Schelling Plan to Close the International Tax Evasion Route National, European and international measures to combat tax fraud: Europe must step up the pace

“Tax fraud, profit shifting and tax evasion practices take place right in the centre of Europe; we should not point the finger at others. Europe needs a joint strategy at last”, as Minister of Finance Dr. Hansjörg Schelling emphasised during a press conference together with MEP Mag. Othmar Karas.

Everything that Austria can regulate by law is already being implemented or prepared. “Austria has already reacted very early to possible tax avoidance scenarios; we have closed gaps at national level and continue to keep at it. Numerous measures against tax fraud at national level have already been implemented; countries like Germany are now following our example.” 

European solutions wanted

The Minister of Finance presented a package of measures to combat tax fraud and to close international tax evasion routes. He was supported by Othmar Karas, since many of the solutions can be implemented only jointly at European level. “In order to get results more quickly, Othmar Karas and I are also pleading for a majority vote when it comes to decisions regarding fiscal measures at EU level”, said Schelling. “The current need for unanimity in fiscal matters means that we cannot act quickly enough”, Schelling and Karas agreed. Hence, they jointly advocated for even stronger European co-ordination and co-operation.

National measures are being implemented

Minister of Finance Schelling listed a number of measures already implemented in Austria. In Austria, for example, deductions on interest and licenses in company groups have been prohibited already since 2012, in order to prevent profit shifting into low-tax countries. In addition, a special unit for transfer prices was set up last year, just as the Task Force Offshore – a special commission for the prosecution of potential tax evaders. By 2018, large-scale auditing may look forward to an increase in staffing by some eight percent.

At national level, a register of beneficial owners as well as an increased obligation to co-operate in cases involving foreign elements are planned.

Austria’s pioneering role in combating tax evasion

Schelling and Karas also agreed that it was time for an EU-wide uniform assessment base for corporation tax. Just as for a joint European approach to double-taxation agreements with low-tax countries. In an EU sample agreement, the so-called exemption method is to be abandoned in favour of the credit method. Austria would thereby continue to levy its tax, while double taxation would be avoided by deduction of the lower tax of the low-tax country from the Austrian tax.

In addition, Schelling and Karas are going to support VAT on (internet) orders from third countries from the very first euro: “Up to now, imports from third countries up to 22 euros are exempt from the import VAT”, said the Minister of Finance. “Here, we simply want to create a level playing field for all, so that no competitive disadvantage for domestic companies arises”, said Schelling. 

Schelling considers all the measures described as serving “the protection of the honest companies and taxpayers that allow our country to run through their tax payments.”