P8_TA(2019)0240

Report on financial crimes, tax evasion and tax avoidance

European Parliament resolution of 26 March 2019 on financial crimes, tax evasion and tax avoidance (2018/2121(INI))

(2021/C 108/02)

The European Parliament,

— having regard to Articles 4 and 13 of the Treaty on European Union (TEU),

— having regard to Articles 107, 108, 113, 115 and 116 of the Treaty on the Functioning of the European Union (TFEU),

— having regard to its decision of 1 March 2018 on setting up a special committee on financial crimes, tax evasion and tax avoidance (TAX3), and defining its responsibilities, numerical strength and term of office (1),

— having regard to its TAXE committee resolution of 25 November 2015 (2) and its TAX2 committee resolution of 6 July 2016 (3) on tax rulings and other measures similar in nature or effect,

— having regard to its resolution of 16 December 2015 with recommendations to the Commission on bringing transparency, coordination and convergence to corporate tax policies in the Union (4),

— having regard to the results of the Committee of Inquiry into money laundering, tax avoidance and tax evasion, which were submitted to the Council and the Commission on 13 December 2017 (5),

— having regard to the Commission’s follow-up to each of the above-mentioned Parliament resolutions (6),

— having regard to the numerous revelations by investigative journalists, such as the LuxLeaks, the Panama Papers, the Paradise Papers and, more recently, the cum-ex scandals, as well as the money laundering cases involving, in particular, banks in Denmark, Estonia, Germany, Latvia, the Netherlands and the United Kingdom,

— having regard to its resolution of 29 November 2018 on the cum-ex scandal: financial crime and loopholes in the current legal framework (7),

— having regard to its resolution of 19 April 2018 on protection of investigative journalists in Europe: the case of Slovak journalist Ján Kuciak and Martina Kušnírová (8),

— having regard to the studies prepared by the European Parliamentary Research Service on ‘Citizenship by investment (CBI) and residency by investment (RBI) schemes in the EU: state of play, issues and impacts’, ‘Money laundering and tax evasion risks in free ports and customs warehouses’ and ‘An overview of shell companies in the European Union’ (9),

— having regard to the study on ‘VAT fraud: economic impact, challenges and policy issues’ (10), the study on ‘Cryptocurrencies and blockchain — Legal context and implications for financial crime, money laundering and tax evasion’ and the study on the ‘Impact of Digitalisation on International Tax Matters’ (11),

— having regard to the Commission studies on ‘aggressive tax planning indicators’ (12),

— having regard to the evidence collected by the TAX3 committee in its 34 hearings with experts or exchanges of views with Commissioners and Ministers and during the missions to Washington, Riga, the Isle of Man, Estonia and Denmark,

— having regard to the modernised and more robust corporate tax framework introduced during this legislative term, notably the Anti-Tax Avoidance Directives (ATAD I (13) and ATAD II (14)) and the reviews of the Directive on Administrative Cooperation in taxation (DAC) (15),

— having regard to the Commission proposals pending for adoption, in particular on the CC(C)TB (16), the digital taxation package (17) and public country-by-country reporting (CBCR) (18), as well as Parliament’s position on these proposals,

— having regard to the resolution of the Council and the Representatives of the Governments of the Member States of 1 December 1997 on a Code of Conduct Group on Business Taxation (CoC Group), and to this Group’s regular reports to the ECOFIN Council,

— having regard to the Council list of non-cooperative jurisdictions for tax purposes adopted on 5 December 2017 and amended on the basis of the ongoing monitoring of third country commitments,

— having regard to the Commission communication of 21 March 2018 on new requirements against tax avoidance in EU legislation governing in particular financing and investment operations (C(2018)1756),

— having regard to the ongoing modernisation of the VAT framework, in particular the VAT definitive regime,

— having regard to its resolution of 24 November 2016 on towards a definitive VAT system and fighting VAT fraud (19),

— having regard to the recently adopted new EU anti-money laundering framework, in particular after the adoption of the fourth (AMLD4) (20) and fifth (AMLD5) (21) reviews of the Anti-Money Laundering Directive,

— having regard to the infringement procedures initiated by the Commission against 28 Member States for having failed to properly transpose AMLD4 into national law,

— having regard to the Commission Action Plan of 2 February 2016 on strengthening the fight against terrorist financing (COM(2016)0050) (22),

— having regard to the Commission communication of 12 September 2018 on strengthening the Union framework for prudential and anti-money laundering supervision (COM(2018)0645),

— having regard to its resolution of 14 March 2019 on the urgency for an EU blacklist of third countries in line with the Anti-Money Laundering Directive (23),

— having regard to the Platform of the Financial Intelligence Units of the European Union (EU FIUs’ Platform) mapping exercise and gap analysis of 15 December 2016 on EU FIUs’ powers and obstacles in obtaining and exchanging information, and to the Commission Staff Working Document of 26 June 2017 on improving cooperation between EU Financial Intelligence units (SWD(2017)0275),

— having regard to the Recommendation of the European Banking Authority (EBA) and the Commission of 11 July 2018 to the Maltese Financial Intelligence Analysis Unit (FIAU) on action necessary to comply with the Anti-Money Laundering and Countering Terrorism Financing Directive,

— having regard to the letter of 7 December 2018 sent by the TAX3 Committee Chair to the Permanent Representative of Malta to the EU, HE Daniel Azzopardi, seeking explanations about the company ‘17 Black’,

— having regard to the state aid investigations and decisions of the Commission (24),

— having regard to the proposal for a directive of the European Parliament and of the Council of 23 April 2018 on protection of persons reporting on breaches of Union law (COM(2018)0218),

— having regard to the Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community;

— having regard to the Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom;

— having regard to the outcomes of the various G7, G8 and G20 summits held on international tax issues,

— having regard to the resolution adopted by the United Nations General Assembly on 27 July 2015 on the Addis Ababa Action Agenda,

— having regard to the report by the High Level Panel on Illicit Financial Flows from Africa, jointly commissioned by the African Union Commission(AUC)/UN Economic Commission for Africa (ECA) Conference of African Ministers of Finance, Planning and Economic Development,

— having regard to the Commission communication of 28 January 2016 on an External Strategy for Effective Taxation (COM(2016)0024), in which the Commission also called for the EU to ‘lead by example’,

— having regard to its resolutions of 8 July 2015 on tax avoidance and tax evasion as challenges for governance, social protection and development in developing countries (25), and of 15 January 2019 on gender equality and taxation policies in the EU (26),

— having regard to the obligation under Article 8(2) of the European Convention on Human Rights (ECHR) to observe privacy laws at all times,

— having regard to the Commission report of 23 January 2019 on Investor Citizenship and Residence Schemes in the European Union (COM(2019)0012),

— having regard to the Commission communication of 15 January 2019 entitled ‘Towards a more efficient and democratic decision making in EU tax policy’ (COM(2019)0008),

— having regard to the European Economic and Social Committee opinion of 18 October 2017 entitled ‘EU development partnerships and the challenge posed by international tax agreements’,

— having regard to Rule 52 of its Rules of Procedure,

— having regard to the report of the Special Committee on financial crimes, tax evasion and tax avoidance (A8-0170/2019),

1. General introduction setting the scene

1.1. Changes

1. Asserts that existing tax rules are often unable to keep up with the increasing speed of the economy; recalls that current international and national tax rules were mostly conceived in the early 20 th century; asserts that there is an urgent and continuous need for reform of the rules, so that international, EU and national tax systems are fit for the new economic, social and technological challenges of the 21 st century; notes the broad understanding that current tax systems and accounting methods are not equipped to keep up with these developments and ensure that all market participants pay their fair share of taxes;

2. Highlights that the European Parliament has made a substantial contribution to the fight against financial crimes, tax evasion and tax avoidance as uncovered inter alia in the LuxLeaks, Panama Papers, Paradise Papers, Football Leaks, Bahamas Leaks, and cum-ex cases, notably with the work of the TAXE, TAX2 ( 27 ) and TAX3 special committees, the PANA inquiry committee and the Committee on Economic and Monetary Affairs (ECON);

3. Welcomes the fact that during its current term the Commission has put forward 26 legislative proposals aimed at closing some of the loopholes, improving the fight against financial crimes and aggressive tax planning, and enhancing tax collection efficiency and tax fairness; deeply regrets the lack of progress in the Council on major initiatives in relation to corporate tax reform that have not yet been finalised due to the lack of genuine political will; calls for the swift adoption of the EU initiatives that have not yet been finalised and for careful monitoring of the implementation to ensure efficiency and proper enforcement, in order to keep pace with the versatility of tax fraud, tax evasion and aggressive tax planning;

4. Recalls that a tax jurisdiction has control only over tax matters related to its territory, whereas economic flows and some taxpayers such as multinational enterprises (MNEs) and high net worth individuals (HNWIs) operate globally;

5. Emphasises that defining tax bases requires being in possession of a full picture of a taxpayer’s situation, including the components that are outside of the given tax jurisdiction, and determining which component refers to which jurisdiction; notes that it also requires that such tax bases are allocated between tax jurisdictions to avoid double-taxation and double non-taxation; affirms that priority should be given to eliminating double non-taxation, as well as ensuring that the issue of double taxation is tackled;

6. Considers that efforts need to be made by all EU institutions, as well as Member States, to explain to citizens the work being done in the field of taxation and the actions taken to remedy existing problems and loopholes; considers that the EU needs to adopt a broad strategy whereby the EU supports, with relevant policies, Member States in moving from their current detrimental tax systems to a tax system compatible with the EU’s legal framework and the spirit of the EU Treaties;

7. Notes that economic flows ( 28 ) and opportunities to change tax residence have substantially increased; warns that some new phenomena ( 29 ) are inherently opaque or facilitate opaqueness, allowing for tax fraud, tax evasion, aggressive tax planning, and money laundering;

