Fixing Financial Plumbing: Tax, Leaks and BEPS in Europe

Aggressive tax planning by multinational enterprises (MNEs) costs EU member states between €50-70 billions and €150-190 billions per annum through base erosion and profit shifting (BEPS). This tax gap has been blamed on ‘unethical’ companies acting legally, but inappropriately. This paper argues that fault also lies on member states who have too closely guarded sovereignty over corporation tax, failed to cooperate when establishing tax rules, or to appropriately share information on tax. The issue of BEPS highlights the tension between globalised, digitised trade, and Westphalian sovereignty. The OECD and EU’s policy endeavours highlight that the reforms come at an exceptional and perhaps unrepeatable political moment, which allows legislators to move on this issue.