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EUROPE: MEPs call on Cyprus to phase out golden visa scheme

26 March, 2019

The European Parliament voted in favour of measures to clampdown on “tax haven characteristics” and golden visas in seven EU Member States, including Cyprus. 


 

 

Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and the Netherlands were all specifically mentioned for shortcomings in their tax systems that facilitate aggressive tax planning.  

The Tax3 committee report argues that this undermines the integrity of the European single market, resulting in a loss of €43 billion from EU Member States. 

Over 500 MEPs voted in favour of the report, while 63 voted against. 

Following a number of multi-billion-euro scandals over the last few years, the European Parliament created a special committee in March 2018.  

A 70-page report was then issued that called for thoroughly improved cooperation throughout the EU on all matters relating to tax and finance-related areas.  

It recommended new legislation and the creation of new bodies at both EU and global level, including an EU financial police force and an EU anti-money laundering watchdog. 

Criticism was also levied against Cyprus and Malta’s golden visa scheme and shortcomings on due diligence procedures, resulting in a high risk of security, money laundering and tax evasion.  

The report called for phasing out of such invest citizenship schemes as soon as possible. 

It highlights how the high share of FDI in Malta, Luxembourg, Cyprus, the Netherlands and Ireland in particular is usually attributable to special purpose entities. 

Tuesday’s vote calls on the European Commission to carry out “fitness checks” of relevant laws and policy initiatives aimed at addressing the use of letterbox companies in the context of tax fraud, tax evasion, aggressive tax planning and money laundering. 

The vote agrees with calls by the European Commission to introduce a common corporate tax base across the EU. 

The report is the result of a year’s work by a committee of the EU Parliament, set up after a series of revelations of alleged financial crime in some EU states and in tax havens across the world, such as the Luxleaks and Panama Papers. 

The committee concluded that not enough has been done by EU states to close loopholes on tax rules, as many governments showed a “lack of political will to tackle tax avoidance and financial crime.” 

Lack of appetite for reform is partly due to the fact that some of the 28 EU states “display traits of a tax haven and facilitate aggressive tax planning,” the report said.

“Europe has a serious money-laundering and tax fraud problem,” said socialist lawmaker Jeppe Kofod, who took part in drafting the report.