(December 4, 2014)

On November 28, 2014 the Ministers of Finance of Germany (Schäubele), France (Sapin) andItaly (Padoan) sent a letter to the European Commissioner for Economic and Financial Affairs, Taxation and Customs (Mr. Pierre Moscovici). In their letter the Ministers call upon Mr. Moscovici to take action against unfair tax competition and Base Erosion and Profit Shifting within the EU.

According to the three Ministers the lack of tax harmonisation in the European Union is one of the main causes allowing aggressive tax planning, base erosion and profit shifting (BEPS) to develop within the internal market. This situation may lead to incooperative behaviours between Member States, which directly affects the establishment or functioning of the internal market and the benefits provided by the Treaty freedoms. The Ministers admit that good progress has been made, especially during the last six months, but they are of the opinion that more should be done.

According to the Ministers, no one can deny that there is a strong need for real action and that collectively necessary measures should be taken to ensure transparency and fair taxation. The Ministers continue by stating that they feel the appropriate response by the EU is the adoption of a set of common binding rules on corporate taxation to curb tax competition and fight aggressive tax planning. The Ministers continue by stating that they are convinced that this can only be reached through a comprehensive anti-BEPS Directive, to be adopted by the 28 EU Member States before end 2015.

The 2 page letter that the three Ministers jointly sent to Mr. Moscovici was published by the Italian Ministry of Finance and can be found here.

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