COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Communication on further measures to enhance transparency and the fight against tax evasion and avoidance
Date: 2016-07-05
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, administrative cooperation, approximation of laws, exchange of information, international cooperation, single market, tax avoidance, tax evasion, tax law

EN 

   EN 

   EUROPEAN COMMISSION  Strasbourg, 5.7.2016  COM(2016) 451 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Communication on further measures to enhance transparency and the fight against tax evasion and avoidance  
 
 
Introduction 

The European Commission is pursuing an ambitious agenda for fairer, more transparent 
and  more  effective  taxation  in  the  EU,  in  line  with  its  wider  objective  of  sustainable 
growth  and  investment  supporting  job  creation  within  a  deeper  Single  Market. 
Companies should pay taxes in the country where their profits are generated. The fight 
against tax evasion and avoidance is central to this agenda.  

Tax evasion and avoidance deprive public budgets of billions of euros in revenues each 
year, distort competition between businesses and erode the fair and level-playing field for 
all taxpayers. They undermine the concept of growth-friendly tax systems and hamper a 
successful  Capital  Markets  Union.  Innovation  and  competitiveness  risk  being  stifled  as 
small and medium sized enterprises (SMEs), which are the main source of employment 
in  Europe,  end  up  paying  proportionately  more  taxes  than  larger  companies  that  can 
afford  to  engage  in  aggressive  tax  planning.  Tax  avoidance  can  also  increase  the  tax 
burden  on  labour,  as  governments  compensate  for  the  lost  revenue  by  increasing  taxes 
elsewhere, to the detriment of employment and a healthy labour market. Fair taxation is 
also essential for the social contract between citizens and their governments. There is a 
strong public call for action to combat aggressive tax practices which reduce the revenues 
available to governments for other purposes.  

Due  to  the  cross-border  nature  of  tax  evasion  and  avoidance,  purely  national  action  to 
tackle these problems is generally ineffective. In fact, uncoordinated national measures to 
combat  tax  abuse  can  exacerbate  the  situation,  by  fragmenting  the  Single  Market, 
creating  new  burdens  for  tax  payers  and  opening  new  loopholes  for  aggressive  tax 
planners  to  exploit.  A  coordinated  approach  to  tackling  tax  abuse  –  at  both  EU  and 
international level – is essential.  

To  this  end,  the  Commission  has  presented  a  number  of  proposals  for  a  stronger  and 
more  coordinated  EU  stance  against  tax  abuse,  aligned  to  the  international  agenda  and 
going  further  where  necessary  for  the  Single  Market.  These  initiatives  have  already 
resulted  in  a  number  of  landmark  achievements,  which  should  fundamentally  improve 
the  tax  environment  for  citizens  and  businesses  in  Europe.  The  Commission  has  also 
launched investigations under state aid rules into whether certain Member States granted 
tax advantages to selected multinational companies1.  

Despite  these  important  advances,  more  remains  to  be  done  to  fight  tax  avoidance  and 
evasion,  and  to  limit  opportunities  for  large-scale  concealments  of  funds  exposed  in 
recent media leaks, known as the "Panama Papers".  

This Communication outlines the progress made so far and the priority areas for action in 
the  coming  months,  at  EU  and  international  level,  to  strengthen  the  fight  against  tax 
evasion, avoidance and illicit financial activity.     

1 See notice on the Notion of aid § 169 to 174: 

http://ec.europa.eu/competition/state_aid/modernisation/notice_of_aid_en.pdf 

2 

 
 
 
 
                                                 
PROGRESS MADE IN THE EU AGENDA TO ENHANCE TRANSPARENCY AND FIGHT TAX 
EVASION AND AVOIDANCE 

Increased Tax Transparency 

The first step towards fairer and more effective taxation was to inject more transparency 
into  taxation  across  Europe.  Following  two  ambitious  transparency  proposals  by  the 
Commission,  Member  States  have  recently  agreed  to  increase  the  openness  and 
cooperation between their tax authorities and intensify the scrutiny of companies' cross-
border  tax  practices.  From  2017,  all  Member  States  will  automatically  exchange 
information  with  each  other  on  their  cross-border  tax  rulings  on  a  systematic  basis. 
Moreover,  in  March  2016,  Member  States  agreed  that  their  tax  authorities  will 
automatically  share  country-by-country  reports  of  multinationals'  activities  for  tax 
purposes. These new legislative requirements will significantly improve Member States' 
ability to protect their tax bases and clamp down on tax avoidance schemes.  

