There is still insufficient sharing of tax information between EU Member States to ensure fair and effective taxation throughout the Single Market, according to a new special report published today by the European Court of Auditors (ECA). The problems are not only with the EU’s legislative framework, but also with its implementation and monitoring. In particular, the auditors found that, often, the information exchanged is of limited quality or underused.
The ever growing number of cross-border transactions makes it difficult for Member States to assess taxes due properly, and encourages tax avoidance and evasion. Revenues lost to corporate tax avoidance alone are estimated at between €50 billion and €70 billion yearly in the EU, reaching some €190 billion if special tax arrangements and tax collection inefficiencies are included. Cooperation between Member States is therefore essential to make sure taxes are collected in full and where they are due.
“Tax fairness is crucial to the EU economy: it increases certainty for taxpayers, enhances investment and stimulates competition and innovation”, said Ildikó Gáll-Pelcz, the Member of the European Court of Auditors responsible for the report. “Initiatives in recent years have given administrations unparalleled access to tax data. Yet, the information exchanged still needs to be used much more for the system to reach its full potential.”