Corporate tax troubles in Europe

Tax revenue leakage has become a hot button issue in Europe, the US and the G20. The European Commission is seeking to strike down advance tax agreements concluded years ago between member states and some of the world’s largest corporations, because they confer a selective advantage and fall foul of state aid rules. The test cases currently in progress could have far-reaching implications for multinationals operating in Europe. The real target is not unfair competition, but aggressive tax avoidance. The actions of the Commission open a new front against tax avoidance, but the practices they have exposed will also add political impetus to wider international efforts to improve tax transparency and clamp down on profit shifting. The job of tax planners is becoming more difficult and the reputational and political risks of the corporations that employ them are increasing.