European Commission publishes plan to close corporate tax loophole

Monday 25 November 2013 12.35
Algirdas Šemeta said it was necessary to reform the Parent Subsidiary Directive
Algirdas Šemeta said it was necessary to reform the Parent Subsidiary Directive

The European Commission has published a plan that it says will eliminate a corporate tax loophole that has cost the European Union billions of euro every year.

The announcement was made in Brussels this afternoon by European Commissioner for Taxation Algirdas Šemeta.

He said it was necessary to reform the Parent Subsidiary Directive.

The law was supposed to prevent multinationals with companies in different member states from being taxed twice.

However, he said while the directive aimed to stop double taxation, it had enabled some companies from either lowering their tax base or avoiding paying any tax at all.

Mr Semeta declined to say whether the law was aimed at certain member states that had facilitated the multinationals, arguing that the proposed reform would apply equally across the EU.

However, it has been widely reported that the measure is mainly directed at countries such as Belgium, Luxembourg and the Netherlands.

Ireland is not under close scrutiny on the matter because it has no exemptions for foreign income.

However, before the reform outlined today can become law, it needs the support of EU governments and the European Parliament, something that is not guaranteed.

Elsewhere, Irish woman Mary Walsh has been appointed by the European Union to a task force on taxing the digital economy.

Ms Walsh, who served on Ireland's Commission on Taxation, is one of seven people on the committee.