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THE STATE OF THE EUROPEAN UNION
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of the UN (Tax Committee). This group of coun-
tries feels that the OECD and the G20 represent
the “rich countries’ club” and that they have
not been allowed to participate on an equal
footing in the BEPS process of developing rules.
They argue that specifying compliance with
BEPS minimum standards as the third criterion
for the European list repeats the error of forcing
them to comply with rules that have been devel-
oped without their input.
As in the case of the criterion of transpar-
ency, it is sufficient – initially – for the third-par-
ty jurisdiction to formally undertake to imple-
ment the standards for it to be excluded from
the blacklist. In the future, the criterion will be
tightened and the EU will require the jurisdiction
to have received a positive evaluation within the
monitoring process established by the OECD
“Inclusive Framework on BEPS”. This frame-
work brings together states that are not mem-
bers of the OECD, to contribute to the process
of implementing the BEPS Programme. The
OECD hopes that as many non-member coun-
tries as possible will adhere to the Inclusive
Framework and undergo monitoring to deter-
mine the level of compliance of each jurisdiction
with the minimum BEPS standards. In this crite-
rion, as in the case of the first criterion, the EU
will base its decision entirely on the outcome of
the work of the OECD and, before it can be
implemented, will therefore have to wait until
the monitoring process has been completed for
all countries that adhere to the Inclusive
Framework.
The controversial decision to exempt Member
States from the criteria
However, perhaps the most controversial aspect
of the EU process is the decision not to apply
the criteria used in the evaluation of third-party
countries to the EU’s own Member States. The
most recent tax scandals (LuxLeaks, Panama
Papers and Paradise Papers) have exposed the
decisive role of certain tax regimes and tax sys-
tems in European jurisdictions in corporate tax
avoidance strategies. It is impossible to make
sense of the complex structures established by
Google and Apple without considering the use
of tax advantages offered by the Netherlands,
Ireland or Luxembourg.
There is no doubt that the EU would be in a
far stronger moral position to require other
countries to respect a series of standards of
good tax governance if it had put its own house
in order first by ensuring that these standards
were applied internally. It seems that pressure
was exerted by certain Member States in the
Council to prevent this happening. However,
this has not prevented detailed discussion of the
issue at the centre of other EU institutions, as
evidenced by the tightly contested vote in the
European Parliament at the end of 2017, on the
approval of the final report of the inquiry com-
mitte into the Panama Papers. The chamber re-
jected, by a single vote, an amendment that
proposed the possibility of including Member
States on the blacklist of tax havens if they failed
to satisfy the criteria approved by ECOFIN.
More recently, the Commission also ques-
tioned the position of the Council by publishing
a series of reports
6
in which, after careful study
of its tax systems, it directly identified seven
Member States: Belgium, Cyprus, Ireland, Hun-
gary, Luxembourg, Malta and the Netherlands.
Despite recognizing that these countries had
recently made some improvements, the Com-
mission did not hesitate to state that their tax
6
Biannual Report of the Commission on coordination of
economic and tax policy in the EU