France has been a vocal supporter of EU attempts to fight tax evasion but is dragging its feet when it comes to transposing a crucial EU fiscal directive. EurActiv.fr reports.
The European Commission transmitted a reasoned opinion to the French government on 20 November demanding the implementation of the directive on administrative cooperation in the field of taxation, which was supposed to be incorporated in national law by 1 January 2013.
A reasoned opinion is the second stage in the pre-litigation procedure between the Commission and a member state, after a letter of formal notice has been sent.
If the state fails to take action within two months, in this case by mid-January 2014, the Commission will refer to the Court of Justice.
This directive, adopted in 2011, is relative to the co-operation at EU level on fiscal information and information on certain types of income.
France wants stricter rules only in theory
With Latvia, France is the only country that has not yet transposed the directive into its national legislation, an utterly surprising move for a country which constantly demands stronger fiscal rules at EU level.
Recently, the French finance minister, Pierre Moscovici, called on the EU to adopt a European FATCA.
FATCA, or Foreign Account Tax Compliance Act, is a US law on the automatic exchange of fiscal and banking information, which would be the natural prolongation of the non-adopted EU directive.
France does however cooperate with other countries on tax evasion. The exchange of information with other European countries is implemented through an administrative circular, which was only adopted last July, however.
“Last June we got a little scared. On the one hand, member states stated at an EU summit that they wanted to go further in the fight against tax evasion, but on the other hand, seven of them, among them Germany and France, had not even transposed the directive adopted in 2011,” said a source in the European Commission.
Even Luxembourg and Austria, which had resisted the EU's tax evasion drive, have translated the directive into national law and put an end to bank secrecy on fiscal issues.
One of the problems is that France is organising the administrative co-operation through administrative texts called "circulars", which are seen as too weak because they can be cancelled anytime, the Commission argues. Instead, a directive must be transposed into a proper law, it says.
The directive also foresees that each country exchanges information on three types of income they can choose from a list of proposals, including director’s fees, life insurance products, pensions, etc.
A technical problem
French sources play down the issue, saying “it is only a little technical problem”.
For French authorities, the exchange of information is properly covered by the circular. Officials point out that paragraph 11 of the directive in question which is composed of 31 articles, is the only remaining one that is yet to be transposed into French law. The paragraph organises administrative co-operation among teams of civil servants from one country to another.
“The other 30 articles are already a reality” according to the French administration. “We will demonstrate to the Commission that all the provisions of the directive are already present in French law”.
France and Latvia have until mid-January to convince the EU executive.