8. Deplores the fact that some Member States confiscate the tax base of other Member States by attracting profits generated elsewhere, thereby allowing companies to artificially lower their tax base; points out that this practice not only harms the principle of EU solidarity, but also gives rise to a redistribution of wealth towards MNEs and their shareholders at the expense of EU citizens; supports the important work by academics and journalists who are helping to shed light on these practices;

1.2. Purpose of taxation and the impact of tax fraud, tax evasion, harmful tax practices and money laundering on European societies

9. Considers that fair taxation and the determined fight against tax fraud, tax evasion, aggressive tax planning and money laundering have a central role to play in shaping a fair society and a strong economy while defending the social contract and the rule of law; notes that a fair and efficient taxation system is key to addressing inequality, not only by financing public spending to support social mobility, but also by reducing income inequalities; highlights that tax policy can have a major influence on employment decisions, investment levels and the willingness of companies to expand;

10. Underlines that the most urgent priority is to reduce the tax gap resulting from tax fraud, tax evasion, aggressive tax planning and money laundering and their impact on national and EU budgets to ensure a level playing field and tax fairness between and among all taxpayers, to fight the rise in inequality and to strengthen trust in democratic policymaking by ensuring that fraudsters do not have a competitive tax advantage over honest taxpayers;

11. Stresses that joint efforts at EU and national level are crucial to defend the EU and national budgets from losses due to unpaid taxes; notes that only with fully and efficiently collected tax revenues, can states provide for, among other things, quality public services, including affordable education, healthcare and housing, security, crime control and emergency response, social security and care, enforcement of occupational and environmental standards, the fight against climate change, promotion of gender equality, public transport, and essential infrastructure in order to foster and, if necessary, to stabilise socially balanced development, to move towards the Sustainable Development Goals;

12. Considers that recent developments in taxation and tax collection, which have shifted the tax incidence from wealth to income, from capital income to labour income and consumption, from MNEs to small and medium-sized enterprises (SMEs), and from the financial sector to the real economy, has had a disproportionate impact on women and low-income people, who typically rely more on labour income and spend a higher proportion of their income on consumption ( 30 ) ; notes that higher rates of tax evasion exist among the wealthiest ( 31 ) ; calls on the Commission to consider the impact on social development, including gender equality and the other aforementioned policies, in its legislative proposals in the areas of tax and anti-money laundering;

1.3. Risk and benefits linked to cash transactions

13. Stresses that cash transactions remain a very high risk in terms of money laundering and tax evasion, including VAT fraud, despite its benefits, such as accessibility and speed; notes that a number of Member States already have restrictions on cash payments in place; also notes that while rules on cash controls at the EU external borders have been harmonised, rules among Member states concerning cash movements within the EU’s borders vary;

14. Notes that fragmentation and the divergent nature of these measures have the potential to disrupt the proper functioning of the internal market; calls on the Commission, therefore, to prepare a proposal on European restrictions on payments in cash, while maintaining cash as a means of payment; notes, furthermore, that high-denomination euro notes present a higher risk in terms of money laundering; welcomes the fact that the European Central Bank (ECB) announced in 2016 that it would no longer issue new EUR 500 notes (even though the outstanding stock remains legal tender); calls on the ECB to draw up a timetable to phase out the ability to use EUR 500 notes;

1.4. Quantitative assessment

15. Stresses that tax fraud, tax evasion and aggressive tax planning result in lost resources for national and European Union budgets ( 32 ) ; acknowledges that quantification of these losses is not straightforward; notes, however, that increased transparency requirements would not only provide better data, but also would contribute to reducing opaqueness;

16. Notes that several assessments have attempted to quantify the magnitude of losses from tax fraud, tax evasion and aggressive tax planning; recalls that none of these provide a large enough picture on their own due to the nature of the data or the lack thereof; notes that some of the recent assessments supplement each other, based on different but complementary methodologies;

17. Notes that, to date, while the Commission performs a VAT tax gap estimate for the EU, only fifteen Member States prepare their own national tax gap estimates; calls on each Member State, under the guidance of the Commission, to prepare a comprehensive tax gap estimate, not limited to VAT and including an assessment of the cost of all tax incentives;

18. Deplores, once again, ‘the lack of reliable and unbiased statistics on the magnitude of tax avoidance and tax evasion’ and stresses ‘the importance of developing appropriate and transparent methodologies to quantify the scale of these phenomena, as well as their impact on countries’ public finances, economic activities and public investments’ ( 33 ) ; points out the importance of the political and financial independence of statistical institutes to ensure the reliability of statistical data; calls for technical assistance to be requested from Eurostat for the collection of comprehensive and accurate statistics, so that they are provided in a comparable, easily coordinated digital format;

19. Recalls in particular the empirical assessment of the magnitude of annual revenue losses caused by aggressive corporate tax planning in the EU which was drawn up in 2015; notes that the assessment ranges from EUR 50-70 billion (sum lost to profit-shifting only, equivalent to at least 17 % of corporate income tax (CIT) revenue in 2013 and 0,4 % of GDP) to EUR 160-190 billion (adding individualised tax arrangements of major MNEs and inefficiencies in collection);

20. Calls on the Council and Member States to prioritise projects, notably with the support of the Fiscalis programme, aimed at quantifying the magnitude of tax avoidance in order to better address the current tax gap; stresses that the European Parliament has adopted ( 34 ) an increase in the Fiscalis programme; urges Member States, under the coordination of the Commission, to estimate their tax gaps and publish the results annually;

21. Notes that the IMF working paper ( 35 ) estimates worldwide losses due to base erosion and profit shifting (BEPS) and relating to tax havens to be approximately USD 600 billion per year; notes that the IMF long-run approximate estimates are USD 400 billion for OECD countries (1 % of their GDP) and USD 200 billion for developing countries (1,3 % of their GDP);

22. Welcomes the recent estimates of the non-observed economy (NOE) — often called the shadow economy — in the 2017 Survey of Tax Policies in the European Union ( 36 ) , which provides a broader indication of tax evasion; stresses that the value of the NOE measures economic activities which may not be captured in the basic data sources used for compiling national accounts;

23. Highlights that close to 40 % of MNEs’ profits are shifted to tax havens globally each year with some European Union countries appearing to be the prime losers of profit shifting, as 35 % of shifted profits come from EU countries, followed by developing countries (30 %) ( 37 ) ; points out that about 80 % of the profits shifted from many EU Member States are channelled to or through a few other EU Member States; points out that MNEs can pay up to 30 % less tax than domestic competitors, and that aggressive tax planning distorts competition for domestic firms, in particular SMEs;

24. Notes that the latest estimates of tax evasion within the EU point to a figure of approximately EUR 825 billion per year ( 38 )

25. Notes that the MNEs heard by the TAX3 committee produce their own estimates of Effective Tax Rates (ETR) ( 39 ) ; points out that these estimates are questioned by some experts;

26. Calls for statistics to be collected on large transactions at free ports, customs warehouses and special economic zones, as well as disclosures made by intermediaries and whistle-blowers;

1.5. Tax fraud, tax evasion, tax avoidance and aggressive tax planning (ATP)

27. Recalls that the fight against tax evasion and fraud tackles illegal acts, whereas the fight against tax avoidance addresses situations that exploit loopholes in the law or are a priori within the limits of the law — unless deemed illegal by the tax or, ultimately, the judicial authorities — but against its spirit; calls, therefore, for simplification of the tax framework;

28. Recalls that improving tax collection in EU countries is likely to reduce crime associated with tax evasion and the money laundering that follows it;

29. Recalls that ATP describes the setting of a tax design aimed at reducing tax liability by using the technicalities of a tax system or arbitrating between two or more tax systems that go against the spirit of the law;

30. Welcomes the Commission’s reply to the calls made in its TAXE, TAX2 and PANA resolutions to better identify ATP and harmful tax practices;

31. Calls on the Commission and the Council to propose and adopt a comprehensive and specific definition of ATP indicators, building on both the hallmarks identified in the fifth review of the Directive on administrative cooperation (DAC6) ( 40 ) and the Commission’s relevant studies and recommendations ( 41 ) ; stresses that these clear indicators may be based, where necessary, on internationally agreed standards; calls on Member States to use these indicators as a basis to repeal all harmful tax practices deriving from existing tax loopholes; calls on the Commission and the Council to regularly update these indicators if new ATP arrangements or practices emerge;

32. Stresses the similarity between corporate taxpayers and HNWIs in the use of corporate structures and similar structures such as trusts and offshore locations for the purpose of ATP; points out the role of intermediaries ( 42 ) in setting up such schemes; recalls, in this context, that most of the HNWIs’ income arrives in the form of capital gains rather than earnings;

33. Welcomes the Commission’s assessment and inclusion of ATP indicators in its 2018 European Semester country reports; calls for such an assessment to become a regular feature in order to ensure a level playing field in the EU internal market, as well as the greater stability of public revenue in the long run; invites the Commission to ensure clear follow-up to end ATP practices, if appropriate in the form of formal recommendations;

34. Reiterates its call on companies, as taxpayers, to fully comply with their tax obligations and refrain from ATP leading to BEPS, and to consider fair taxation strategy, as well as abstaining from harmful tax practices, as an important part of their corporate social responsibility, taking into account the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises in order to secure taxpayers’ trust in tax frameworks;

35. Urges Member States taking part in the enhanced cooperation procedure to agree as quickly as possible on the adoption of a Financial Transaction Tax (FTT), while acknowledging that a global solution would be the most appropriate;

2. Corporate taxation

36. Recalls that opportunities for choosing a business or residence location on the basis of the regulatory framework have increased with globalisation and digitalisation;

