Concord Denmark writes to you ahead of the EU Heads of State summit 22 May. We are pleased to see thatthe fight against tax havens and tax fraud is on top of the summits agenda. Having witnessed strongstatements from a wide range of EU leaders we have high expectations that the Council will deliver clearcommitments and actions that will help put an end to harmful tax practices.We urge EU leaders to takethis opportunity to agree on concrete measures, including; 1) Multilateral automatic informationexchange; 2) Disclosure of beneficial owners through public registries1; 3) Country-by-country reportingfor transnational corporations in all sectors; and 4) A common binding definition of tax havens andeffective non-compliance sanctions.Tax havens and harmful tax practices are detrimental to both developed and developing countries not onlyby depriving them of much needed revenues but also by undermining good governance, institutionaldevelopment and democratic accountability between governments and citizens. Combined, the abovemeasures will significantly help reduce theone trillion Euros lost to tax evasion and avoidance every yearin the EU.Not least will it be of help and justice todeveloping countries who lose much more than theyreceive in aid, much of this is a result of actions and facilitation by companies, individuals andjurisdictions in or associated with the EU.We find the recently strong statements against tax havens, evasion and avoidance made by EU politicalleaders extremely promising,including:“As Danish Minster for Taxation I am ready to dig deep into the toolbox to find instruments to fight taxhavens. One of these instruments can be the elaboration of black lists. These lists would give the countriesexposed as tax havens a strong incentive to change their tax policies. In this manner black listing of taxhavens can be an efficient instrument, if it happens jointly in the EU, because it is jointly – not as individualcountries – we can and should put pressure on tax havens.”2Holger K. Nielsen, Danish Minister forTaxation.“We think that the EU should lead the fight against worldwide financial crimes and should promote anefficient international cooperation with the view to achieving the end of opacity. We therefore support thedevelopment by the EU of a policy against non-cooperative jurisdictions which present deficiencies in thefield of combatting tax crimes and money-laundering.”3Wolfgang Schäuble, Finance Minister of Germany,and Pierre Moscovici, Finance Minister of FranceTo our big regret the ECOFIN council conclusions 14 May did not sufficiently reflect EU political leaders’progressive talk.Whereas the conclusions produced strong rhetoric about the importance of tackling taxevasion and tax fraud, they offered little in the way of concrete action and they delayed importantdecisions to tackle financial secrecy.4

Cross-border tax fraud and avoidance demands, as the European Commission states, “a

strong and

cohesive EU stance.”

Member States have also repeatedly and publicly admitted that unilateral measuresagainst tax evasion will not be enough in a globalised economy and coordinated action at an EU andbroader international level is urgently needed. The EU has the opportunity to show that this internationalcooperation can happen. Alongside other international actors it can lead in establishing new legislation,standards and commitments for the EU, and work with others, especially developing countries, in findingways to strengthen tax systems and tackle tax fraud everywhere.A first essential step to help clamp down on the global system of tax havens is to agree on commoncriteria to identify tax havens.The European Commission recommended this in its 2012Action Plan tostrengthen the fight against tax fraud and tax evasion.5Unlike previous failed attempts, these criteria mustbe binding and comprehensive, combining as a minimum, features of secrecy of banks and legal entities,non-cooperation and harmful tax measures such as:Fiscal advantages accorded to non-resident individuals or legal entities only, without requiring thatsubstantial economic activity be made in the country or dependency;Significantly lower effective level of taxation, including zero taxation for natural or legal persons;Laws or administrative practices that prevent the automatic exchange of information for tax purposeswith other governments;Legislative, legal or administrative provisions that allow the non-disclosure of the corporate structureof legal entities (including trusts, charities, foundations etc.) or the ownership of assets or rights.To be effective, EU leaders should publish a European blacklist of any non-cooperative jurisdictionsbasedon the objective use of these criteria. Non-cooperative jurisdictions should face automatic countermeasures applied by all Member States. Sanctions should also apply to companies that do not comply withthe EU tax standards.Statements from you and your peers across Europe show that EU Member States are united on this issue.Thus, when meeting in Brussels next week, the EU Heads of States have no excuse for failure. You must alltake up this task, go further than the Ministers of finance and promise, and deliver, concrete action. Failureto put in place transparency measures and sanction misbehaviour will not be accepted by EU citizens andtax payers who are facing a severe economic crisis, high unemployment and dramatic cuts in publicspending. Adding the harmful impacts of today’s transparency regulations on developing countries unableto meet the Millennium Development Goals due to the billions lost to illicit financial flows every year,concrete actions against tax havens is a demand.We urge Denmark to support the European Union in leading the world on fair and full tax complianceand achieving concrete binding results behind declarations at the European Council 22 May.Sincerely,