The  European  Union  is  also  increasing  transparency  towards  the  public.  Strict 
transparency requirements for banks were put in place in the wake of the financial crisis. 
Under the Capital Requirements Directive2, financial institutions must publicly disclose 
key  information  on  their  activities,  taxes,  profits  and  public  subsidies  on  a  country-by-
country basis, inside and outside the EU. Large extractive and logging industries are also 
required to conduct public Country-by-Country Reporting (CBCR) under the Accounting 
Directive.   

In April 2016, the Commission proposed that any multinational with a turnover of more 
than €750 million and a presence in the EU should have to publish a specified set of tax-
related  data  online.  Country-by-Country  information  will  have  to  be  publicly  disclosed 
by these companies for every EU country as well as for those tax jurisdictions that do not 
abide by tax good governance standards. Aggregate figures will also have to be provided 
for  operations  in  the  rest  of  the  world.  These  rules  will  increase  large  multinationals' 
accountability  on  tax  matters,  enabling  citizens  to  better  scrutinise  their  tax  behaviour 
and  encouraging  them  to  pay  tax  where  they  make  profit,  while  preserving 
competitiveness and  avoiding  burdens on smaller  companies. The European Parliament 
and Council are invited to consider this proposal swiftly.  

EU  measures  also  require  transparency  as  regards  the  accounts  of  individuals.  Since 
January  2016, new legislation is in force to  prevent the concealment of offshore funds. 
Under  the  Administrative  Cooperation  Directive,  Member  States  are  obliged  to 
automatically exchange an extensive amount of information with each other on income 
and  capital  held  by  individuals  and  entities  abroad.  In  addition,  new  tax  transparency 
agreements  have  also  been  signed  with  Switzerland,  Liechtenstein,  Andorra  and  San 
Marino, and a similar agreement will be signed with Monaco in the coming weeks. This 
new  transparency  will  improve  Member  States'  ability  to  detect  and  deal  with  tax 
evaders, while also acting as a deterrent against hiding income and assets offshore for tax 
purposes.  Finally,  under  the  Fourth  Anti-Money  Laundering  Directive,  Member  States 
are  required  to  create  central  registers  of  beneficial  ownership  information,  to  ensure 
greater transparency on capital flows and better combat money laundering and terrorism 
financing. The Commission has called on Member States to implement these rules by the 
end of the year. 

2 Directive 2013/36/EU 

3 

 
                                                 
Fairer Taxation  

The  Commission's  work  for  greater  tax  transparency  has  been  coupled  with  an  equally 
determined approach to ensure that Member States have the right tools in place to protect 
their tax bases against abuse and collect their legitimate revenues.  

The  Commission  Action  Plan  for  Fair  and  Effective  Taxation3  of  June  2015  sets  out  a 
series of measures to modernise corporate taxation in the EU. The Action Plan laid the 
foundation for a multi-pronged EU approach to clamp down on aggressive tax planning 
and  the  regimes  that  encourage  it,  while  at  the  same  time  minimising  the  risk  of 
unjustified double taxation. Work is already well advanced on many of the actions, not 
least the preparation of a proposal to re-launch the Common Consolidated Corporate Tax 
Base (CCCTB), which the Commission intends to present before the end of the year, to 
improve  the  environment  for  businesses  in  the  Single  Market  while  eliminating 
mismatches  between  national  systems  which  are  currently  exploited  by  aggressive  tax 
planners.   

The Anti Tax Avoidance Package of January 2016 included legally binding measures to 
tackle aggressive tax planning and an External Strategy to promote tax good governance 
internationally. There has been significant progress on all elements of this Package. The 
Anti Tax Avoidance Directive was agreed by the Council in June 2016. This will help to 
prevent some of the most prevalent types of profit-shifting, through coordinated rules to 
resolve  hybrid  mismatches,  tax  controlled  foreign  companies  and  limit  of  the 
deductibility  of  interest,  amongst  other  things.  The  External  Strategy  was  endorsed  by 
Council in May 2016 and work is underway on each of its actions, including the process 
for establishing a common EU list of non-cooperative jurisdictions. Important progress is 
also being made to improve other areas of corporate taxation, such as reviewing transfer 
pricing  rules  and  Member  States'  preferential  regimes,  in  line  with  new  international 
norms. In addition, the Commission is actively pursuing cases where incentives offered 
to selected undertakings may breach EU state aid rules. 