37. Recalls that taxes must be paid in the jurisdictions where the actual substantive and genuine economic activity and value creation take place or, in the case of indirect taxation, where consumption takes place; highlights that this can be achieved by adopting the Common Consolidated Corporate Tax Base (CCCTB) in the EU with an appropriate and fair distribution, incorporating among other things all tangible assets;

38. Notes that an exit tax was adopted by the EU in ATAD I, allowing Member States to tax the economic value of capital gain created on its territory even when that gain has not yet been realised at the time of exit; considers that the principle of taxing profits made in Member States before they leave the Union should be strengthened, for example through coordinated withholding taxes on interests and royalties, so as to close existing loopholes and avoid profits leaving the EU untaxed; calls on the Council to resume negotiations on the interest and royalties proposal ( 43 ) ; notes that tax treaties often reduce the withholding tax rate with a view to avoiding double taxation ( 44 )

39. Reaffirms that the adaptation of international tax rules needs to respond to avoidance deriving from the possible exploitation of the interplay between national tax provisions, and networks of tax treaties, resulting in an erosion of the tax base and double non-taxation while ensuring that there is no double-taxation;

2.1. BEPS action plan and its implementation in the EU: ATAD

40. Acknowledges that the G20/OECD-led BEPS project was meant to tackle in a coordinated manner the causes and circumstances creating BEPS practices, by improving the coherence of tax rules across borders, reinforcing substance requirements and enhancing transparency and certainty; states, however, that the degree of willingness and commitment to cooperate on the OECD BEPS action plan varies among countries and the particular actions concerned;

41. Notes that the G20/OECD 15-point BEPS action plan, intended to tackle in a coordinated manner the causes and circumstances creating BEPS practices, is being implemented and monitored and further discussions are taking place, in a broader context than just the initial participating countries, through the Inclusive Framework; calls, therefore, on Member States to support a reform of both the mandate and the functioning of the Inclusive Framework to ensure that remaining tax loopholes and unsolved tax questions are covered by the current international framework; welcomes the initiative of the Inclusive Framework to discuss and find a global consensus on a better allocation of taxing rights among countries;

42. Takes note of the fact that the actions require implementation; takes note of the policy note ( 45 ) of the Inclusive Framework on BEPS, which aims to devise possible solutions to the identified challenges relating to the taxation of the digital economy;

43. Points out that some countries have recently adopted unilateral countermeasures against harmful tax practices (such as the UK’s Diverted Profits Tax and the Global Intangible Low-Taxed Income (GILTI) provisions of the US tax reform) to ensure that the foreign income of MNEs is duly taxed at a minimum effective tax rate in the parent’s country of residence; calls for an EU assessment of these measures; notes that, in contrast to these unilateral measures, the EU generally promotes multilateral and consensual solutions to deal with a fair allocation of taxing rights; stresses that, for example, the EU prioritises a global solution for taxing the digital sector, but is nevertheless proposing an EU Digital Services Tax (DST) as global discussions have been progressing slowly;

44. Recalls that the 2016 EU ‘anti-tax-avoidance package’ supplements existing provisions so as to implement the 15 BEPS actions in a coordinated manner across the EU in the single market;

45. Welcomes the adoption by the EU of ATAD I and ATAD II; notes that these directives provide fairer taxation by establishing a minimum level of protection against corporate tax avoidance throughout the EU and ensuring a fairer and more stable environment for businesses, from both demand and supply perspectives; welcomes the provisions on hybrid mismatches to prevent double non-taxation in order to eliminate existing mismatches and refrain from creating further mismatches, between Member States and with third countries;

46. Welcomes the provisions on Controlled Foreign Corporation (CFC) included in ATAD I to ensure that profits made by related companies parked in low or no-tax countries are effectively taxed; acknowledges that they prevent the absence or diversity of national CFC rules within the Union from distorting the functioning of the internal market beyond situations of wholly artificial arrangements as called for repeatedly by Parliament; deplores the coexistence of two approaches to implement CFC rules in ATAD I and calls on Member States to implement only the simpler and most efficient CFC rules as in ATAD I Article 7(2)(a);

47. Welcomes the general anti-abuse rule for the purposes of calculating corporate tax liability included in ATAD I, allowing Member States to ignore arrangements that are not genuine and having regard to all relevant facts and circumstances aimed solely at obtaining a tax advantage; reiterates its repeated call for the adoption of a general and common, stringent anti-abuse rule, namely in existing legislation and in particular in the parent-subsidiary directive, the merger directive and the interest and royalties directive;

48. Reiterates its call for a clear definition of permanent establishment and significant economic presence so that companies cannot artificially avoid having a taxable presence in a Member State in which they have economic activity;

49. Calls for the finalisation of the work being done within the EU Joint Transfer Pricing Forum (JTPF) on the development of good practices and monitoring of Member States’ implementation by the Commission;

50. Recalls its concerns relating to the use of transfer prices in ATP and consequently recalls the need for adequate action and improvement of the transfer pricing framework to address the issue; stresses the need to ensure that they reflect the economic reality, provide certainty, clarity and fairness for Member States and for companies operating within the Union, and reduce the risk of misuse of the rules for profit-shifting purposes, taking into account the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration 2010 ( 46 ) ; notes, however, that, as has been highlighted by experts and publications, the use of the ‘independent entity concept’ or ‘arm’s length principle’ constitutes one of the main factors enabling harmful tax practices ( 47 )

51. Emphasises that the EU actions aimed at addressing BEPS and ATP have equipped tax authorities with an updated toolbox to ensure fair tax collection while maintaining the competitiveness of EU businesses; stresses that tax authorities should be responsible for making effective use of the tools without imposing an additional burden on responsible taxpayers, particularly SMEs;

52. Recognises that the new flow of information to tax authorities following the adoption of ATAD I and DAC4 creates the need for adequate resources to ensure the most efficient use of such information and to effectively reduce the current tax gap; calls on all Member States to make sure that the tools used by the authorities are sufficient and adequate to use this information and to combine and cross-check information from different sources and data sets;

2.2. Strengthening EU actions to fight against ATP and supplementing BEPS action plan

2.2.1. Scrutinising Member States’ tax systems and overall tax environment — ATP within the EU (European Semester)

53. Welcomes the fact that Member States’ tax systems and overall tax environment have become part of the European Semester in line with Parliament’s call to that effect ( 48 ) ; welcomes the studies and data drawn up by the Commission ( 49 ) that allow situations that provide economic ATP indicators to be better addressed, and give a clear indication of the exposure to tax planning as well as furnishing a rich data base for all Member States on the phenomenon; points out that Member States, in the spirit of loyal cooperation, must not facilitate the creation of ATP schemes incompatible with the EU legal framework and the spirit of the EU Treaties;

54. Calls for these new tax indicators for the European Semester to be given the same status as the indicators relating to expenditure control; underlines the benefit of providing the European Semester with this tax dimension, as it will make it possible to tackle certain harmful tax practices that had not thus far been tackled through the ATAD Directive and other existing European regulations;

55. Welcomes the fact that DAC6 sets out the hallmarks of reportable cross-border arrangements that intermediaries must report to tax authorities to allow them to be assessed by the latter; welcomes the fact that these features of ATP schemes can be updated if new arrangements or practices emerge; points out that the deadline for the implementation of the directive has not yet elapsed and that the provisions will need to be monitored to ensure their efficiency;

56. Calls on the CoC Group to report yearly to the Council and Parliament on the main arrangements reported in Member States to allow decision makers to keep up with the new tax schemes which are being elaborated, and to take the necessary countermeasures that might potentially be needed;

57. Calls for both the EU institutions and the Member States to ensure that public procurement contracts do not facilitate tax avoidance by suppliers; points out that Member States should monitor and ensure that companies or other legal entities involved in tenders and procurement contracts do not participate in tax fraud, tax evasion and ATP; calls on the Commission to clarify existing procurement practice under the EU Procurement Directive, and if necessary, propose an update of the directive that does not prohibit the application of tax-related considerations as criteria for exclusion or even as selection criteria in public procurement;

58. Calls on the Commission to publish a proposal that would oblige the Member States to ensure that economic operators participating in public procurement procedures comply with a minimum level of transparency regarding tax, in particular public country-by-country reporting and transparent ownership structures;

59. Calls on the Commission to issue as soon as possible a proposal aimed at repealing patent boxes, and calls on Member States to favour non-harmful and, if appropriate, direct support for R&D on their territory; stresses that tax reliefs for companies need to be carefully constructed and implemented only where there is a positive impact on jobs and growth and any risk of creating new loopholes in the taxation system is excluded;

60. Reiterates, in the meantime, its call to ensure that current patent boxes establish a genuine link to economic activity, such as expenditure tests, and that they do not distort competition; notes the growing role of intangible assets in the MNE value chain; notes the improved definition of R&D costs in the common corporate tax base (CCTB) proposal; upholds Parliament’s position on tax credit for genuine R&D expenses instead of R&D deduction;

2.2.2. Better cooperation in the area of taxation, including the CCCTB

61. Stresses that taxation policy in the European Union should focus both on fighting tax avoidance and ATP and on facilitating cross-border economic activity through cooperation between tax authorities and smart tax policy design;

62. Underlines that there is a multitude of tax-related obstacles that hamper cross-border economic activity; notes, in this regard, its resolution of 25 October 2012 on the 20 main concerns of European citizens and business with the functioning of the Single Market ( 50 ) ; urges the Commission to adopt an action plan addressing these obstacles as a matter of priority;

63. Welcomes the re-launch of the CCCTB project with the Commission’s adoption of interconnected proposals on CCTB and CCCTB; stresses that once implemented fully, the CCCTB will eliminate loopholes between national tax systems, in particular transfer pricing;

64. Calls on the Council to swiftly adopt and implement the two proposals simultaneously taking into consideration Parliament’s opinion that already includes the concept of virtual permanent establishment and apportionment formulas that would close the remaining loopholes allowing tax avoidance to take place and level the playing field in light of digitalisation; regrets the continued refusal of certain Member States to find a solution, and calls on the Member States to bridge their diverging positions;

