The European Investment Bank (EIB) was the first Development Financial Institution (DFI) to adopt a tax haven policy in 2009. However, more than five years on EIB money still runs via tax havens. A new report by Counter Balance and Re:Common 'Towards a Responsible Taxation Policy for the EIB' which is launched today calls on the EU’s public bank to grasp the political momentum at EU level to prevent any public money from flowing through tax havens. Country by country reporting, identification of beneficial ownership and a workable list of non-compliant jurisdictions would be key ingredients of a real 'Responsible Taxation Policy'.
The report highlights several cases which show EIB funds have been granted to beneficiaries that allegedly used tax havens to increase their profits or to embezzle proceeds from corruption. The report also lists several EIB investments in developing countries that run through tax havens.
This is possible because the EIB’s current policy on Non-Compliant Jurisdictions (NCJ) is easy to get around and until recently didn’t have a workable list of non-compliant jurisdiction. Since 2014 it works with the rather conservative Global Forum’s list which is further undermined by several exceptions in the bank’s current policy on non-compliant jurisdictions. For example, even though Luxemburg is not compliant according to the Global Forum, the EIB operates from Luxembourg and invests in several funds that are registered there.
Additionally, it is very hard to track EIB investments, especially when they run through financial intermediaries such as commercial banks or investment funds. Demanding country by country reporting from its clients and thoroughly tracking the beneficial ownership of its beneficiaries would be an important step forward to increase the transparency of EIB investments and prevent tax dodging.
“Recent revelations such as #luxleaks and #swissleaks prove that Europe is losing out billions of euros because of tax dodging, and in developing countries the situation is even worse. EU leaders make bold statements on tackling tax dodging, but at the same time its own public financial institution is part of the problem”, says Antonio Tricarico, author of the report.
“The EIB is in the driver seat to implement the Juncker Plan and get Europe out of the crisis. The fight against tax havens and tax dodging should be an absolute priority in that regard and has the potential to bring back billions of public money. In 2010 the EIB was the first DFI to introduce a tax haven policy. We hope the EIB demonstrates its will to tackle those issues like it did back then in order to show that its zero tolerance policy towards tax havens is more than rhetoric”, says Xavier Sol, Counter Balance Director.