Some EU countries are calling for tougher sanctions on jurisdictions that facilitate tax avoidance in a move that is likely to spark a dispute with EU memgbers like Luxembourg and Ireland.
According to a document prepared by the Danish government and seen by Reuters, a group of European Union countries are urging for a discussion on whether "current criteria provide sufficient protection against tax avoidance and evasion", and pushing for "strengthened" standards and sanctions.
It also calls for a discussion on how member states deal with the issue, asking: "Do we internally have sufficient safeguards against tax avoidance and evasion?"
This potentially sets up a dispute with EU members Luxembourg, the Netherlands and Ireland, which widely use low tax and other sweeteners to host EU headquarters of foreign firms. At a meeting of EU finance ministers, several states backed the Danish proposal, one EU official said, naming Germany, France, Spain and Austria among the supporters.
Some of Luxembourg's tax dealings with multinationals have been made public through the disclosure of the LuxLeaks documents. A number of these dealings have been investigated by the European Commission, in some instances leading to the firms being asked to pay back taxes, for instance in the recent case of Fiat Finance and Trade.
Croatia, which holds the EU chair from January, said the review of the current criteria would be discussed during its six-month presidency, the official said. The review was likely to take place in February or March, the official added.
EU lawmakers have faced criticism that during former Luxembourg prime minister Jean-Claude Juncker time as commission president, the EU set up a tax haven blacklist that exempted its 28 member states from screening. The new European Commission, led by Ursula von der Leyen, took office on the first of December.
Foreign jurisdictions are blacklisted if they do not meet EU standards on tax transparency and regulation.