65. Recalls that the application of the C(C)CTB should be accompanied by the implementation of common accounting rules and appropriate harmonisation of administrative practices;

66. Recalls that in order to end the practice of profit shifting and introduce the principle that tax is paid where profit is generated, the CCTB and CCCTB should be introduced simultaneously in all Member States; calls on the Commission to issue a new proposal based on Article 116 of the TFEU, whereby the European Parliament and the Council act in accordance with the ordinary legislative procedure to issue the necessary legislation, should the Council fail to adopt a unanimous decision on the proposal to establish a CCCTB;

2.2.3. Corporate digital taxation

67. Notes that the phenomenon of digitalisation has created a new situation in the market, whereby digital and digitalised companies are able to take advantage of local markets without having a physical, and therefore taxable, presence in that market, creating a non-level playing field and putting traditional companies at a disadvantage; notes that digital businesses models in the EU face a lower effective average tax burden than traditional business models ( 51 )

68. Points out, in this context, the gradual shift from tangible production to intangible assets in the value chains of MNEs, as reflected in the relative rates of growth over the last five years of royalties and licensing fee receipts (almost 5 %annually) compared with trade in goods and foreign direct investment (FDI) (less than 1 % annually) ( 52 ) ; deplores the fact that digital businesses pay almost no taxes in some Member States despite their significant digital presence and large revenues in those Member States;

69. Believes that the EU should allow for an attractive business environment in order to achieve a smoothly functioning digital single market while ensuring fair taxation of the digital economy; recalls that, when it comes to the digitalisation of the economy as a whole, the location of the value creation should take users’ input into account, as well as information collected on consumers’ behaviour online;

70. Underlines that a lack of a common Union approach to addressing the taxation of the digital economy will lead — and indeed already has led — Member States to adopt unilateral solutions, which will lead to regulatory arbitrage and the fracturing of the single market, and might become a burden for companies operating on a cross-border basis, as well as for tax authorities;

71. Notes the leading role played by the Commission and some Member States in the global debate on the taxation of the digitalised economy; encourages the Member States to continue their proactive work at OECD and UN level, especially via the process introduced by the Inclusive Framework on BEPS in its Policy Note ( 53 ) ; recalls, however, that the EU should not wait for a global solution and must act immediately;

72. Welcomes the digital tax package adopted by the Commission on 21 March 2018; regrets, however, that Denmark, Finland, Ireland and Sweden maintained their reservations or their fundamental opposition to the DST package during the ECOFIN meeting on 12 March 2019 ( 54 )

73. Emphasises that the agreement on what constitutes digital permanent establishment, the only one to have been reached hitherto, is a step in the right direction, but does not resolve the issue of tax base allocation;

74. Calls on the Member States willing to consider the introduction of a digital tax to do so within the framework of enhanced cooperation in order to avoid further fragmentation of the single market, as is already happening with individual Member States considering the introduction of national solutions;

75. Understands that the so-called interim solution is not optimal; believes that it will help speed up the search for a better solution at global level, while levelling the playing field in local markets to some extent; calls on the EU Member States to discuss, adopt and implement the long-term solution concerning the taxation of the digital economy (on significant digital presence) as soon as possible in order for the EU to remain a trendsetter at global level; stresses that the long-term solution proposed by the Commission should serve as a basis for further work at international level;

76. Notes the strong demand for the DST by the EU citizens; recalls that surveys show that 80 % of citizens from Germany, France, Austria, the Netherlands, Sweden and Denmark are supportive of a DST, and think that the EU should pioneer international efforts; underlines, furthermore, that a majority of the surveyed citizens would like a broad scope for a DST ( 55 )

77. Calls on the Member States to ensure that the DST remains a temporary measure by including a ‘sunset clause’ to the proposal for a Council Directive of 21 March 2018 on the common system of a digital services tax on revenues resulting from the provision of certain digital services ( 56 ) (COM(2018)0148), and by speeding up the discussion on a significant digital presence;

2.2.4. Effective Taxation

78. Notes that nominal corporate tax rates have decreased at EU level from an average of 32 % in 2000 to 21,9 % in 2018 ( 57 ) , which represents a decrease of 32 %; is concerned about the implications of this competition on the sustainability of tax systems and its potential spillover effects on other countries; observes that the first G20/OECD-led BEPS project did not touch upon this phenomenon; welcomes the announcement of the Inclusive Framework on BEPS to explore on a ‘without prejudice’ basis taxing rights that would strengthen the ability of jurisdictions to tax profits where the other jurisdiction with taxing rights applies a low effective rate of tax to those profits, by 2020 ( 58 ) , which translates into minimum effective taxation; notes that, as stated by the Inclusive Framework on BEPS, the current OECD-led work does not imply changes to the fact that countries or jurisdictions remain free to set their own tax rates or not to have a corporate income tax system at all ( 59 )

79. Welcomes the new OECD global standard on substantial activities factor to no or only nominal tax jurisdiction ( 60 ) , largely inspired by the EU’s work on the EU listing process (Fair criterion 2.2 of the EU list);

80. Notes the discrepancies between estimates of large corporations’ effective tax rates — often based on provision for taxes ( 61 ) — and the actual tax paid by large MNEs; notes that traditional sectors pay on average an effective corporate tax rate of 23 %, while the digital sector pays about 9,5 % ( 62 )

81. Notes the diverging methodologies in assessing effective tax rates, which do not allow for reliable comparison of ETRs in the EU and globally; notes that some assessments of effective tax rates in the EU diverge from 2,2 % to 30 % ( 63 ) ; calls on the Commission to develop its own methodology and regularly publish the ETRs in the Member States;

82. Calls on the Commission to assess the phenomenon of decreasing nominal tax rates and its impact on ETRs in the EU, and to propose remedies, both within the EU and towards third countries as applicable, including strong anti-abuse rules, defensive measures, such as stronger controlled foreign company rules, and a recommendation to amend tax treaties;

83. Believes that the global coordination on the tax base as a result of the OECD/BEPS project should be accompanied by better coordination on tax rates in an effort to achieve improved efficiency;

84. Invites the Member States to update the mandate of the CoC Group to explore the concept of minimum effective taxation of corporate profits to follow up on the OECD’s work on the Tax Challenges of the Digitalisation of the Economy;

85. Takes note of the statement made by the French Finance Minister at the TAX3 meeting of 23 October 2018 regarding the need to discuss the concept of minimum taxation; welcomes France’s readiness to include the debate on minimum taxation as one of the priorities of its G7 Presidency in 2019, as reiterated during the ECOFIN meeting of 12 March 2019;

2.3. Administrative cooperation in relation to direct taxes

86. Stresses that since June 2014 the DAC has been amended four times;

87. Calls on the Commission to assess and present proposals to close loopholes in DAC2, particularly by including hard assets and cryptocurrencies in the scope of the directive, by prescribing sanctions for non-compliance or false reporting from financial institutions, as well as by including more types of financial institution and types of accounts that are not being reported at the moment, such as pension funds;

88. Reiterates its call for a broader scope in relation to the exchange of tax rulings and broader access by the Commission, and for greater harmonisation of the tax ruling practices of different national tax authorities;

89. Calls on the Commission to swiftly release its first assessment of DAC3 in this regard, looking in particular at the number of rulings exchanged and the number of occasions on which national tax administrations accessed information held by another Member State; asks that the assessment also consider the impact of disclosing key information related to tax rulings (the number of rulings, the names of beneficiaries, the effective tax rate deriving from each ruling); invites the Member States to publish domestic tax rulings;

90. Deplores the fact that the Commissioner in charge of taxation does not recognise the need to extend the existing system for the exchange of information between national tax authorities;

91. Reiterates, furthermore, its call to ensure simultaneous tax audits of persons of common or complementary interests (including parent companies and their subsidiaries), and its call to further enhance tax cooperation between Member States through an obligation to answer group requests on tax matters; points out that the right to remain silent in dealings with tax authorities does not apply to a purely administrative investigation and that cooperation is mandatory ( 64 )

92. Considers that coordinated on-site inspections and joint audits should be part of the European framework of cooperation between tax administrations;

93. Emphasises that not only information exchanges and the processing of information, but also the sharing of best practices among tax authorities, contribute to more efficient tax collection; calls on Member States to give priority to the sharing of best practices among tax authorities, particularly regarding the digitalisation of tax administrations;

94. Calls on the Commission and Member States to harmonise procedures for a digital system of filing tax returns in order to facilitate cross-border activities and reduce red tape;

95. Calls on the Commission to swiftly assess the implementation of DAC4 and whether national tax administrations effectively access country-by-country information held by another Member State; asks the Commission to assess how DAC4 relates to Action 13 of the G20/BEPS action plan on exchange of country-by-country information;

96. Welcomes the automatic exchange of financial account information based on the global standard which has been developed by the OECD with Andorra, Liechtenstein, Monaco, San Marino and Switzerland; calls on the Commission and the Member States to upgrade the Treaty provisions so as to match the DAC as amended;

97. Stresses, furthermore, the contribution made through the Fiscalis 2020 Programme, which aims to enhance cooperation between participating countries, their tax authorities and their officials; stresses the added value brought by joint actions in this field and the role of the possible programme in developing and operating major trans-European IT systems;

98. Reminds Member States of all their obligations under the Treaty ( 65 ) , in particular to cooperate loyally, sincerely and expeditiously; calls, therefore, in the light of cross-border cases, and most notably the so-called cum-ex files, for the nomination of Single Points of Contact (SPoC) by all Member States’ national tax authorities, in line with the SPoC-system of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) in the framework of the OECD ( 66 ) , to facilitate and enhance cooperation in combating tax fraud, tax evasion and ATP; calls further on the Commission to facilitate and coordinate cooperation between Member States’ SPoCs;

