Google, Facebook and Amazon forced to face MEPs’ tax questions

The hearing of the TAXE committee on 16 November. [European Parliament]

Some 11 multinationals gave patchy responses to questions on their tax practices from the MEPs of the special committee on tax rulings (TAXE) on Monday, ending months of procrastination. EURACTIV France reports

After a tussle that has lasted several months, the MEPs of the TAXE committee, charged with investigating the loopholes of Europe’s tax systems and the bad practices of certain companies, finally interviewed the representatives of a group of multinationals about their tax practices this Monday (16 November).

Summoned by the TAXE special committee, the 11 multinational companies interviewed at the five hour marathon session had previously refused to appear in the European Parliament.

Effective blackmail

To force the companies’ hands, the TAXE committee had threatened to revoke the accreditation of the lobbyists representing these companies in Brussels. This blackmail evidently found its mark, as 11 of the 13 companies that had previously declined the Parliament’s invitations were present at the hearing.

Facebook, Google, Amazon, Coca-Cola, Mc Donald’s Europe, Ikea, Philip Morris, Disney, Anheuser-Busch InBev, HSBC and Barclays all sent representatives to the European Parliament to defend their tax practices.

Only Walmart and Fiat, which are both under investigation, did not participate in the hearings. The Commission is examining the advantages offered to the car-maker by Luxembourg and the Netherlands.

>> Read: Tax rulings committee flexes muscles over Luxleaks hearings

“This turnout confirms that no economic player, no matter what its weight, can refuse to cooperate with the European Parliament. We are extremely happy about this,” said the TAXE committee president and French Republican MEP Alain Lamassoure.

>> Read: European institutions split over lobbying black list

“Let’s not fool ourselves: you know that we know,” Alain Lamassoure said at the opening of the hearing. “What we are interested in is the European and global tax strategies of your companies under the current legal framework,” he added.


The special committee, established in the wake of the Luxleaks scandal which broke last November, has spent several months examining tax rulings; deals between states and multinationals that allow companies to negotiate preferential tax rates. This practice causes fiscal competition between EU member states and reduces tax revenue.

Despite being encouraged to share the detailed substance of the subject, the business representatives largely avoided the MEPs’ questions on their subsidiaries in tax havens, and skirted round the details of tax systems.

>> Read: Finance ministers show willing to work with tax rulings committee

Bernd Lucke, a German MEP from the right wing populist Alternativ für Deutschland party and vice-president of the TAXE committee, said, “You have presented your companies to us, but you have said very little about the subjects that interest us.”

Bermuda and the Caiman Island

The question of tax havens was particularly divisive. “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained.

Google’s representative responded that “the entire Bermuda structure does not erase any tax liability, it defers only US tax. It doesn’t actually affect the amount of tax paid in the European Union”.

To this, the German Green MEP Sven Giegold replied, “You made a false statement that the Bermuda structure has no influence on European tax dodging. It has, because all the benefits from European tax dodging would be worthless if you had to tax it according to US corporate rates.”

>> Read: Parliament tax committee threatens to blacklist uncooperative lobbyists

Questioned over the very low levels of tax payed by Facebook in the United Kingdom, the social network’s representative explained that competition in the labour market, particularly with Google, pushed the company to offer shares to its new recruits.

“With a 37% increase in jobs in England, the amount of stock given to employees, which is tax deductible, explains the amount of tax paid by Facebook in 2014,” she said.

The internet giant paid around £4,000 (€5,700) of tax in the UK in 2014.

Common Consolidated Corporate Tax Base

The companies questioned called for greater harmonisation of European tax policies. The proposed Common Consolidated Corporate Tax Base (CCCTB) would do just this.

“What companies look for is high visibility and stable tax rules. From this point of view, the CCCTB is a compatible model,” the Facebook representative said. The Commission’s proposal to establish a common tax base was well received by the multinationals, some of which even called for the implementation of a single tax rate for the whole of the EU.

The question of the risk of double taxation was also raised by the companies during the hearings. Accused of avoiding tax, the multinationals blamed the inefficiency of the dispute settlement system in the case of double taxation, which can take years to make decisions.

“We need a dispute resolution system that solves the problem of double taxation,” the representative of Anheuser-Busch InBev said.

“We need mandatory arbitration,” HSBC added. “Tax declarations made in one country can sometimes be judged illegal by another tax administration. This amounts to a tariff barrier.”

Continuing the committee’s work?

The work of the TAXE committee is set to come to an end with the adoption of its conclusions at the November plenary session.

>> Read: Luxleaks committee to be extended until October

“This is the last meeting of the TAXE committee in its current mandate,” Alain Lamassoure confirmed.

But the European Parliament could still extend the special committee’s mandate. A decision will be made by the Conference of the Presidents of the European Parliament on Thursday (19 November). 

On 12 February 2015, the European Parliament decided to launch a special committee for an initial period of six months, to investigate the sophisticated tax rulings of EU member states that became the centre of a media storm earlier this year.

With 45 members and the same number of substitutes, the TAXE Committee's role is primarily to investigate the compatibility of tax rulings with the rules on state aid and tax law.

The special committee will then draft a report, including recommendations on how to improve transparency and cooperation between member states to the benefit of the internal market, European companies and citizens. 

  • 19 November: decision of the Conference of the Presidents on the extension of the TAXE committee's mandate.
  • 24 November: debate on the report of the TAXE committee.
  • 25 November: plenary vote the TAXE committee. 

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