Juncker proposals will put pressure on Irish corporate tax regime

Ireland's corporate tax regime is expected to come under renewed pressure from Brussels, after the European Commission announced a series of sweeping measures yesterday to combat tax avoidance in the wake of the "Luxembourg leaks" tax scandal.

In his first comments on the matter since the exposé last week, European Commission president Jean-Claude Juncker unveiled a series of initiatives yesterday in Brussels to tackle tax avoidance. If adopted, they would represent a radical escalation of the European Union’s powers over countries’ tax systems.

The measures, expected to be strongly opposed by Ireland, include an EU directive obliging all countries to reveal details of specific tax deals offered to firms. Mr Juncker announced plans to progress legislation on a common EU corporate tax base: “If we can reach an agreement on that . . . then many problems will disappear.”

Tax harmonisation

In addition, French commissioner Pierre Moscovici, who has responsibility for taxation and economics, has been tasked with finding further ways of introducing tax harmonisation across the EU "using all tools available".

Further details of the proposed clampdown on tax are expected by next month.

The move to tackle EU tax avoidance came as German finance minister Wolfgang Schäuble wrote to Mr Moscovici urging tax rulings be included in information exchanged between countries.

National vs international rules

Mr Juncker, who was prime minister of Luxembourg when the 343 tax deals unveiled by the “Lux leaks” investigation were agreed, acknowledged he had made mistakes in the affair. He stressed Luxembourg had at all times been in compliance with national legislation and international rules when it struck tax deals.

However, he conceded the mismatch between different national and international tax rules “can lead to results that are not in line with ethical and moral standards”.

“If there is no tax harmonisation throughout Europe, or if there is insufficient fiscal harmonisation in Europe, then this can be the result,” he said, pledging to “fight tax evasion and tax avoidance”.

Measures outlined by Mr Juncker included “automatic exchange of information” on tax rulings or “letters” by governments to corporations. He will also progress the Common Consolidated Corporate Tax Base opposed by Ireland.