99. Recommends that Member States’ authorities which are notified by their counterparts in other Member States of potential breaches of law be required to provide an official notification of receipt and, where appropriate, a substantive response on actions taken following the aforementioned notification in a timely manner;

2.4. Dividend stripping and coupon washing

100. Notes that cum-ex transactions have been a known global problem since the 1990s, including in Europe, yet no coordinated counteraction has been taken; deplores the tax fraud revealed by the so-called cum-ex files scandal which has led to publicly reported losses of Member States’ tax revenue, amounting to as much as EUR 55,2 billion according to some media estimates; highlights that the consortium of European journalists identifies Germany, Denmark, Spain, Italy and France as allegedly the main target markets for cum-ex trading practices, followed by Belgium, Finland, Poland, the Netherlands, Austria and the Czech Republic;

101. Stresses that the complexity of tax systems can give rise to legal loopholes facilitating tax fraud schemes such as cum-ex;

102. Notes that the systematic fraud centred around the cum-ex and cum-cum schemes was made possible in part because the relevant authorities in the Member States did not perform sufficient checks on applications for the reimbursement of taxes and lack a clear and complete picture of the actual ownership of shares; calls on the Member States to give access to all relevant authorities to complete and up-to-date information on ownership of shares; calls on the Commission to assess whether EU action is needed in this regard, and to present a legislative proposal should the assessment demonstrate a need for such action;

103. Underlines that the revelations seem to indicate possible shortcomings in national taxation laws and in the current systems of exchange of information and cooperation between Member State authorities; urges the Member States to effectively use all communication channels, national data and data made available by the strengthened framework for exchange of information;

104. Stresses that the cross-border aspects of the cum-ex files should be addressed multilaterally; warns that the introduction of new bilateral treaties on exchanges of information and bilateral cooperation mechanisms between individual Member States would complicate the already complex web of international rules, introduce new loopholes and contribute to the lack of transparency;

105. Urges all Member States to thoroughly investigate and analyse dividend payment practices in their jurisdictions, to identify the loopholes in their tax laws that generate opportunities for exploitation by tax fraudsters and avoiders, to analyse any potential cross-border dimension of these practices and to put an end to all these harmful tax practices; calls on Member States to exchange best practices in this regard;

106. Calls on the Member States and their financial supervisory authorities to assess the need to ban exclusively tax-driven financial practices such as dividend arbitrage or dividend stripping and similar schemes, in absence of proof to the contrary by the issuer that these financial practices have a substantive economic purpose other than unjustified tax reimbursement and/or tax avoidance; calls for the EU legislators to evaluate the possibility of implementing this measure at EU level;

107. Calls on the Commission to start working immediately on a proposal for a European financial police force within the framework of Europol with its own investigatory capabilities, as well as on a European framework for cross-border tax investigations and other cross-border financial crimes;

108. Concludes that the cum-ex-files demonstrate the urgent need to improve cooperation between EU Member States’ tax authorities, particularly with regard to information sharing; urges, therefore, the Member States to enhance their cooperation in detecting, stopping, investigating and prosecuting tax fraud and evasion schemes such as cum-ex and, where applicable, cum-cum, including exchange of best practices, and to support EU-level solutions where justified;

2.5. Transparency in relation to corporate tax

109. Welcomes the adoption of DAC4 providing for CBCR to tax authorities, in line with the BEPS Action 13 standard;

110. Recalls that public CBCR is one of the key measures to create greater transparency on tax information of companies; stresses that the proposal for public CBCR by certain undertakings and branches was submitted to the co-legislators just after the Panama Papers scandal on 12 April 2016, and that Parliament adopted its position on it on 4 July 2017 ( 67 ) ; recalls that it called for an enlargement of the scope of reporting and protection of commercially sensitive information with due regard to the competitiveness of EU enterprises;

111. Recalls Parliament’s position in the PANA recommendations calling for ambitious public country-by-country reporting (CBCR) in order to enhance tax transparency and the public scrutiny of multinational enterprises (MNEs); urges the Council to reach a common agreement in order to adopt public CBCR, as one of the key measures for achieving greater transparency for all citizens in relation to companies’ tax information;

112. Deplores the lack of progress and cooperation from the Council since 2016; urges that swift progress be made in the Council so that it enters into negotiations with Parliament;

113. Recalls that public scrutiny is useful for researchers ( 68 ) , investigative journalists, investors and other stakeholders to properly assess risks, liabilities and opportunities to stimulate fair entrepreneurship; recalls that similar provisions already exist for the banking sector in Article 89 of Directive 2013/36/EU (CDR IV) ( 69 ) and for the extractive and logging industries in Directive 2013/34/EU ( 70 ) ; notes that some private stakeholders are voluntarily developing new reporting tools enhancing tax transparency, such as the Global Reporting Initiative standard ‘Disclosure on tax and payments to governments’, as part of their corporate social responsibility policy;

114. Recalls that measures on corporate tax transparency are to be regarded as relating to Article 50, paragraph 1 of the TFEU on freedom of establishment, hence the above-mentioned article is the appropriate legal base for the proposal for public CBCR as found in the Commission’s impact assessment published on 12 April 2016 (COM(2016)0198);

115. Notes that, with regard to the limited capacity of developing countries to meet requirements through existing exchange of information procedures, transparency is particularly important, as it would ease access to information for their tax administrations;

2.6. State aid rules

116. Recalls that the area of direct business taxation falls within the scope of State aid ( 71 ) when fiscal measures discriminate between taxpayers, contrary to fiscal measures of a general nature that apply to all undertakings without distinction;

117. Calls on the Commission and, in particular, the Directorate-General for Competition, to assess possible measures to discourage Member States from granting such State aid in the form of a tax advantage;

118. Welcomes the Commission’s new proactive and open approach to investigations into illegal State aid during the present term, which has led to a number of high-profile cases being concluded by the Commission;

119. Deplores the fact that companies can make agreements with governments to pay almost no tax in a given country despite conducting substantial activity there; points in this regard to a tax ruling between the Dutch tax revenue authority and Royal Dutch Shell plc that seems to be in violation of Dutch tax law, issued on the sole ground that the head office would be located in the Netherlands after the unification of the two former parent companies, and which results in an exemption from Dutch dividend withholding tax; points out that at the same time, recent investigations seem to show that the company pays no profit tax in the Netherlands either; reiterates its call on the Commission to investigate this case of potentially illegal State aid;

120. Welcomes the fact that since 2014, the Commission has been investigating the tax ruling practices of Member States, following up on allegations of the favourable tax treatment of certain companies, and has launched nine formal investigations since 2014, six of which concluded that the tax ruling constituted illegal State aid ( 72 ) ; notes that one investigation was closed concluding that the double non-taxation of certain profits did not constitute State aid ( 73 ) , while the other two are ongoing ( 74 )

121. Deplores the fact that, nearly five years on from the LuxLeaks revelations, the Commission has opened a formal investigation ( 75 ) into only one of the over 500 tax rulings granted by Luxembourg that were disclosed as part of the LuxLeaks investigation led by the International Consortium of Investigative Journalists (ICIJ);

122. Notes that despite the fact that the Commission found McDonald’s benefited from double non-taxation on certain of its profits in the EU, no decision under EU State aid rules could be issued, as the Commission concluded that the double non-taxation stemmed from a mismatch between Luxembourg and US tax laws and the Luxembourg-United States double taxation treaty ( 76 ) ; acknowledges the announcement by Luxembourg to revise its double taxation treaties to conform with international tax law;

123. Is concerned about the fact that the Commission has ruled that the double non taxation achieved by McDonald’s stemmed from a mismatch between Luxembourg and US tax laws and the Luxembourg-US double taxation treaty, a mismatch from which McDonald’s profited by arbitrating between the jurisdictions; is further concerned about the fact that such arbitration-led tax avoidance is being enabled in the EU;

124. Is concerned by the magnitude of tax unpaid for all Member States over long periods ( 77 ) ; recalls that the aim of the recovery of unlawful aid is to restore the position to the status quo, and that calculating the exact amount of aid to be repaid is part of the implementation obligation incumbent on the national authorities; calls on the Commission to assess and establish viable countermeasures, including fines, to help Member States avoid offering selective favourable tax treatment which constitutes State aid that is non-compliant with EU rules;

125. Reiterates its calls to the Commission for guidelines clarifying what constitutes tax-related State aid and ‘appropriate’ transfer pricing; calls also for the Commission to remove legal uncertainties for both compliant taxpayers and tax administrations, and provide a comprehensive framework for Member States’ tax practices accordingly;

126. Expresses its regret at the Commission’s failure to use the State aid rules against any tax measure that seriously distorts competition, and that it only applies these rules in select cases with particular characteristics so as to change the practice of the state concerned; calls on the Commission to make every effort to recover undue State aid, including for all companies mentioned in the Luxleaks scandal, in order to level the playing field; also calls on the Commission to provide further guidance to the Member States and market players on the application of State aid rules and what it means for companies’ tax planning practices;

127. Calls for a reform of competition law to extend the scope of State aid rules in order to be able to act more vigorously against harmful fiscal State aid for multinational companies, which include tax rulings;

2.7. Letterbox companies

128. Notes that there is no single definition of letterbox companies, i.e. companies registered in a jurisdiction for tax avoidance or tax evasion purposes only and without any significant economic presence; points out, however, that simple criteria such as actual business activity or the physical presence of staff working for a company could serve to identify letterbox companies and combat their proliferation; reiterates its call for a clear definition;

129. Stresses that, as proposed in Parliament’s position for inter-institutional negotiations for the amending directive as regards cross-border conversions, mergers and divisions ( 78 ) , Member States should be required to ensure that cross-border conversions correspond to the actual pursuit of a genuine economic activity, including in the digital sector, to avoid the setting up of ‘letterbox’ companies;

