* European leaders meet to discuss tax, energy policy
* Tax avoidance schemes by major companies on agenda
* EU loses 1 trillion euros a year to tax avoidance, evasion
By Luke Baker and Mark John
BRUSSELS/PARIS, May 21 Growing concern in
European capitals about aggressive tax avoidance by high-profile
corporations such as Amazon, Google and Apple looks set to steal
the agenda of a European Union summit in Brussels on Wednesday.
The summit was originally called to discuss energy policy
and tax coordination, but press reports in Britain, France and
the United States exposing how little tax major international
companies have been paying by carefully structuring their
European operations has forced the issue up the agenda.
France and Britain in particular have grown concerned by the
sheer scale of the legal tax schemes, with a U.S. investigation
revealing on Monday that Apple Inc had paid just 2
percent tax on $74 billion in overseas income, largely by
exploiting a loophole in Ireland's tax code.
That followed reports that the British unit of Amazon
paid just $3.7 million tax on 2012 sales of $6.5
billion, and similar revelations concerning Google's
and Starbucks's UK operations.
In all, officials have said that tax avoidance and evasion
costs the EU around 1 trillion euros a year.
"A lot of these revenues (from the digital economy) are not
getting taxed," said a French diplomat briefing reporters in
Paris ahead of the EU summit. "We need to find a way of bringing
home the tax on these activities."
Officials said French President Francois Hollande could
raise the issue with the EU's 27 leaders, although it was
unclear what agreement could be reached with little advanced
preparation and just four hours of talks scheduled.
A draft of the summit's declaration, which is agreed in
advance but can be changed, set out nine specific proposals for
strengthening tax policy and coordination, including fighting
tax avoidance schemes and the process of routing profits abroad.
"Work will be carried forward as regards the Commission's
recommendations on aggressive tax planning and profit shifting,"
a draft seen by Reuters read.
"The Commission intends to present a proposal before the end
of the year for the revision of the 'parent/subsidiary'
directive, and is reviewing the anti-abuse provisions in
relevant EU legislation."
NAME NO NAMES
But officials played down the possibility of immediate steps
to close tax loopholes or any 'naming and shaming' of companies
in the final summit declaration, saying it was primarily up to
EU member states to craft the necessary legislation.
"We agree that companies shouldn't be able to avoid tax by
pursuing aggressive tax avoidance schemes," said an EU official
involved in handling preparations for the summit.
"But while companies may be using loopholes to pay as little
tax as possible, the truth is it's a national issue. It's up to
the relevant member states to change their tax codes and tighten
The official said the most likely outcome from the talks was
tougher language on strengthening bilateral tax treaties and
bolstering so-called "anti-abuse" rules in national legislation.
"I can see the issue hijacking this summit, but the fact is
there are recommendations out there already and it's up to
countries to explore them," he said, referring to
recommendations the Commission made last December on tackling
aggressive tax planning and the erosion of the tax base.
France has already shown its willingness to take on major
U.S. companies. In 2011, French authorities raided Google in an
investigation of whether its Paris office does sales work. The
company was asked to pay 1.7 billion euros in back taxes.
A similar issue has arisen with how Google operates in
Britain, with questions raiseed about whether its sales staff
are based abroad or actually in the country.
Google has said it follows tax rules everywhere it operates
and that references to selling in job ads reflect the fact
Google likes to hire people with a sales background.
In a briefing ahead of the Wednesday's gathering, a senior
EU diplomat sidestepped suggestions that EU leaders were looking
to take on specific companies, but said the issue was serious.