Luis de Guindos – Photo EU Council
(BRUSSELS) – EU finance ministers meeting in Brussels Tuesday backed sanctions against Spain and Portugal for failing to correct their excessive deficits according to their recommendations.
The EU Council confirmed that the two countries were not going to reduce their deficits below 3% of GDP – the EU’s reference value for government deficits – by the recommended deadline. And in both cases, it found the fiscal effort to fall significantly short of what was recommended.
The finance ministers’ decisions will trigger sanctions under the excessive deficit procedure. The Commission now has 20 days to recommend further Council decisions imposing fines. Those fines should amount to 0.2% of GDP, though Portugal and Spain can submit reasoned requests within 10 days for a reduction of the fines. The Council will have 10 days to approve the fines.
“I am sure that we will have a smart, intelligent result at the end”, said Peter Kazimir, Slovakia’s finance minister, for the EU presidency.
Also at the meeting, ministers adopted new rules addressing corporate tax avoidance practices, The directive addresses situations where corporate groups take advantage of disparities between national tax systems in order to reduce their tax liability.
Further possible measures to enhance tax transparency and prevent tax abuse were also discussed.
“The presidency plans to make progress on action to fight tax evasion and tax avoidance in the coming months”, Mr Kazimir said. “No need to say that tens and hundreds of millions of euros lost to tax fraud or avoidance could be invested into our economies and we need to tackle this disease by all means.”
Ministers then discussed a proposal to strengthen EU rules aimed at preventing money laundering and terrorist financing. This is a central element of the EU’s response to recent terrorist attacks in Europe, as well as the April 2016 Panama Papers revelations. Technical work will start in July 2016, with a view to enabling a Council agreement within months.
