91996E0953

WRITTEN QUESTION E-0953/96 by Viviane Reding (PPE) to the Commission (26 April 1996)

Subject: Combating economic crime

At its 35th sitting, on 22 September 1995, the Committee of the Union of Financial Officials in Europe noted that in the sphere of direct taxes 'the political will to combat economic crime and the shadow economy effectively is clearly lacking in all countries'.

What measures are planned in order to deal with this unacceptable state of affairs?

Answer given by Mr Monti on behalf of the Commission (6 June 1996)

The general upshot of economic crime and the underground economy is the evasion of direct taxes, and in particular income tax.

The Commission would note that, where direct taxes are concerned, evasion is a matter for the Member States so that it is the national tax administrations that essentially have the task of combating evasion.

However, it would point out that, in a document (('Taxation in the European Union' (SEC(96) 487 final). )) discussed by the Finance Ministers on 13 April in Verona, it drew the attention of the Member States to the need to combat the erosion of tax receipts caused by the growth of the parallel economy.

As regards the legislative measures necessary at Community level to crack down on international tax evasion, the Commission would remind the Honourable Member that the Council, back in 1977, adopted a Directive concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation. ((OJ L 336, 27.12.1977. )) Under that Directive, Member States are in a position to obtain from the other Member States all the information relevant for the correct assessment of taxes on income and on capital.

The Commission, in collaboration with the Member States, is currently looking into the possibility of stepping up this exchange of information with a view to combating tax evasion more effectively.

Another area highly susceptible to tax evasion and in which Community measures are considered necessary by the Commission is the taxation of investment interest. This is because, with the full liberalization of capital movements within the Community, the risk of investment income not being declared has increased.

Accordingly, the Commission in 1989 put forward a proposal for a directive establishing a common system of withholding tax on interest payments. ((OJ C 141, 7.6.1989. )) However, despite numerous discussions, the most recent taking place during the German Presidency in 1994, the Council has not yet reached agreement in the matter.