Just now, on 22 November, the EU Tax Observatory has published a study on tax dumping in the EU. More and more EU member states are courting the income tax of rich individuals from other European countries: between 1995 and today, the number of special tax regimes for the super-rich and pensioners has increased more than fivefold, from 5 to 28. According to the study, the most damaging tax regimes have been created by Italy, Greece, Cyprus and Portugal. In Italy, foreign income is taxed at a flat rate for a long time in order to attract wealthy pensioners. According to conservative estimates, this preferential treatment of the wealthy in the EU causes a tax loss of 4.5 billion euros per year. According to the study authors, this sum is equivalent to the annual budget of the Erasmus programme. These tax regimes are created for a wealthy minority: currently, the number of beneficiaries is around 200,000, with only a few hundred benefiting from some preferential treatments. Already in 2019, the Green Group had presented a study on the topic and thus set the theme.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“In Europe, a ruinous tax competition for the highly wealthy is raging. The tax dumping practices of the EU member states have spread from capital income to the personal income tax of the wealthy and pensioners. We are witnessing a Monacoisation of Europe. The number of tax avoidance schemes for the super-rich has more than quintupled in recent years. Special treatment is extended to a few super-rich at the expense of 450 million EU citizens. Especially countries which do not participate in the tax race for the super-rich are losing out. Germany has already taken defensive measures at a reasonable level with exit taxation, other countries would be well advised to toughen their regimes. Europe should stop the harmful race to the bottom not only in corporate taxes but also in personal income tax exemptions. We need a new spirit of tax cooperation in Europe on income tax.
To tackle the disastrous exemption rules, we need a reform of the Code of Conduct Group on Business Taxation. The mandate of the Code of Conduct Group should be urgently extended to include income taxation of the wealthy. So far, there is a lack of European cooperation to jointly put a stop to this kind of tax damage. The new study shows how worthwhile the establishment of the EU Tax Observatory was. The establishment of the Tax Observatory is the result of a Green initiative.
It is scandalous that several EU countries did not respond at all or completely inadequately to the request for data. Cyprus, France, Greece, Italy, Luxembourg, Malta and Portugal did not cooperate effectively with the EU Tax Observatory. In contrast, Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Spain, Sweden and the UK replied.”
Report by the EU Tax Observatory: “New Forms of Tax Competition in the European Union: an Empirical Investigation” https://www.taxobservatory.eu/wp-content/uploads/2021/11/EUTAX-rapport-N3.pdf
The EU Tax Observatory was set up in November 2020: https://sven-giegold.de/en/european-tax-observatory/
2019 Study: „Competing for the Rich – Tax exemptions and special schemes for the rich“ http://extranet.greens-efa-service.eu/public/media/file/1/5920
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