130. Calls for Member States to request that a set of financial information be exchanged between the competent authorities ahead of the execution of cross-border conversions, mergers or divisions;

131. Recommends that any entity creating an offshore structure should provide the competent authorities with the legitimate reasons behind such a decision in order to guarantee that offshore accounts are not used for money laundering or tax evasion purposes;

132. Calls for the identities of the actual owners to be disclosed to tax authorities;

133. Points out national measures to specifically ban commercial relationships with letterbox companies; highlights, in particular, the Latvian legislation which defines a letterbox company as an entity having no actual economic activity and holding no documentary proof to the contrary, as being registered in a jurisdiction where companies are not required to submit financial statements, and/or as having no place of business in its country of residence; notes, however, that, according to EU law, the banning of letterbox companies in Latvia cannot be used to ban letterbox companies resident in EU Member States, as that would be considered discriminatory ( 79 ) ; calls for the Commission to propose changes to the current EU law that would enable the banning of letterbox companies even if resident in EU Member States;

134. Highlights that the high level of inward and outward FDI as a percentage of GDP in seven Member States (Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands) can only to a limited extent be explained by real economic activities taking place in these Member States ( 80 )

135. Underlines the high share of FDI in several Member States, particularly in Luxembourg, Malta, Cyprus, the Netherlands and Ireland ( 81 ) ; notes that such FDI is usually held by special purpose entities (SPEs) that often serve to exploit loopholes; calls on the Commission to assess the role of the SPEs holding FDI;

136. Notes that economic indicators such as an unusually high level of FDI, as well as FDI held by SPEs, are included among ATP indicators ( 82 )

137. Notes that the ATAD anti-abuse rules (artificial arrangements) cover letterbox companies, while the CCTB and CCCTB would ensure that the income is attributed to where the real economic activity takes place;

138. Urges the Commission and the Member States to establish coordinated, binding, enforceable and substantial economic activity requirements as well as expenditure tests;

139. Calls on the Commission to carry out, within two years, fitness checks of the interconnected legislative and policy initiatives aimed at addressing the use of letterbox companies in the context of tax fraud, tax evasion, aggressive tax planning and money laundering;

3. VAT

140. Underscores the need for harmonisation of VAT rules at EU level to the extent that it is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition ( 83 )

141. Stresses that VAT is an important source of tax revenue for national budgets; notes that in 2016, VAT revenues in the EU-28 Member States amounted to EUR 1 044 billion, which corresponds to 18 % of all tax revenues in the Member States; takes note of the fact that the 2017 annual EU budget amounted EUR 157 billion;

142. Regrets, however, that every year, large amounts of the expected VAT revenue are lost because of fraud; highlights that according to the Commission’s statistics, the VAT gap (which is the difference between the expected VAT revenue and the VAT actually collected, thereby providing an estimate of the VAT lost due not only to fraud, but also to bankruptcy, miscalculations and avoidance) in the EU in 2016 amounted to EUR 147 billion, which represents more than 12 % of the total expected VAT revenue ( 84 ) , although the situation is much worse in a number of Member States where the gap is close to or even above 20 %, showing a big difference between Member States in their handling of the VAT gap;

143. Notes that the Commission estimates that around EUR 50 billion — or EUR 100 per EU citizen each year — is lost to cross-border VAT fraud ( 85 ) ; while Europol estimates that around EUR 60 billion of VAT fraud is linked to organised crime and terrorism financing; notes the increased harmonisation and simplification of VAT regimes in the EU, although cooperation between Member States is neither sufficient nor effective as of yet; calls on the Commission and the Member States to reinforce their cooperation to better fight against VAT fraud; calls on the next Commission to prioritise the introduction and implementation of the definitive VAT regime in order to improve it;

144. Calls for reliable statistics to estimate the VAT gap and stresses the need for a common approach to data collection and sharing within the EU; urges the Commission to ensure that harmonised statistics are collected and published regularly in the Member States;

145. Underlines that the feature of the current VAT (transitional) regime of applying an exemption to intracommunity supplies within the EU and exports has been abused by fraudsters, in particular in the VAT carousel fraud or missing trader intra-community fraud (MTIC);

146. Takes note of the fact that according to the Commission, businesses trading on a cross-border basis currently suffers from compliance costs which are 11 % higher compared to those incurred by companies that only trade domestically; notes that, in particular, SMEs suffer from disproportionate VAT compliance costs, which is one of the reasons they have remained wary of reaping the advantages of the single market; calls on the Commission and Member States to develop solutions to reduce the VAT compliance costs linked to cross-border trade;

3.1. Modernisation of the VAT framework

147. Welcomes, therefore, the Commission’s VAT action plan of 6 April 2016 to reform the VAT framework and the 13 legislative proposals adopted by the Commission since December 2016 that address the shift towards the definitive VAT regime, remove VAT obstacles to e-commerce, review the VAT regime for SMEs, modernise the VAT rates policy and tackle the VAT tax gap;

148. Welcomes the fact that a VAT Mini One Stop Shop (MOSS) on telecommunications, broadcasting and electronic services was introduced in 2015 as a voluntary system for the registration, declaration and payment of VAT; welcomes the extension of the MOSS to other supplies of goods and services to final consumers as of 1 January 2021;

149. Notes that the Commission estimates that the reform to modernise VAT is expected to reduce red tape by 95 %, which amounts to an estimated EUR 1 billion;

150. Welcomes in particular the fact that on 5 December 2017 the Council adopted new rules making it easier for online businesses to comply with VAT obligations; welcomes in particular the fact that the Council took Parliament’s opinion on board in relation to introducing online platforms’ liability for collecting VAT on the distance sales that they facilitate; considers that this measure will ensure a level playing field with non-EU businesses, as many goods that are imported for distance sales currently enter the EU VAT-free; calls on the Member States to correctly implement the new rules by 2021;

151. Welcomes the definitive VAT system proposals adopted on 4 October 2017 ( 86 ) and 24 May 2018 ( 87 ) ; welcomes in particular the Commission’s proposal to apply the destination principle to taxation, which means that VAT would be paid to the tax authorities of the Member State of the final consumer at the rate applicable in that Member State;

152. Welcomes in particular the progress made by the Council towards the definitive VAT regime by adopting the Quick Fixes ( 88 ) on 4 October 2018; expresses its concern, however, that no safeguards in relation to its fraud-sensitive aspects were adopted along the lines of Parliament’s position ( 89 ) on the Certified Taxable Person (CTP) proposal ( 90 ) , as expressed in its opinion of 3 October 2018 ( 91 ) ; profoundly regrets that the Council postponed the decision on introduction of CTP status until the adoption of the definitive VAT regime;

153. Calls on the Council to ensure that CTP status is consistent with Authorised Economic Operator (AEO) status, which is granted by the customs authorities;

154. Calls for a minimal EU transparent coordination on the definition of CTP status, including a regular assessment by the Commission on how Member States grant CTP status; calls for the exchange of information between Member States’ tax authorities about refusals to grant CTP status to certain companies, in order to enhance coherence and common standards;

155. Welcomes, furthermore, the revision of the special schemes for SMEs ( 92 ) which is key to ensuring a level playing field, as VAT exemption schemes are currently only available to domestic entities, and can contribute to the reduction of VAT compliance costs for SMEs; calls on the Council to take Parliament’s opinion of 11 September 2018 ( 93 ) into account, particularly when it comes to further administrative simplification for SMEs; calls, therefore, on the Commission to set up an online portal through which SMEs willing to avail themselves of the exemption in another Member State are required to register, and to put in place a one-stop shop through which small enterprises can file VAT returns for the different Member States in which they operate;

156. Notes the adoption of the Commission proposal for a general reverse charge Mechanism (GRCM) ( 94 ) that will allow temporary derogations from normal VAT rules in order to better prevent carousel fraud in the Member States that are most severely affected by this type of fraud; calls on the Commission to closely monitor the application and the potential risks and benefits of this new legislation; insists, however, that the GRCM should by no means delay the swift implementation of a definitive VAT system;

157. Notes that the expansion of e-commerce can often pose a challenge for tax authorities, e.g. the absence of a seller’s taxable identification in the EU, and the registration of VAT declarations well below the real value of the declared transactions; welcomes, therefore, the spirit of the proposed implementing rules relating to distance sales of goods adopted on 11 December 2018 by the Commission (COM(2018)0819 and COM(2018)0821), according to which, notably, from 2021 online platforms will have the responsibility to ensure that VAT is collected on sales of goods by non-EU companies to EU consumers taking place on their platforms;

158. Calls on the Commission and Member States to monitor e-commerce transactions involving sellers based outside the EU that would declare no VAT (for example by unduly using the ‘sample’ statute) or would deliberately underestimate the value in order to avoid altogether or reduce the VAT due; considers that such practices endanger the integrity and smooth functioning of the EU’s internal market; calls on the Commission to come up with proposals if appropriate and necessary;

3.2. The VAT gap, the fight against VAT fraud and administrative cooperation on VAT

159. Reiterates its call to the factors contributing to the tax gap, not least VAT;

160. Welcomes the opening of infringement procedures by the Commission on 8 March 2018 against Cyprus, Greece and Malta, and on 8 November 2018 against Italy and the Isle of Man as regards abusive VAT practices in relation to the acquisition of yachts and aircraft, to ensure that they stop offering allegedly unlawful favourable tax treatment for private yachts and aircraft, which distorts competition in the maritime and aviation sectors;

161. Welcomes the amendments to Regulation (EU) No 904/2010 as regards measures to strengthen administrative cooperation in the field of VAT; welcomes the Commission’s monitoring visits to 10 Member States carried out in 2017, notably the subsequent recommendation to improve the reliability of the VAT Information Exchange System (VIES);

