 Thank you very much for inviting me It was quite interesting to read the Financial Times this morning When there was now the devolution of corporate tax to Northern Ireland Promised from Mr. Osborne and I was wondering What this would mean for the Republic? And the tax policy pursued here and you see that tax competition might get the kind of a different connotation in this context so when I was Invited to come here We were still thinking very much about the digital Dimension because Ireland was considered to be the home of European digital economy and it was at the times before This Irish double has been renounced or it has been announced to be renounced and therefore It was one of the Elements that were considered to be relevant in this field of the international tax landscape how it will change and I will be only dealing with the first part of this Conference, I will not be able to give you An idea about the impact it will have and the implications for Ireland some of the implications Perhaps I might know the point is however that as Pascal has just told us we are in front of a remarkable Change in the attitude of member states both in the G20 in the OECD, but also in the European Union towards tax policies Which have been treated as a kind of a holy grail of autonomy without talking to others Now you see a growing concern that those that never wanted to have tax debate at European level requested there is a letter that has been sent from the ministers of finance from France Germany and Italy to the new Commission of Moscow We see where they claim that the landscape and the way how tax Problems should be dealt with in the European level has changed so dramatically that they insist that there will be a broader debate Let's see how many followers these leaders will have however, this debate will not go away and now the starting point apart from the crisis and this kind of Fairness considerations that Pascal was also referring to was triggered off by them uneasiness about can digital economy escape tax completely and This was the reason why we were setting up an expert group in the Commission and I will not go into the detail of it Because we have Mary Walsh. She was sitting on this expert group And she we you have devoted the panel to this issue anyway But the part is that it was quite clear that we couldn't stop looking only at the digital whatever this means in And by definition that we had to go further and have to see that there is no such a Specific problem like the digital economy But there are problems in the overall corporate tax system that have to be addressed Because we are confronted with changing business models with changing behaviors and capacities of companies to arrange for themselves So we do not think that there is a specific solution necessary for the digital but that we have to see that the present rules have to be adapted in Appropriate way that they respond to the new challenges there is The other part that came up and Pascal made reference to it that member states became aware That their arsenal to fight against tax evasion is limited to their own territory And that they have to get into interaction with others Either where they can companies come from or where they go to that they can align with them and find a fair Fair deal This is therefore the the the basic Theme that Pascal in the BEPS initiative is pursuing Now the role of the European Union all of this is a little bit different on the one hand. It is different because member states are Oblige to respect their obligations and rights under the treaty And on the other hand we can go even further Within the Union to fight against unwanted phenomena that we would be able in the international form and therefore There is an interaction between these BEPS initiative at the G20 and the OECD level and The EU tax initiatives We do have Therefore Tried together with the OECD to find an appropriate way of mutual reinforcement of the processes Interalia this digital expert group Was also used by the OECD as an input to the concentrations they have and there is now a kind of a Debate waging within the EU. Is it better to wait for the outcome at the OECD level and then integrate this outcome into the EU? Law books or would it be better that there is a considered position of the EU member states when they go to Paris and negotiate and Have a considered position before I personally would suggest that the second is better because then you can be sure that the solutions discussed there Compatible with what we have to do and they can then also be enforced better However, it is this something which has been raised now by this in this letter by the three inverse Finance ministers because they insist that we have to be ahead of the curve and not just followers of the of the OECD There is another thing that is not just a kind of a theoretical Position taking but we have shown Practical steps in particular in the fight against double non taxation this phenomenon that there is a disharmony between the national tax system has led to the Possibility that companies could avoid paying taxes in both and of this of this business and therefore this was considered to be an abuse of Community rules that were introduced to avoid double taxation But to turn it in its opposite into double non taxation has not been considered Acceptable and therefore we achieved the change in the parents subsidiary directive to respond to hybrid loans challenges and With great luck. I hope that next week on the 9th of December the next ecofin meeting There will also be a general anti-abuse rule that should be introduced in this parents subsidiary directive And therefore we can show to the OECD that there is a possibility To avoid double non taxation in a practical sense and therefore we can show a case to them There is another part that is the analysis that Member states do in this so-called code of conduct group This is a voluntary agreement amongst member states to abstain from harmful practices in the tax field With a limited scope because there is defined what is considered to be harmful behavior and This has led to a thorough examination of more than 300 tax rules in place in the member states With some rollback or with some not having been introduced because they have been considered to be harmful in the beginning So this is something where for instance this hybrid mismatches Issue has been very much debated in the code of conduct group and where the analysis and the finding of the member states Have been fed into this process of the peps and are now Processed also from non-member states and of course it is equally Important that we can share with the others that are around the table in the peps