EU preferential regimes and Code of Conduct Group: state of play

By Francesca Amaddeo, Lecturer-Researcher, Tax Law Competence Centre (SUPSI), Manno, Switzerland

There were several developments in April regarding the EU Code of Conduct Group’s effort to rein in tax avoidance.

The EU General Secretariat of the Council on 16 April submitted to delegations the results of the Code of Conduct Group’s overview of non-EU countries that have preferential tax regimes and other measures. Preferential tax regimes are tax regimes that are considered harmful to EU countries because they help multinational groups engage in profit-shifting.  

The EU update lists non-cooperative jurisdictions for tax purposes identified as potentially of concern by the Group under criteria 2.1 and 2.2. of the evaluation process.

The document released sets out jurisdiction, name, and code of the regime or measure, the standstill date, and notes whether the tax regime is under Code of Conduct Group or OECD Forum on Harmful Tax Practices monitoring. Whether the tax regime is harmful or not and the rollback date are mentioned.

A few days after the release of this document, on 19 April, the European Parliament FISC subcommittee hosted a public hearing addressing the reform of the Code of Conduct Group criteria and process. As already noted by the European Parliament earlier this year, the blacklist only encompasses non-EU countries. This followed the Parliament’s exchange of views with Lyudmilla Petkova, Chair of the Code of Conduct Group.

Indeed, the European Parliament adopted a resolution in January listing the shortcomings of the working of the Code of Conduct Group, notably in the elaboration of the blacklist of tax havens, according to Paul Tang, the Chair of the subcommittee on tax matters.

The Code of Conduct Group is aware of the need to reform its processes and aims to increase the efficiency and transparency of its work. They are working on a new assessment framework by which to judge national corporate tax systems based on a three-step approach.

Problematic tax regimes that do not offer any preferential treatment must be carefully monitored, the European Parliament highlighted.

The hearing presented an opportunity for the FISC subcommittee to consider experts’ views to evaluate a stronger basis for the reform.

Prof. Ana Paula Dorado suggested that the Code of Conduct group be given leeway to examine general regimes and taxes other than those on businesses. Moreover, such an improvement iter must be kept independent from discussion at the OECD level.

Also, Prof. Sol Picciotto pinpointed the relevance of defining a minimum corporate tax rate, which will represent the boot for the reform.

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Francesca Amaddeo

Lecturer-researcher at Tax Law Competence Centre, Department of Business Economics, Health and Social Care, University of Applied Science and Arts of Southern Switzerland (SUPSI)

Dr. Francesca Amaddeo, PhD in European law and national legal systems, is an Italian lawyer that works as Lecturer-researcher at the Tax Law Competence Centre, Department of Business Economics, Health and Social Care, University of Applied Science and Arts of Southern Switzerland (SUPSI).

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