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Commission recommends restricting aid to companies with links to #TaxHavens

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The European Commission has recommended that member states do not grant financial support to companies with links to countries that are on the EU's list of non-co-operative tax jurisdictions. The list does not include the EU's own tax havens.

Restrictions could also apply to companies that have been convicted of serious financial crimes, including, among others, financial fraud, corruption, non-payment of tax and social security obligations.

The aim of the Commission's recommendation is to provide guidance to member states on how to set conditions to financial support that prevent the misuse of public funds and to strengthen safeguards against tax abuse throughout the EU, in line with EU laws.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: "We are in an unprecedented situation where exceptional volumes of state aid are granted to undertakings in the context of the coronavirus outbreak. Especially in this context, it is not acceptable that companies benefiting from public support engage in tax avoidance practices involving tax havens. This would be an abuse of national and EU budgets, at the expense of taxpayers and social security systems. Together with member states, we want to make sure that this does not happen.”

Economy Commissioner Paolo Gentiloni said: “Fairness and solidarity lie at the heart of the EU's recovery efforts. We are all in this crisis together and everyone must pay their fair share of tax so that we can support and not undermine our collective efforts to recover. Those who deliberately bypass tax rules or engage in criminal activity should not benefit from the systems they are trying to circumvent. We must protect our public funds, so that they can truly support honest taxpayers across the EU.”

In a cross-party report on financial crimes, tax avoidance and tax planning that received overwhelming support in the European Parliament (505 votes in favour) MEPs argued that Cyprus, Ireland, Luxembourg, Malta and the Netherlands should be considered corporate tax havens.

A full press release is available online.

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