process What we have experienced in the transfer pricing field because there is a lot and the host of experience we do so This is the one thing where I would say that the role of the European Union and its member states is a proactive one to feed in To speed up and to render practical the outcome of the peps process the other end is the one that once member states have or That the G20 and and and those AD countries have agreed on a way of behavior The EU is the only Supernational entity that can guarantee that these rules are also duly applied and complied with This is something where we can when introducing it into the body of the community law give assurance and on the other hand enhanced Position of individuals or companies because then they have all the rights That derive from community law so you can go to the court of justice in the end if there would be any dispute And there would be a possibility To pursue infringement proceedings against member states which do not fully comply with these rules Because they have a different interpretation so we have a kind of a legal certainty and Mechanics to do this in a complete way Therefore it is Important that the OECD and the EU and the Commission in particular are working together What we do and so we have regular exchange and the fact that There was a traffic jam and conscious yesterday in Paris Saved my breakfast because I had a roundy who bit Pascal to have breakfast together because we have a lot of on our agenda to talk about so there is this tight Cooperation and we see the relationship between the OECD and the EU as a complementary Function and not as a competition between the two institutions We are trying to improve also the tools that are rendered accessible by the OECD by Giving them what we have developed within the union so they don't have to reinvent the wheel But they can build on what we have already and therefore it is also easier for all companies because you have a comparable presentation of Practices for instance in the transfer pricing rules and others and Then we are also of course interested in having a kind of a useful role In the whole field of risk management between tax administrations So to reinforce the cooperation between tax administration I was amazed when I came to digitak suit that and there I have the people that are dealing with customs and I have the tax men and They have a definitive different approach to look outside The customs people consider all the other customs officers in the world as being their partners Because what the the one export is the input of the other and therefore they have to work together And it's in the genes of the customs people to look Beyond and across the borders The tax people typically consider all foreigners as enemies that only want to steal the taxes So this is a completely different approach and therefore the attitude towards Discussing with others has to come a long long way to bridge over prejudice and Sometimes distrust that they can see that they are in front of the same problem and that an isolated solution They may have as clever as it may be will not be clever than the ones that the companies and the tax Advises will invent to go around them So this is something where we also have to work on this. Of course We are also interested in arbitration and mitigation of disputes And so there is the role then of the Commission in particular together with Pascal that we look that ideas Proposals developed in the context of the paps are not in contradiction to the treaty obligations of the member states and The rulings of the Court of Justice because this would then be an odd It's situation when member states would agree on rules which are not considered to be in line with the you rules what are these Rules that or these principles that have to be respected when designing this new set of behavior behaving rules Well The first is the principle of non-discrimination you may not discriminate because of the seat or the nationality of the actors you have to treat people in the same way there are the fundamental freedoms of the treaty like Freedom of establishment free movement of capital free movement of person and goods and of course a number of Court rulings in particular with the view of the free right to establishment Have an impact on the tax File and it is one of the favorite hobby horses of the German Ministry of Finance To to to argue against a number of court rulings because they dislike them But the reason is that the court has no way to say about the usefulness of rule with regard to the tax Because they are only summoned to speak out about the free establishment right of the companies and as they have no Other limitations to take into account because the community right the law doesn't foresee them So this is a kind of a one-sided Interpretation that can only be changed by adding a tax dimension into the considerations that the court is called on to rule The other part apart from this principle freedoms that are enshrined in the treaty is of course the discipline with regard to state aid You must not set up tax schemes which contain unacceptable state aid provisions of course state aid can be Approved can be considered to be compatible with the treaty But then it has to be cleared in advance and it must be again something which is not done in a hidden way and Then of course we do have a host of secondary legislation all these Directives that are there like the parents of Cedarita interest royalties and others that have been developed over time To facilitate the generation of an internal market in the union that is not hampered by tax rules now This is so far in full In full line with the BEPS agenda However in the European Union we have something which can even go beyond What the OECD and the G20 can agree in the BEPS process and This is for the reason because we do have an internal market That quite a number of the member states do or also share the same currency and That we are in the monetary and economic union where tax discipline or avoidance of harmful practices would even be more important apart from the revenue generation and the Drive that we have in the European Union to level out a little bit the tax shift because we see a Growing burden of tax on the factor of labor and in times of unemployment It is not the most intelligent way to render those factor even more expensive where you have problems to fill it and therefore, this is some kind of Of nucleus of trying to do better together and the one proposal that the Commission has made which has been now torn apart in the experts in the working parties from the experts so that we need another Political green red or yellow light whether we can go ahead is