162. Notes that the Commission has recently proposed additional control tools and an enhanced role for Eurofisc, as well as mechanisms for closer cooperation between customs and tax administrations; calls on all Member States to participate more actively in the Transactional Network Analysis (TNA) system in the framework of Eurofisc;

163. Is of the opinion that the participation of all Member States in Eurofisc must be mandatory and a condition for receiving EU funds; echoes the preoccupation of the European Court of Auditors on VAT reimbursement in Cohesion spending ( 95 ) and on the EU Anti-Fraud Programme ( 96 )

164. Urges the Commission to examine the possibilities for real-time collection and communication of transactional VAT data by the Member States, as this would increase the effectiveness of Eurofisc and allow the further development of new strategies to defeat VAT fraud; calls on all relevant authorities to use a variety of statistical and data-mining technologies to identify anomalies, suspicious relationships and patterns, enabling tax agencies to better address a wide spectrum of non-compliance behaviours in a proactive, targeted and cost-effective way;

165. Welcomes the adoption of the Protection of Financial Interests (PIF) Directive ( 97 ) which clarifies the issues of cross-border cooperation and mutual legal assistance between Member States, Eurojust, Europol, the European Public Prosecutor’s Office (EPPO), the European Anti-Fraud Office (OLAF) and the Commission in tackling VAT fraud; calls on the EPPO, OLAF, Eurofisc, Europol and Eurojust to cooperate closely with a view to coordinating their efforts against VAT fraud and to identifying and adapting to new fraudulent practices;

166. Points, however, to the need for better cooperation between the administrative, judicial and law-enforcement authorities within the EU, as highlighted by experts during the hearing held on 28 June 2018 and in a study commissioned by the TAX3 committee;

167. Welcomes the Commission’s communication to extend the competences of the EPPO to cross-border terrorist crimes; calls on the Commission and Member States to ensure that the EPPO can begin operating as soon as possible and no later than 2022, ensuring close cooperation with the already established institutions, bodies, agencies and offices of the Union in charge of the protection of the financial interests of the Union; calls for exemplary, dissuasive and proportional sanctions to be pronounced; considers that anyone engaged in an organised VAT fraud scheme should be severely sanctioned in order to avoid a perception of impunity;

168. Considers that one of the main issues allowing fraudulent behaviour in relation to VAT to occur is the ‘cash profit’ that a fraudster can make; calls, therefore, on the Commission to analyse the proposal made by experts ( 98 ) to place cross-border transactional data on a blockchain, and to use secured digital currencies that can only be used for VAT payments (single purpose) instead of using fiat currency;

169. Welcomes the fact that the fraud linked to imports has been addressed by the Council ( 99 ) ; considers that the proper integration of data from customs declarations into the VIES will allow the Member States of destination to cross-check customs and VAT information in order to ensure that VAT is paid at the country of destination; calls on Member States to implement this new legislation in an effective and timely manner by 1 January 2020;

170. Considers that administrative cooperation between tax and customs authorities is suboptimal ( 100 ) ; calls on Member States to mandate Eurofisc to develop new strategies to track goods under customs procedure 42, the mechanism which allows the importer to obtain a VAT exemption when the imported goods are eventually intended for transport to a business customer in a Member State other than the Member State of importation;

171. Highlights the importance of the implementation of a register of beneficial owners of corporate entities under AMLD5 as an important tool to tackle VAT fraud; urges Member States to enhance the competences and qualifications of the police forces, tax services, prosecutors and judges dealing with this type of fraud;

172. Is concerned by the results of the study ( 101 ) commissioned by the TAX3 committee stating that the Commission’s proposals will reduce fraud on imports but not eliminate it; takes note that the issue of undervaluation and enforcement of EU rules in general in the case of non-EU taxable persons will not be solved; calls on the Commission to investigate alternative collection methods for these supplies for the longer term; stresses that relying on the good faith of non-EU taxable persons to collect EU VAT is not a sustainable option; considers that such alternative collection models should not only target sales made via electronic platforms, but encompass all sales made by non-EU taxable persons, irrespective of the business model that they use;

173. Calls on the Commission to closely monitor the consequences of the introduction of the definitive regime for VAT revenues on Member States; calls on the Commission to investigate seriously the possibilities of new fraud risks in the definitive VAT system, notably the potentially missing supplier in cross-border transactions supplanting the missing customer type of carousel fraud; stresses, in this regard, that the custom transit system, among others, can certainly facilitate trade within the EU; notes, however, that abuses are possible and that criminal organisations, by avoiding the payment of taxes and duties, may cause a huge loss both to Member States and the EU (by avoiding VAT); calls, therefore, on the Commission to monitor the custom transit system and come up with proposals building on the recommendations made notably by OLAF, Europol and Eurofisc;

174. Believes that a large majority of European citizens expect clear European and national legislation that enables those who do not pay the tax which they are due to pay to be identified and sanctioned, and for the missing tax to be recuperated in a timely manner;

4. Taxation of individuals

175. Emphasises that natural persons do not generally exercise their freedom of movement for the purposes of tax fraud, tax evasion and aggressive tax planning; underlines, however, that some natural persons have a tax base large enough to span several tax jurisdictions;

176. Regrets the fact that HNWIs and ultra HNWIs (UHNWIs), using complex tax structures, including the setting up of companies, continue to have the possibility to shift their earnings and funds or their purchases through different tax jurisdictions to obtain substantially reduced or zero liability by using the services of wealth managers and other intermediaries; deplores the fact that some EU Member States have implemented tax schemes to attract HNWIs without creating real economic activity;

177. Notes that headline rates for labour income are usually higher than for income from capital throughout the EU; notes that, overall, the contribution of wealth-based taxes to overall tax revenues has remained rather limited, at 4,3 % of overall tax revenues in the EU ( 102 )

178. Notes with regret that corporate tax fraud, tax evasion and ATP contribute to shifting the tax liability on to honest and fair taxpayers;

179. Calls on the Member States to impose dissuasive, effective, and proportionate penalties in cases of tax fraud, tax evasion and illegal ATP, and to ensure that these penalties are enforced;

180. Deplores the fact that some Member States have created dubious tax regimes allowing individuals who become resident for tax purposes to obtain income tax benefits, thereby undermining other Member States’ tax base and fostering harmful policies which discriminate against their own citizens; notes that these regimes may include benefits not available to national citizens, such as the non-taxation of foreign possessions and income, lump-sum tax on foreign income, tax-free allowances on a part of incomes earned domestically or lower tax rates on pensions remitted to the country of origin;

181. Recalls that the Commission, in a communication from 2001, suggested the inclusion of special regimes for highly-qualified expatriate staff in the list of harmful tax practices of the CoC Group (on Business Taxation) ( 103 ) , but has not provided any data on the scope of the problem since; calls on the Commission to reassess this issue and, in particular, to assess the risks of double taxation as well as double non-taxation of such schemes;

4.1. Citizenship by investment (CBI) and residency by investment (RBI) schemes

182. Is concerned that a majority of Member States have adopted citizenship by investment (CBI) or residency by investment (RBI) schemes ( 104 ) , generally known as ‘golden visa and passports’ or investor programmes, by which citizenship or residence is granted to EU and non-EU citizens in exchange for financial investment;

183. Observes that the investments made under these programmes do not necessarily promote the real economy of the Member State granting citizenship or residency, and that they often do not require applicants to spend any time on the territory in which the investment is made, and that even when such a requirement formally exists, its fulfilment is usually not verified; stresses that such schemes jeopardise the attainment of the Union’s objectives and are therefore in breach of the principle of sincere cooperation;

184. Observes that at least 5 000 non-EU citizens have obtained EU citizenship through citizenship by investment schemes ( 105 ) ; notes that, according to a study ( 106 ) , at least 6 000 people have been granted citizenship and almost 100 000 residence permits have been issued;

185. Worries that CBI and RBI are awarded without proper security screening of the applicants, including to high-risk third-country nationals, and therefore pose security risks for the Union; deplores the fact that the opaqueness surrounding the origin of the money connected to CBI and RBI schemes has significantly increased the political, economic and security risks for European countries;

186. Stresses that CBI and RBI schemes carry other significant risks, including a devaluation of EU and national citizenships and the potential for corruption, money laundering and tax evasion; notes that one Member State’s decision to implement CBI and RBI schemes has spillover effects on other Member States; reiterates its concern that citizenship or residence could be granted through these schemes without proper or indeed any customer due diligence (CDD) having been carried out by the competent authorities;

187. Notes that the obligation laid down by AMLD5, whereby obliged entities should consider CBI and RBI applicants as high-risk in the course of their CDD process, does not absolve Member States of their responsibility to establish and conduct enhanced due diligence themselves; notes that several formal investigations into corruption and money laundering have been launched at national and EU level directly related to CBI and RBI schemes;

188. Underlines that, at the same time, the economic sustainability and viability of the investments provided through these schemes remain uncertain; highlights that citizenship and the rights associated to it should never be for sale;

189. Notes that the CBI and RBI schemes of some Member States have been used profusely by Russian citizens and by citizens from countries under Russian influence; highlights that these schemes may serve Russian citizens included in the sanctions list adopted after the illegal annexation of Crimea by Russia and the aggression of Russia on Crimea as a means to avoid EU sanctions;

190. Criticises that these programmes regularly involve tax privileges or special tax regimes for the beneficiaries; is concerned that these privileges could hamper the objective of making all citizens contribute fairly to the tax system;

191. Worries about the lack of transparency in relation to the number and origin of applicants, the numbers of individuals granted citizenship or residency by these schemes, the amount invested through these schemes and the origin thereof; appreciates the fact that some Member States make explicit the name and nationalities of the individuals who are granted citizenship or residency under these schemes; encourages other Member States to follow this example;

