European Central Bank (ECB) President Christine Lagarde confirmed that the ECB would maintain its very accommodative monetary policy stance. The Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) and expects purchases to be conducted at a significantly higher pace than during the first months of the year.

Lagarde said that the eurozone still had a long way to go before phasing out of monetary easing. She compared the situation to an economy on crutches, that has to cross the bridge of the pandemic, and in the meantime it needs two crutches, one fiscal and one monetary.

On national fiscal policies, Lagarde said an “ambitious and co-ordinated” approach remained crucial as a premature withdrawal of support would delay recovery and amplify long term scarring effects. She said firms and households would need ongoing support. 

At a European level, she said the ECB Governing Council reiterated the need for a timely ratification of the own resources decision, to finalize recovery and resilience plans promptly and the need for the NextGenerationEU programme to become operational without delay. She said that this could contribute a faster, stronger and more uniform recovery and thereby add to the effectiveness of monetary policy in the eurozone.

Fair taxation is a priority for the European Parliament. Find out how it wants to tackle issues such as tax avoidance, tax fraud and more, Economy.

Tax policy, including the fight against tax fraud, has become a hot topic over the past decade due to journalistic investigations such as LuxLeaks, the Panama Papers, Football Leaks, Bahamas Leaks and the Paradise Papers, which revealed tax leaks and tax havens. They led to increasing unhappiness about damaging tax practices, particularly after the recession and the resulting budget constraints. Unpaid taxes result in smaller budgets both nationally and at EU level.

Tax policy has remained EU countries' own responsibility since the EU’s beginning, but the fight against tax fraud is shared by EU countries and the EU.

Taxation a priority for the European Parliament

Since September 2020, the Parliament has had a permanent sub-committee on tax matters. The committee was established to assist the economic and monetary affairs committee with taxation issues and deals with the fight against tax fraud, tax evasion and tax avoidance, as well as financial transparency in taxation.

During the 2014-19 parliamentary term, Parliament set up temporary special committees, including a special committee on financial crimes, tax evasion and tax avoidance and an inquiry committee Inquiry to investigate alleged contraventions and maladministration in the application of EU law in relation to money laundering, tax avoidance and tax evasion. These committees identified a number of flaws in tax provisions.

EU tax measures

Some of the main legislative proposals in recent years regarding tax relate to the exchange of information through the Directive on Administrative Cooperation, which has been amended many times to provide:

• Automatic exchange of information relating to financial accounts where a taxpayer is active in another country than the country of residence
• Exchange of tax rulings between member states to disclose to other EU countries and the European Commission, for example “tax planning schemes” offered to specific companies
• Country-by-country information provided by large multinational enterprises and shared between EU countries to prevent multinationals that are active in different countries from engaging in aggressive tax-planning practices not available for domestic companies
• Money laundering information

Other proposals relate to corporate taxation and tax avoidance for example:

• The common consolidated corporate tax base (CCCTB), which addresses the tax obstacles that arise from different national tax systems for companies that operate in the internal market in order to avoid the risks of double taxation or aggressive tax planning
• Corporate taxation of a significant digital presence to allow members states to tax profits made in their territory, even if a company is not physically present there
• A common system for a digital services tax, a tax on revenues stemming from for example the transmission of data collected about users on digital interfaces

In addition, there have been many proposals to update the VAT framework. The tax matters subcommittee is currently working on a report on how to create a new basis for taxing the profits of digital companies in countries where they operate, even when they do not have a physical presence.

The report will set out Parliament’s views ahead of the final global negotiations at the OECD, which are expected to be finalised by mid-2021. By June at the latest, the Commission is also expected to put forward a proposal on a digital levy as part of reforming the EU's system of own resources and financing the economic recovery after the Covid-19 pandemic.

About the infographics

Our infographic at the top shows the income from direct and indirect taxes for each EU country as well as total tax revenue as a percentage of the gross domestic product. The latter is divided between taxes on capital, consumption and labour. In addition, our map shows how wealthy countries are.

Find out more 

• European Commission page on taxation 
• Fiscal terms made easy 
• Briefing: the fight against tax fraud

The European Parliament gave the go-ahead on Tuesday (13 April) for two key committees to vote this week on the EU-UK trade deal, but deferred a decision on whether the full parliament will give its assent later this month, writes Philip Blenkinsop.

The vote by parliament would be a final step in clearing the trade agreement struck between Britain and the European Union in December. Members of the parliament suspended the voting process in March in protest against British changes to arrangements on Northern Ireland.