THE STATE OF THE EUROPEAN UNION

THE FIGHT AGAINST TAX EVASION AND AVOIDANCE: TOWARDS A HARMONISATION OF CORPORATE INCOME TAXES WITHIN THE EU

it suits them, which will inevitably be solely in

circumstances in which taking that route trans-

lates into lower tax bills (and subsequently low-

er tax revenues). However, it has been agreed

that once a company opts to be taxed on the

basis of the CCCTB, it will be locked into that

regime for a period of five years.

In terms of the CCCTB’s viability, it should be

noted that some States have taken issue with

several aspects of the proposal as it stands

and

others, such as the United Kingdom, have come

out strongly against the overall proposal. Given

the fact that the adoption of any initiative re-

lated to taxation is subject to unanimous ap-

proval, the Council will be unable to adopt the

CCCTB in the event that it fails to garner the

support of all Member States, although it could

be pushed through by a number of countries by

means of an enhanced cooperation proce-

dure

Reconsidering the definition of what

constitutes a tax haven

Tax havens provide the foundation upon which

all tax evasion and avoidance schemes are con-

structed. Nevertheless, there is no internation-

ally agreed-upon and updated definition of

what constitutes a tax haven. Prior to recent

initiatives, the most widely recognised attempt

to define the concept was that developed by

the OCDE, which offers three criteria: the impo-

sition of no or only nominal taxes in a given ju-

risdiction, a jurisdiction’s lack of transparency

The Netherlands is in favour of a common tax base but

not consolidation.

Enhanced cooperation agreements may be approved by

the Council on the basis of majority vote on the basis of

Article 329 of the TFEU.

and its unwillingness to exchange tax-related

information. Other suggested definitions, such

as that offered in the Tax Justice Network’s

Financial Secrecy Index

, place a greater empha-

sis on the guarantees of opacity and secrecy

that such territories extend to non-residents.

In any case, a new, comprehensive European

and international definition of tax haven that

includes criteria for judging whether a territory

can rightfully be placed in this category is sorely

needed. Any such definition must include refer-

ences to the characteristics that typify territories

that aid and abet tax avoidance and evasion,

including unnaturally low (nominal or effective)

tax rates and policies of not requiring non-resi-

dents to maintain substantial business activities

within their jurisdictions. It is precisely the ab-

sence of any necessity to maintain “substantial”

business operations that often makes compa-

nies decide to transfer profits to tax havens.

Following the G20 2009 London Summit,

the OECD drew up three lists that divided tax

jurisdictions into three categories according to

their relative degrees of opacity and cooperation

with tax authorities in other countries. However,

the lack of effectiveness of this exercise became

patently clear when not a single country re-

mained on the black list only a few days later.

The requisites for being removed from the

OECD’s black list were easy for countries to fulfil

and rooted in formalities. The jurisdictions in

question were merely required to sign twelve

double taxation agreements (DTAs) or tax infor-

mation exchange agreements (TIEAs).

Nevertheless, the OECD did eventually fol-

low through with the formation of an interna-

tional “peer review” group charged with the

The highest level of secrecy involves shielding the identi-

ties of ultimate beneficiaries of hidden assets.