU tax havens.”