Finance

EU pillories British overseas territory

The EU countries have revised their blacklist of tax loopholes – and for the first time have also set a British overseas territory on them. That was only made possible by the Brexit at the end of January. However, sanctions are difficult to enforce.

After Brexit, the EU put a British overseas territory on its black list of tax havens for the first time. In addition to the Cayman Islands, the EU finance ministers also put the Seychelles, Panama and Palau on the pillory on Tuesday.

As a British overseas territory, the Cayman Islands could not be blacklisted until Brexit at the end of January. The EU accuses the archipelago of the Caribbean that the legislation there will facilitate the settlement of offshore structures for tax evasion.

MEP Markus Ferber also saw the decision as a warning to Britain as a whole: “The dream of some Brexit supporters to make the United Kingdom a tax haven off the European coast will not work,” said the CSU politician. If it did, “the British will also end up on the black list”.

Turkey gets grace period

By contrast, Turkey’s finance ministers are currently not being blacklisted. The country should have created the conditions for an automatic exchange of information on tax matters with the EU by the end of 2019, but it had not implemented this. Turkey now gets “a little more time for political reasons,” it said last week from EU circles. A decision will be made “by the end of the year”, said Austrian Finance Minister Gernot Bl├╝mel.

The EU tightened its pace against tax havens at the end of 2017 after revelations such as the Panama Papers on widespread practices of tax evasion and evasion. Henceforth, twelve countries are now on the EU’s black list. In addition to the four countries and territories listed on Tuesday, this includes the United States Virgin Islands, American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago and Vanuatu.

The Europeans are pillorizing their black list and at the same time trying to persuade countries and regions to change their tax legislation through political pressure. Sanctions against uncooperative countries are only possible to a limited extent.

Finance ministers want more money when the economy is bad

In addition to the revised blacklist, EU finance ministers have also called for more government funds to be counteracted in the event of an economic downturn. Many Member States are particularly hoping for more investment from Germany and the Netherlands, which have had high budget surpluses for years.

This commitment is a breakthrough for France’s finance minister Bruno Le Maire. However, the paper adopted in Brussels on Tuesday contains no specific objectives and also leaves open when the additional expenditure would become necessary. The decision is left to the individual states.

Federal Finance Minister Olaf Scholz (SPD) is already calculating with higher investments, but many in the EU are not going far enough. His budget for 2020 envisages investments of 42.9 billion euros. In order to keep them at this level by 2024, the federal government would have to spend around three billion euros more annually than previously estimated. In recent years, Germany has repeatedly braked due to the high level of debt in many EU countries and promoted balanced households.

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