October 29, 2020

Brussels calls for an end to public aid for companies with links to tax havens

That companies with links to tax havens do not receive aid. This is what the European Commission has asked this Tuesday: that the Member States do not grant financial support to companies that have ties to countries that appear on the EU’s list of non-cooperative countries and territories for tax purposes. “Restrictions must also be applied to companies convicted of serious financial crimes, such as financial fraud, corruption or non-payment of taxes and social security obligations, among others,” says Brussels.

Vice President for Competition Margrethe Vestager said: “We are in an unprecedented situation, in which exceptional amounts of public aid are awarded to companies in the context of the coronavirus pandemic. In these circumstances, it is particularly unacceptable that companies receiving public aid maintain tax avoidance practices involving tax havens, which would constitute an abusive use of national and EU budgets, to the detriment of taxpayers and social security systems, together with the Member States We want to make sure this doesn’t happen. ”

The European Commission explains “that the coronavirus pandemic has required an unprecedented effort, which includes significant financial aid to provide liquidity and capital to companies. In this context, several Member States expressed their willingness to adopt rules to restrict access to this support from companies that maintain tax avoidance practices that involve tax havens or that have been convicted of financial crimes. ”

Today’s Brussels recommendation seeks to provide a model to Member States, in line with EU law, on how to prevent public aid from being used in fraud or tax evasion structures, tax avoidance and money laundering or to terrorist financing.

“In particular, companies with links to non-cooperative countries and territories for EU tax purposes should not receive public support (this is the case, for example, when a company has its tax residence in one of them)” , states Brussels: “At the same time, the Commission is ready to discuss with Member States their specific plans to ensure that the granting of state aid, in particular in the form of recapitalizations, is limited to companies paying the proportion of taxes that in justice corresponds to them “.

The Commission, in any case, recommends exceptions: “Although they maintain links with non-cooperative countries and territories for tax purposes according to the EU list, companies should be able to access financial aid in certain circumstances. This could be the case, for For example, companies that demonstrate that they have paid an appropriate tax in the Member State for a certain period of time (for example, the last three years) or that demonstrate a real economic presence in the listed country. members to introduce appropriate penalties to discourage applicants from providing false or inaccurate information. ”


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