The  Commission  is  also  pushing  for  higher  tax  good  governance  at  international  level. 
Steady progress has been made to improve the tax good governance framework globally, 
and to tighten tax systems against abuse. In particular, the OECD Base Erosion and Profit 
Shifting (BEPS) measures will shut down major channels for aggressive tax planning, if 
fully and widely implemented.  

TACKLING REMAINING CHALLENGES 

Despite these important advances, the Commission is convinced that more remains to be 
done  in  the  fight  against  tax  avoidance  and  evasion.  The  recent  media  revelations 
exposed  how  secretive  holdings  and  financial  structures  are  still  being  used  to  hide 
income  and  assets  offshore,  often  with  the  aid  of  sophisticated  advice.  Whilst  certain 
structures might have a legitimate purpose, some of these activities could be supporting 
corruption, money-laundering and tax evasion.   

Many  of  the  new  measures  mentioned  above,  including  the  binding  anti-abuse 
provisions, new transparency requirements and the common EU list of non-cooperative 
jurisdictions,  should  restrict  such  practices  in  the  future.  However,  there  are  still 
important gaps  in  the EU and international  tax framework  that  need  to be addressed to 

3 COM(2015) 302 

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prevent  cross-border  tax  abuse  and  illicit  financial  activity.  The  European  Parliament 
shares  this  viewpoint  and  has  established  an  enquiry  committee  into  the  "Panama 
Papers",  which  should  provide  useful  insights  as  regards  the  EU  response  to  these 
revelations.  

1. Harness the link between Anti Money Laundering and Tax Transparency rules 

The "Panama Papers" confirmed that a lack of transparency on beneficial ownership can 
facilitate money-laundering, corruption and tax evasion. The responses to these problems 
should therefore be complementary and connected.  

Today, the Commission has proposed amendments to the Fourth Anti Money Laundering 
Directive4,  with  the  specific  purpose  of  reinforcing  EU  defence  mechanisms  against 
money laundering and terrorist financing. 5  

These amendments include widening the scope of the information accessible to Financial 
Intelligence  Units,  introducing  due  diligence  requirements  for  the  exchange  of  virtual 
currencies and strengthening the verifications and controls on pre-paid instruments.  

The  Commission  will  also  soon  adopt,  for  the  first  time,  an  EU  list  of  high-risk  third 
countries with strategic deficiencies in their anti-money laundering and counter-terrorism 
financing  regimes.  The  amendments  to  the  Fourth  Anti  Money  Laundering  Directive 
include a harmonised list of due diligence measures that financial institutions must carry 
out on financial flows from these countries.  

A  number  of  the  proposed  amendments  directly  address  the  loopholes  exposed  in  the 
recent media leaks, which enabled funds to be hidden offshore to escape taxation.  

First,  in  the  amended  Anti  Money  Laundering  Directive,  the  threshold  for  declaring 
beneficial  ownership  for  passive  corporate  entities  has  been  lowered.  This  will  ensure 
that these structures are subject to greater transparency and scrutiny. Second, as part of 
their wider financial reporting obligations for tax purposes, financial institutions will be 
required  to  systematically  apply  current  due  diligence  rules  to  existing  customers,  in 
addition to all new customers. This will allow accounts that have not been reviewed by 
financial  institutions  for  over  ten  years,  and  which  may  have  been  used  for  illicit 
purposes,  to  be  monitored.  Third,  the  requirements  for  the  registration  of  beneficial 
owners  of  trusts  have  been  clarified,  to  remove  gaps  in  the  legislation  and  national 
mismatches.  Fourth,  access  to  beneficial  ownership  information  will  be  improved: 
Member States will be required, through amendments to the Company Law Directive, to 
give  public  access  to  a  set  of  information  on  companies  and  business-type  trusts6;  for 
other  trusts,  access  to  such  information  will  be  possible  for  those  holding  a  legitimate 
interest. This will contribute to combatting the misuse of legal entities and arrangements.  