192. Is concerned that according to the OECD, CBI and RBI schemes could be misused to undermine the common reporting standard (CRS) due diligence procedures, leading to inaccurate or incomplete reporting under the CRS, in particular when not all jurisdictions of tax residence are disclosed to the financial institution; notes that in the OECD’s view, the visa schemes which are potentially high-risk for the integrity of the CRS are those that give a taxpayer access to a low personal income tax rate of less than 10 % on offshore financial assets, and do not require a significant physical presence of at least 90 days in the jurisdiction offering the golden visa scheme;

193. Is concerned that Malta and Cyprus have schemes ( 107 ) among those that potentially pose a high risk to the integrity of CRS;

194. Concludes that the potential economic benefits of CBI and RBI schemes do not offset the serious security, money laundering and tax evasion risks they present;

195. Calls on Member States to phase out all existing CBI or RBI schemes as soon as possible;

196. Stresses that, in the meantime, Member States should require physical presence in the country as a condition for benefiting from CBI and RBI schemes, and should properly ensure that enhanced CDD on applicants for citizenship or residence through these schemes is duly carried out, as required by AMLD5; stresses that AMLD5 imposes enhanced CDD for politically exposed persons (PEPs); calls on Member States to ensure that governments bear the ultimate responsibility for performing due diligence on applicants for CBI or RBI; calls on the Commission to monitor rigorously and continuously the proper implementation and application of CDD within the framework of CBI and RBI schemes until they are repealed in each Member State;

197. Notes that the acquisition of a residence permit for or citizenship of a Member State gives the grantee access to a wide range of rights and entitlements in the entire territory of the Union, including the right to move and reside freely in the Schengen area; calls, therefore, on Member States implementing CBI and RBI programmes, until they are finally repealed, to duly verify the character of the applicants and refuse their application if they present security risks, including money laundering; further alerts to the dangers posed by CBI and RBI schemes associated with family reunification, whereby family members of CBI or RBI beneficiaries can acquire citizenship or residence with little or no checks;

198. Calls, in this context, on all Member States to compile and publish transparent data related to their CBI and RBI schemes, including the number of refusals and the reasons for denial; calls on the Commission, until the schemes are finally repealed, to issue guidelines and to ensure better data collection and exchange of information among Member States in the context of their CBI and RBI schemes, including in relation to applicants who have had their application denied due to security issues;

199. Considers that until CBI and RBI are finally repealed, Member States should impose the same obligations on intermediaries in the trade of CBI and RBI as apply to obliged entities under AML legislation, and calls on Member States to prevent conflicts of interest linked to CBI and RBI schemes, which might arise when private firms which assisted the government in the design, management and promotion of these schemes, also advised and supported individuals by screening them for suitability and filing their applications for citizenship or residence;

200. Welcomes the Commission’s report of 23 January 2019 on Investor Citizenship and Residence Schemes in the European Union (COM(2019)0012); notes that the report confirms that both types of schemes pose serious risks for the Member States and the Union as a whole, particularly in terms of security, money laundering, corruption, the circumvention of EU rules and tax evasion, and that these serious risks are further accentuated by shortcomings in the transparency and governance of the schemes; worries that the Commission has concerns that the risks posed by the schemes are not always sufficiently mitigated by the measures taken by the Member States;

201. Takes note of the Commission’s intention to set up a group of experts to address matters of the transparency, governance and security of these schemes; welcomes the fact that the Commission has undertaken to monitor the impact of investor citizenship schemes implemented by visa-free countries as part of the visa suspension mechanism; calls on the Commission to coordinate information sharing between Member States on rejected applications; calls on the Commission to assess the risks associated with the selling of citizenship and residence as part of its next supranational risk assessment; calls on the Commission to assess the extent to which these schemes have been used by EU citizens;

4.2. Free ports, customs warehouses and other specific economic zones (SEZs)

202. Welcomes the fact that free ports will become obliged entities under AMLD5, and that they will be under an obligation to carry out CDD requirements and report suspicious transactions to the financial intelligence units (FIUs);

203. Notes that free ports within the EU can be established under the ‘free zone’ procedure; notes that free zones are enclosed areas within the customs territory of the Union where non-Union goods can be introduced free of import duty, other charges (i.e. taxes) and commercial policy measures;

204. Recalls that free ports are warehouses in free zones, which were — originally — intended as spaces to store merchandise in transit; deplores the fact that they have since become popular for the storage of substitute assets, including art, precious stones, antiques, gold and wine collections — often on a permanent basis ( 108 ) — and financed from unknown sources; stresses that free ports or free zones must not be used for the purposes of tax evasion or to achieve the same effects as tax havens;

205. Notes that, apart from secure storage, the motivations for the use of free ports include a high degree of secrecy and the deferral of import duties and indirect taxes such as VAT or user tax;

206. Underlines that there are over 80 free zones in the EU ( 109 ) and many thousands of other warehouses under “special storage procedures” in the EU, notably “customs warehouses”, which can offer the same degree of secrecy and (indirect) tax advantages ( 110 )

207. Observes that under the Union Customs Code, customs warehouses are on an almost identical legal footing with free ports; recommends, therefore, that they be put on an equal footing with free ports under legal measures aimed at mitigating money laundering and tax evasion risks therein, such as AMLD5; considers that warehouses should be equipped with sufficient and qualified staff to be able to undertake the necessary scrutiny of the operations that they host;

208. Notes that money laundering risks in free ports are directly associated with money laundering risks in the substitute assets market;

209. Notes that under DAC5, as of 1 January 2018, direct tax authorities have “access upon request” to a broad information set with regard to ultimate beneficial ownership (UBO) information collected under the AMLD; notes that EU AML legislation is built on the trust in reliable CDD research and the diligent reporting of suspicious transactions by obliged entities, which will become AML gatekeepers; notes with concern that “access upon request” to information held by free ports may only have very limited effect in specific cases ( 111 )

210. Calls on the Commission to assess the extent to which free ports and shipping licenses may be misused for the purposes of tax evasion ( 112 ) ; calls on the Commission, moreover, to table a legislative proposal to ensure the automatic exchange of information between the relevant authorities such as law enforcement, tax and customs authorities and Europol, on beneficial ownership and transactions taking place in free ports, customs warehouses or SEZs, and to include a traceability obligation;

211. Calls on the Commission to bring forward a proposal for the urgent phasing out of the system of free ports in the EU;

212. Notes that the end of banking secrecy has led to the emergence of investment in new assets such as art, which has led to rapid growth of the art market in recent years; stresses that free zones provide them with a safe and widely disregarded storage space, where trade can be conducted untaxed and ownership can be concealed, while art itself remains an unregulated market, due to factors such as the difficulty of determining market prices and finding specialists; points out that, for example, it is easier to move a valuable painting to the other side of the world than a similar amount of money;

4.3. Tax amnesties

213. Recalls ( 113 ) the need to use amnesties with extreme caution or to refrain from using them altogether, as they only represent a source of easy and quick tax collection in the short run, often introduced to close budget loopholes, but may also serve to encourage residents to evade taxes and wait for the next amnesty without being subject to dissuasive sanctions or penalties; calls on the Member States which enact tax amnesties to always require the beneficiary to explain the source of funds previously omitted;

214. Calls on the Commission to assess past amnesty programmes enacted by Member States, and, in particular, the public revenues recovered and their impact in the medium and long term on tax base volatility; urges Member States to ensure that relevant data related to the beneficiaries of previous and future tax amnesties is duly shared with the judiciary, law enforcement and tax authorities, and to ensure compliance with AML/CFT rules and possible prosecution for other financial crimes;

215. Takes the view that the CoC Group should mandatorily screen and clear each tax amnesty programme before its implementation by a Member State; takes the view that a taxpayer or UBO of a company who has already benefited from one or more tax amnesties should never be entitled to benefit from another one; calls for national authorities managing the data on persons who have benefited from tax amnesties to engage in an effective exchange of the data from law enforcement or other competent authorities investigating crimes other than tax fraud or tax evasion;

4.4. Administrative cooperation

216. Acknowledges the fact that administrative cooperation in the field of direct tax frameworks now covers both individual and corporate taxpayers;

217. Stresses that international standards on administrative cooperation are minimum standards; considers, therefore, that Member States should go further than merely complying with these minimum standards; calls on the Member States to further remove barriers to administrative and legal cooperation;

218. Welcomes the fact that, with the adoption of the global standard on the automatic exchange of information (AEOI) implemented by DAC1, and the repeal of the 2003 Savings Directive, a single EU mechanism for the exchange of information has been established;

5. Anti-Money Laundering (AML)

219. Stresses that money laundering can assume various forms, and that the money laundered can have its origin in various illicit activities, such as corruption, arms and human trafficking, drug dealing, tax evasion and fraud, and can be used to finance terrorism; notes with concern that the proceeds from criminal activity in the EU are estimated to amount to EUR 110 billion per year ( 114 ) , corresponding to 1 % of the Union’s total GDP; highlights that the Commission estimates that in some Member States up to 70 % of money laundering cases have a cross-border dimension ( 115 ) ; further notes that the scale of money laundering is estimated by the UN ( 116 ) to be the equivalent of between 2 to 5 % of global GDP, or around EUR 715 billion and 1,87 trillion a year;

220. Underlines that various recent cases of money laundering within the Union are linked to capital, ruling elites, and/or citizens who come from Russia and from the Commonwealth of Independent States (CIS) in particular; expresses its concern about the threat posed to European security and stability by illicit proceeds from Russia and CIS countries which enter the European financial system in order to be laundered and further used to finance criminal activities; stresses that these proceeds endanger the security of EU citizens and create distortions and unfair competitive disadvantages for law-abiding citizens and companies; considers that, in addition to capital flight, which cannot be curbed without solving the economic and administrative problems of the country of origin, and money laundering for purely criminal reasons, these hostile activities, the intention of which is to wea