the common Consolidated corporate tax base now. This is something that you may consider to be completely unrealistic however, I Was absolutely astonished and amazed to see how in this digital expert tax group There was an absolute strong support from all the members coming from the business environment pleading for a triple ctp Because they considered that this would save them a lot of problems and they considered also to be a fairer Way of dealing and it would resolve a lot of problems that we do have within the union We transfer pricing and other issues. So this is something that may come back I Don't know whether you have followed a little bit the campaign before the nomination of the new president of the Commission And then you can see that mr. Yonker when he was giving speeches He made all this reference to the triple ctp and this is something which he is interested to revive also Mr. Moscow we see wants to do so Let's see what the reaction of the ecofin will be there is no point to discuss Technical points any further unless you give a clear political signal you like it you dislike it You want to have it in one go you want to have it in stages You start with something which is a common tax base and the consolidation may be following later And all these elements that have to be discussed But this is something where we can even go beyond and again be a pioneer as we have been in other areas In the tax policy where the whole OECD is copying what has been achieved in junior one of the other elements that is Aligning with the BEPS debate and this international landscape is now the growing pressure on politics in all the member states to fight against tax fraud and tax evasion This has become Intolerable from many countries which in good times didn't care so much Because when everybody is doing fine, they don't care whether the others are doing worse So they are in the sense now confronted with the challenge that the Voters would no more accept that there is such an unfair Division of burden and therefore we have set up in the Commission already in 2012 an action plan To strengthen this fight against tax evasion and fraud and this is something which is progressing amazingly fast because Member states see their own interest preserved by Implementing them so it is not something which has been perceived as those idiots in Brussels are imposing something worse But this has been something perceived as when we work together We can get a better result for all of us and this is the real mindset that is necessary in such a In such an effort so it is on the one hand Checking where the rules that have been designed with a completely different intention in the past Haven't turned in its opposite and now offer a chance to avoid taxes Unintendedly from the lawmakers or how we can help That tax compliance can be assured by a stronger cooperation of tax authorities Amongst themselves because they typically would not communicate so This also is done not only with a view to have a better discipline within the Union but also Looking across the borders. This is the next link with the international landscape Because again, we are not on an island although island is on an island but the whole of the Union is only part of the of the continent and then there are neighbors Which would only be happy when we are stupid enough to increase discipline amongst ourselves and Give an invitation to all those that want to dodge taxes that they come to them so we have to also include them and in Invite them More or less politely to also align with standards that we apply within the Union and therefore it is important that This kind of basic rules that also Pascal made reference to transparency exchange of information and fair tax competition These are the three pillars that have to be recognized with all those economies We want to have friendly relations with and so this is something where we have come up with two recommendations within from the Commission the one on Avoiding aggressive tax planning and the other is how to deal with tax havens that have been identified nowadays every Member state is free to decide on whether or not another jurisdiction is considered to be Well behaving or to be a tax haven and to deploy Measures against them for instance putting them on a blacklist, but these blacklists are not all the same the criteria to Applied to put some jurisdictions on a blacklist or them off are Completely different and we thought that this should be done In a better way. Therefore, we have established now a platform for good tax practices We should help the Commission from the practitioner's point of view and from NGOs that can contribute to this work that we show to member states Tax administration what are the possibilities to render these tools all more efficient? And again, it is not to be prescriptive It is to exchange best practices and to realize that when we work together We can avoid that there is a forum shopping from those that Only looking to get a deal in their own favor at the expense of the taxpayers of the member states This is very much outside looking within the union, of course We do have the problem or the situation rather that tax is one of the areas where member states have reserved their full sovereignty and Free to legislate To the will with regard within the respect of the rules of the treaty. So but this is not a community competence Unless there is an overriding reason like the internal market and this is typically more in the field of Indirect taxation where we had to harmonize some systems Therefore we have a vat system throughout the unit although the rates may differ But the scheme the system as such is is harmonized We do have harmonized rules in exercise duties and then energy tax alcohol Tobacco and so on because these are goods which are traded But we do not have so much in the field of corporate taxation and in the corporate taxation The point is that their member states in preserving the sovereignty and the right to legislate in the tax field Have however found an agreement in this code of conduct of good behavior in corporate taxation To oust some of the practices that have been prevailing before and this is since 1997 that this political commitment Working the commitment is that they Commonly assess tax legislation planned or in place in one of the member states and To amend the law or abrogate them in case they are considered to be harmful and on the other hand they Commit themselves to refrain from introducing rules which are considered to be harmful So they do not give up the sovereign rights But they agree to follow a kind of a joint and common Discipline in the interpretation and in the design. This is both now looking