4 COM(2016) 450 

5 See also the Action Plan to strengthen the fight against terrorist financing, COM(2016) 50  

6  Trusts  which  comprise  any  property  held  by,  or  on  behalf  of,  a  person  carrying  on  a  business  which 
consists of or includes the management of trusts, and acting as trustee of a trust in the course of that 
business  with  a  view  to  gain  profit,  and  other  types  of  legal  arrangements  having  a  structure  or 
functions similar to such trusts. 

5 

 
 
 
 
                                                 
In addition to these amendments to the Fourth Anti Money Laundering Directive and the 
Company Law Directive, the Commission  has  also  proposed a complementary revision 
of the Directive on Administrative Cooperation in the field of taxation7. This will ensure 
that tax authorities must be given access to the data provided under the EU's anti-money 
laundering rules, notably customer due diligence information and the information in their 
national  beneficial  ownership  registries,  in  order  to  perform  their  tasks  and  not  only  in 
the context of the fight against money laundering and terrorist financing. Indeed, the fact 
that  Member  States  currently  have  the  choice  of  whether  or  not  to  give  access  to  this 
information  to  tax  authorities  limits  the  effectiveness  of  tax  audits.  With  access  to  this 
information,  tax  authorities  will  be  able  to  identify  the  person  behind  an  opaque 
company, structure or entity, and react quickly to situations of tax evasion and avoidance.   

Effective  supervision  and  enforcement  are  a  key  element  to  prevent  money  laundering, 
the financing of terrorism and crime generally. It is of outmost importance that Member 
States transpose and implement in practise this reinforced legal framework. 

The  Commission  calls  on  the  European  Parliament  and  the  Council  to  agree  on  the 
proposed amendments to the Fourth Anti-Money Laundering Directive without delay to 
improve  the  fight  against  terrorist  finance  and  close  important  loopholes  that  have 
enabled tax evaders to escape detection when they channel funds offshore.  

The  European  Parliament  and  the  Council  should  also  quickly  agree  to  the  proposed 
revision  of  the  Administrative  Cooperation  Directive,  which  reinforces  the  synergies 
between EU anti-money laundering and EU tax transparency rules. This will ensure that 
tax authorities have access to vital information, at national level, allowing them to clamp 
down on tax evasion and avoidance through offshore funds.  

2. Improve Information Exchange on Beneficial Ownership 

The  above  mentioned  proposals  to  allow  tax  authorities  to  access  enhanced  national 
beneficial  ownership  information  will  significantly  improve  their  ability  to  target  tax 
evasion  and  avoidance.  However,  effectively  tackling  tax  evasion  and  avoidance  will 
require  going  further,  notably  by  making  transparency  on  beneficial  ownership 
immediately applicable cross-border.  

The EU has long been aware of the importance of administrative cooperation between tax 
authorities  in  tackling  tax  abuse.  The  automatic  exchange  of  information  between  tax 
authorities is one of the EU's most powerful instruments in this regard. This cross-border 
information  exchange  has  recently  been  extended  to  cover  all  financial  accounts,  tax 
rulings and information on multinationals' activities for tax purposes.  

In light of the situation highlighted by recent media revelations, there is a strong case for 
extending  the  administrative  cooperation  between  tax  authorities  even  further,  to  cover 
beneficial  ownership information,  within the  EU  and  globally.  Allowing  tax  authorities 
direct  access  to  the  detailed  beneficial  ownership  information  of  other  Member  States 
would significantly improve their ability to target risks of tax evasion and avoidance.  

At EU level, all EU Member States have agreed to participate in a pilot project, launched 
by  UK,  Germany,  Spain,  Italy  and  France,  to  exchange  information  on  the  ultimate 

7 COM(2016) 452 

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beneficial  owners  of  companies  and  trusts8.  This  would  be  a  natural  extension  of  the 
transparency  provisions  already  enshrined  in  EU  law  and  of  the  proposals  presented 
today  which  allow  tax  authorities  full  access  to  beneficial  ownership  information.  The 
automatic  exchange  of  information  on  beneficial  ownership  could  potentially  be 
integrated into the binding tax transparency framework already in place in the EU.   

At  international  level,  the  G20  has  reiterated  the  high  priority  it  gives  to  international 
financial  transparency,  In  April  2016,  it  called  on  the  OECD  and  FATF9  to  propose  a 
new global transparency standard for beneficial ownership by October.  The Commission 
warmly  welcomes  this  initiative,  which  would  give  tax  authorities  access  to  vital 
information  to  uncover  complex  and  hidden  offshore  schemes  worldwide.  The 
Commission  will  lend  any  support  that  it  can  to  the  development  of  the  new  global 
transparency  standard.  Once  more  details  are  known  on  how  the  new  global  initiative 
will  be  implemented,  the  Commission  will  analyse  that  in  the  context  of  possibly 
interlinking Member States’ registers of beneficial ownership.  

The Commission has started to examine the most appropriate framework through which 
the automatic exchange of information on beneficial ownership could be implemented at 
EU  level,  to  ensure  that  tax  authorities  have  up-to-date  and  reliable  information  on 
companies and trusts abroad that are potentially relevant for them from a tax perspective.   

The Commission will present a first analysis of the issue to Member States in the autumn 
and  will,  based  on  the  feedback  received,  subsequently  determine  the  appropriate  next 
steps.  

3. Increase Oversight of Enablers and Promoters of Aggressive Tax Planning 

The  role  of  certain  financial  intermediaries  and  advisors  in  helping  their  clients  to 
conceal  money  offshore  has  been  thrown  into  the  spotlight  by  the  recent  media 
revelations. While some complex transactions and corporate structures may have entirely 
legitimate  purposes,  other  offshore  activities  may  be  less  justifiable  or  even  illegal.  A 
number of important steps have already been taken at EU level to prevent companies and 
individuals  from  using  artificial  or  hidden  offshore  structures  to  avoid  or  evade  tax. 
These  include  new  transparency  rules  for  financial  accounts10,  anti-abuse  provisions  in 
the  Anti  Tax  Avoidance  Directive11,  the  EU's  robust  regulatory  framework  for  the 
financial  sector  and  the  proposed  amendments  to  the  Fourth  Anti-Money  Laundering 
Directive. However, there appears to be a strong case for introducing further measures – 
either  through  horizontal  or  sectorial  provisions  which  specifically  focus  on  those  who 
promote  or  enable  tax  evasion  and  avoidance  schemes.  This  would  help  competent 
authorities to identify and block such activity at an early stage and to address loopholes 
in legislation allowing for it. It would also have a dissuasive effect on those who actively 
encourage and use aggressive tax planning.  

8  http://www.bundesfinanzministerium.de/Content/EN/Standardartikel/Topics/Taxation/Articles/G5-letter-

to-G20-counterparts-regarding-action-on-beneficial-ownership.html 

9 Financial Task Force on Money Laundering 

10 COM (2013) 348 

11 COM (2016) 26 

7 

 
                                                 
OECD  BEPS  (Action  12)  recommends  that  countries  should  require  tax  payers  and 
promoters  of  tax  planning  schemes  (tax  advisors,  legal  advisors,  financial  institutions, 
etc.)  to  disclose  any  aggressive  tax  planning  schemes  that  they  use  or  promote.  Some 
Member  States12  have  already  implemented  such  mandatory  disclosure  schemes  at 
national level, while others are in the process of considering them. However, given the 
cross-border  nature  of  aggressive  tax  planning,  purely  national  schemes  can  only  have 
limited effect. In May 2016, the Council invited the Commission "to consider legislative 
initiatives  on  Mandatory  Disclosure  Rules  inspired  by  Action  12  of  the  OECD  BEPS 
project  with  a  view  to  introducing  more  effective  disincentives  for  intermediaries  who 
assist  in  tax  evasion  or  avoidance  schemes”.  This  echoes  the  European  Parliament's 
repeated call for tougher measures against in the enablers and promoters of tax evasion 
schemes.  

The Commission will explore the best way to increase oversight and ensure that effective 
disincentives  apply  for  promoters  and  enablers  of  aggressive  tax  planning  schemes13. 
This could include, for example, increasing transparency on such schemes vis-à-vis tax 
authorities.  