at horizontal issues Phenomena which are occurring in several member states or in individual Countries because there might be some and there are never ending things and you can have the most reasonable people That are also extremely pleasant to spend an evening But when they happen to be Spanish and British and they talk about Gibraltar It's the end of the of the story So this is some case where we also have Individual cases now what is At present at stake is that the code Basically has been designed at the times when ring fencing has been the most used tool to attract To welcome Companies to use some of the tax schemes on offer and This has not been much of the liking of those Which were suffering from this invitation So this is the basic rule that we do have for the time being is to avoid any kind of ring fencing schemes now they have disappeared and new modes and new Techniques have been developed business models enable a completely different behavior from the one that was able 20 years ago So we have to review a little bit the way how this harmful Tax practices might be defined and what would be the scope of the code of conduct in the future but this is only in the Remit of the willingness of member states whether they can agree or not on any such thing but My impression is that there is a strong a strong desire To have this done because it gives also legal certainty both for tax administration as well as for businesses and it is Something that is appreciate very much and therefore both new Avoiding practices will come into the scope of this code of conduct. We're working on this and then some of the elements that have been raised by by Pascal in his presentation we have already achieved in the European Union and the one is dealing with Banking secrecy, but also transparency We have after long long long long time achieved an amendment of the Savings directive and this was one of the highlights of Michael Noonan's and Rory's Work in the presidency of the Irish presidency that you were shooting down the Austrians and the Luxemburgers So that was the one thing that was achieved, but then with the global standard being emerging we could Before the entry into force of these amended savings directive even go a step further and go beyond the exchange of information on demand in the administrative cooperation directive to the automatic exchange of information and this is on the vote this This this ecofin and then the Duck 2 as we call it in our internal speak that means the revision of the administrative Cooperation directive will include the obligation for automatic exchange of information For a quite a number of new elements. So the first step that was in this Was already a breakthrough because beyond savings Information or interest gains information in the original Plan we included a series of other incomes like salaries so income from employment directors fees pensions that have been paid out life insurance products or the gains from them and Ownership and income from immovable property and now it is Recognized that we go way beyond and there are now as you may have seen in this letter from The three ministers of finance there is a determined effort to go further to Identify beneficial ownership and to address the issues of trust that they can also be properly Addressed you see that this is now a kind of a tendency where it took us Seven years For the Commission to get a mandate to negotiate with Switzerland and the other jurisdictions for the savings directive now within five months We have achieved the revision of the of the duck So this is something where we can also show to the rest of the world We can deliver and we can now offer also the it tool that is used by the financial institutions to comply with this reporting obligations and Give it without royalties Also to other countries that are interested in getting this So this is way beyond the EU nowadays already although we have just Achieved it within the last point that I would just mention in these tendencies is another Transparency related part that is after we have started from the Point of view of state aid controls the difference between the work that we do in digital tax suit in the tax department and the Competition department is we in the tax department. We look at schemes in Abstract whether they are harmful by their design The competition people are looking whether there is an undue benefit given to an individual company which would then Impact on the competition between companies. So the one is between countries and the others between companies And so they were looking into rulings tax rulings in a number of member states Entirely also in Ireland and This has become now a headline issue because thus this so-called lax leaks brought this to broader audience and this had created an avalanche of Reaction and what we will do now is after the president Yonka has announced is already the one day after the publication of all of this We preparing now legislation that rulings should also be Communicated automatically between tax authorities so that there is no more The situation that we have at present since 2007 in the code of conduct group There has been agreement of member states that tax rulings which might impact other jurisdictions should be Notified in 2013 the commission undertook a research how many have been Communicated and you don't need a single finger to count the number of Communications so it was in June this year only that member states agreed on the format how to Exchange this information. We will build on this and we will present early next year a directive with the purpose of Obliging tax authorities To communicate about rulings they do for multinationals. So only cross-border rulings, of course Effected we are interested in seeing how we can Design all of this because we would not like to have an avalanche of useless Information because most of the rulings are completely innocent and without interest But of course we have to find out how we can make this a kind of a useful tool to avoid that this becomes another source of contention and Would deviate? attraction From the need to respond to the challenges of the tax system internationally by an Infight within the union and this is my biggest concern. We have now a window of opportunity Where member states which were absolutely opposed to discuss tax issues at the level of the EU and Now interested to do so for their own interest and therefore we must do everything To avoid that is getting an acronym and a kind of a bitter debate amongst member states but this is joining forces to set rules and Well behaving at the global level and this is the reason why we intact so much also with the OECD That's it