With  this  aim,  in  autumn  2016,  the  Commission  will  launch  a  public  consultation  to 
gather feedback on the most appropriate approach.  

In  parallel,  the  Commission  will  work  closely  with  the  OECD  and  other  international 
partners  on  a  possible  global  approach  to  greater  transparency  on  advisors'  activities, 
going beyond the recommendation in BEPS (Action 12).  

4. Promote higher tax good governance standards worldwide 

EU  measures  against  tax  evasion  and  avoidance  are  essential  to  help  protect  Member 
States'  tax  bases,  ensure  a  level-playing  field  for  businesses  and  promote  a  fairer  and 
more competitive environment in the Single Market. However, given the global nature of 
tax  abuse,  it  is  essential  to  act  at  the  international  level  against  opaque  systems  and 
aggressive tax planning.  

In  this  respect,  the  EU  strongly  supports  the  OECD's  efforts  to  ensure  worldwide 
implementation  of  higher  tax  good  governance  standards,  both  through  the  inclusive 
framework for the implementation of BEPS and the Global Forum's work to monitor tax 
transparency. The EU has swiftly implemented the new global standard for the automatic 
exchange of information on financial accounts (Common Reporting Standard), as well as 
key  BEPS  measures,  through  binding  legislation.  As  such,  it  is  leading  by  example  in 
international  tax  good  governance.  A  high  priority  now  is  to  ensure  that  the  EU's 
international partners also implement these higher standards of tax good governance, and 
the EU must intensify the pressure in global fora – particularly the G20 – to achieve this.  

In  January  2016,  the  Commission  presented  an  External  Strategy  for  Effective 
Taxation14,  to  ensure  a  coherent  EU  approach  to  promoting  tax  good  governance 
worldwide. As part of this Strategy, the Commission set out a number of tools to promote 

12 UK, Ireland and Portugal 

13 http://ec.europa.eu/smart-regulation/roadmaps/index_en.htm 

14 COM (2016) 24 

8 

 
                                                 
good  governance  worldwide,  including  through agreements  with  third  countries  and  by 
assisting  developing  countries  in  meeting  tax  good  governance  standards.  To  deal  with 
countries that refuse to respect tax good governance standards, the Commission proposed 
a new EU listing process. This reflects the calls of the European Parliament15 for an EU 
list  of  uncooperative  tax  jurisdictions.  The  common  EU  list  will  be  based  on  clear, 
objective and internationally justifiable criteria, a robust screening process and an open 
dialogue with the third countries in question. EU Finance Ministers endorsed this listing 
process at ECOFIN in May 2016 and called for a first EU list to be ready in 2017. They 
also  asked  the  Code  of  Conduct  Group  for  Business  Taxation  to  consider  appropriate 
countermeasures to accompany the list.   

The  common  EU  list  should  serve  as  an  important  dissuasive  tool,  targeting  countries 
that  refuse  to  join  the  global  move  towards  fairer  and  more  transparent  taxation. 
Moreover, the G20's recent call for an international list of non-cooperative jurisdictions 
gives  additional  value  to  the  EU  listing  process.  The  common  EU  list  may  serve  as  a 
blueprint  for  the  future  international  one,  given  that  it  will  be  based  on  internationally 
agreed standards. 

To  facilitate  the  swift  development  of  the  EU  list,  the  Commission  is  finalising  a  pre-
assessment of all third countries, to determine the risk they may pose in terms of eroding 
the tax bases of Member States. It will present the results of this analysis to the Code of 
Conduct Group for Business Taxation before the summer.  On this basis, Member States 
will be able to quickly identify the third countries that they wish to screen further from a 
tax  good  governance  perspective  and  open  a  dialogue  with  the  selected  jurisdictions 
before the end of 2016.   

The  Commission  will  also  work  closely  with  the  OECD  for  the  development  of  an 
ambitious and effective international list of non-cooperative jurisdictions.  

5. Improve the protection of whistle-blowers  

There has been political consensus to fight tax evasion and avoidance in Europe over the 
last years, allowing important measures to be implemented, both at national level and EU 
level.  More  recent  high-profile  cases  of  corporate  tax  avoidance  and  individual  tax 
evasion, exposed by whistle-blowers, increase the need for effective measures to protect 
whistle-blowers. The protection of those who report or disclose information on acts and 
omissions  that  represent  a  serious  threat  or  harm  to  the  public  interest  does  not  only 
enhance  employees'  ability  to  impart  such  information  but  has  also  the  potential  to 
crucially  contribute  to  increased  detection  of  fraud  and  tax  evasion,  which  deprives 
European  tax  authorities  from  legitimate  tax  revenue.  The  European  Parliament  and 
many stakeholders have thus called for improved protection of whistle-blowers.  

Whistle-blower  protection  is  indispensable  considering  that  institutional  processes  of 
accountability  rely  on  exposure  of  information  to  identify  possible  wrongdoing. 
Protection of whistle-blowers in the public and in the private sector contributes to address 
mismanagement and irregularities, including cross-border corruption relating to national 
or  EU  financial  interests.  Also  from  the  perspective  of  the  functioning  of  the  Single 
Market and corporate social responsibility, it can help disciplining companies and protect 

15 TAXE 1 and 2 Reports: http://www.europarl.europa.eu/committees/en/taxe/work-in-progress.html 

9 

 
 
                                                 
societal interests, which  have  the  potential to enhance trust in the  market and  therefore 
attract potential investors and business partners.  

The  Commission  fully  supports  the  objective  of  protecting  whistle-blowers  against 
retaliation.  The  Commission  has  taken  steps  to  protect  whistle-blowers  in  EU  sectorial 
legislation  as  well  as  within  the  EU  institutions.  For  example,  Member  States  are 
required  to  establish  effective  and  reliable  mechanisms  to  encourage  the  reporting  to 
competent  authorities  of  potential  or  actual  breaches  of  anti-money  laundering  rules. 
Financial  institutions  and  other  obliged  entities  have  to  put  in  place  procedures  for 
employees  or  persons  in  a  comparable  position  which  report  breaches  of  those  rules. 
Similar requirements are in place for law firms and audit firms and in other areas of EU 
law such as market abuse and collective investment in transferable securities. EU law on 
trade  secrets  sets  a  framework  in  which  the  importance  of  professional  conduct  and 
confidentiality  of  business  information  is  balanced  by  effective  protection  of  whistle-
blowers.  

As long as there is no specific provision for the protection of whistle-blowers laid down 
in EU law, national legislation applies. This includes areas such as tax law compliance, 
which is not currently covered by EU provisions to protect whistle-blowers.   

The Commission will continue to monitor Member States' provisions for whistle-blowers 
and facilitate research and exchange of best practice to encourage improved protection at 
national level. In parallel, it will assess the scope for further action at EU level.  

With  a  view  to  strengthening  the  protection  of  whistle-blowers,  the  Commission  is 
assessing the scope for horizontal or further sectorial action at EU level, while respecting 
the principle of subsidiarity.  

Conclusion 

In recent years, significant progress has been made in the fight at EU level to tackle tax 
evasion,  avoidance,  fraud  and  corruption.  The  Commission  has  presented  proposals  to 
enhance tax transparency, significantly reduce opportunities for aggressive tax planning 
and promote tax good governance globally. Once these are fully implemented, they will 
permanently change the tax landscape in Europe, making it fairer, more open and more 
efficient for citizens, businesses and Member States in the Single Market.  

However,  the  battle  for  a  fairer  and  more  transparent  tax  system  must  be  a  continuous 
effort  with  a  capacity  to  react  quickly  to  new  circumstances  and  events.  The  practices 
highlighted  by  the  recent  media  leaks  compel  the  EU  to  go  further  in  improving  its 
internal  coordination  against  abusive  tax  practices,  and  to  work  hand-in-hand  with 
international partners – particularly the G20 and OECD – for an ambitious global agenda 
against financial misdeeds.  

The  measures  outlined  in  this  Communication  can  make  a  substantial  contribution  to 
preventing the opaque and sometime illicit schemes that have been recently exposed in 
the  media.  Firm  and  effective  action  in  these  areas  would  allow  the  EU  to  retain  its 
position  at  the  forefront  of  global  tax  good  governance,  and  to  push  its  international 
partners  to  follow  suit.  This  will  increase  fairness  and  help  to  foster  jobs,  growth  and 
investment in Europe.  

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