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Tax avoidance/energy policy/Syria

Published on June 3, 2013
Press conference given by M. François Hollande, President of the Republic, following the European Council (excerpts)

Brussels, May 22, 2013

THE PRESIDENT – Ladies and gentlemen, this European Council – which has been brief, over lunch and one afternoon – has focused on two major subjects: energy and the fight against tax evasion and avoidance, two subjects that France feels particularly strongly about.

The first because I’ve proposed a European energy community. We’re not there yet, but the foundations which were laid form the first stage of it. It’s actually about taking into account the energy market upheaval, and a threefold challenge.

ECONOMIC/ENVIRONMENTAL/ENERGY CHALLENGES

An economic challenge. How can we ensure we don’t lose competitiveness, at the very time when the United States, through shale gas, is creating an energy success for herself, with environmental consequences that have repercussions on Europe?

That’s the second challenge. In reality there’s an increase in greenhouse gas emissions, particularly with the use of coal, and we must meet the targets we set ourselves.

Let me remind you that France has put herself forward to organize the climate conference in 2015. So Europe must set itself the targets that reflect what its position has always been in the international bodies, namely of combating global warming.

The third challenge is to reduce energy insecurity and avoid Europeans paying high energy bills, with the risk of the most vulnerable being dangerously affected in terms of their spending power and even their daily lives.

Insofar as we’ve identified those challenges, several decisions have been taken.

ENERGY TRANSITION

The first is to do everything possible for the European energy market.

The second is to encourage investments that enable the network to be established throughout Europe. Above all, it’s about developing renewable energy in a coordinated way, with support mechanisms that can also be harmonized, and launching a great energy efficiency – that is, energy saving – plan so that we can reduce Europe’s dependence in terms of supply sources.

These paths will not only be pursued in the coming months but extended, because it’s about finding new financing. Some of this will come from the European budget – that is, from the Financial Framework being proposed today to the European Parliament. Some of the expenditure will have to be allocated precisely to this energy investment.

A second source of financing may come from the European Investment Bank or from all the resources we can mobilize, for example, project bonds, which were released by the Growth Compact last June, so as to mobilize all possible resources for the energy transition. That’s the first subject that was discussed.

TAX EVASION/AVOIDANCE

The second was the fight against tax evasion and tax avoidance. There’s a widespread movement now being organized, with a determination on the part of the main countries, the so-called G5, to ensure information exchange can be organized and a battle fought against tax havens. The OECD is also playing an active role, which is good.

So Europe must not simply follow but actually think ahead. There will be a very important G8 meeting in June, so that the battle against tax evasion can be fought at global level.

Two decisions have been taken, among many others, and I want to welcome them.

The first is that, at the European Council in June, Europe will ensure it encourages automatic information exchanges. This is a crucial principle if we want to combat tax evasion successfully. And by the end of the year, once discussions are held with the countries which don’t necessarily behave as we do with regard to capital – and you know those countries –, once this discussion is held, and I was going to say whatever the outcome, the Savings Directive will be adopted at the end of the year.

It’s very important for us to be able to embark on the fight against tax evasion with this ambition and on this scale – across Europe, across the developed countries, across the world –, because at a time when states are trying to reduce their deficits, it’s better to go and seek taxes from those who don’t pay them rather than going to ask for taxes from those who already pay them. That’s true for individuals; it’s also true for companies.

And on the subject of companies, it’s absolutely crucial that there should be a battle against so-called tax optimization, which consists of large groups that aren’t necessarily European going and seeking locations that enable them to escape tax.

If we want there to be conditions for competition, if we want European companies to be able not only to withstand but also to prevail over a number of industrial or commercial or cultural challenges, it’s very important for this battle to be fought against so-called tax optimization, which is nothing other than a search for zero tax by a number of groups.

So what’s being done today, even though it’s been in a short time – there’s no reason to think Europe should take decisions only at night and on gruelling days – what’s just been done is an important stage in the European enterprise, because Europe has been able to reach the necessary compromises on two subjects: on energy – which is short-term and long-term, because there are decisions to be taken as a matter of urgency and others that are part of a long-term approach – and on the other major issue: the fight against tax evasion.

GERMANY/MEETINGS

I want to finish this brief introduction by mentioning several engagements. As you know, tomorrow I’m in Leipzig at the invitation of the German Social Democrats, in the framework of an event you might call ecumenical: the celebration of the 150th anniversary of that great party, the SPD, and in the presence of all the German constitutional authorities. Mrs Merkel will be there, of course.

And I’ll be having another meeting with Mrs Merkel, this time at my invitation: on 30 May, so that we can agree on our joint contribution to the June European Council.

And finally, at the beginning of July, Mrs Merkel is organizing a meeting in Berlin: it will be on 3 July, with all the labour and employment ministers of the EU member states, on the issue that is essential in my view: youth unemployment. There too, we’ll have to make joint proposals and draw on all Europe’s experience – and it has experience – in terms of combating youth unemployment, including what we’re undertaking ourselves in France. The best solutions for reducing youth unemployment.

That’s what I wanted to tell you about this European Council.

SHALE GAS

Q. – Two questions, if I may. The first is on energy and shale gas: wouldn’t one of the solutions be to include shale gas itself in the French or European energy mix, or is France’s position still very firm on the issue – that is, no shale gas exploration?

The second question is on taxation. While I can clearly see what you’ve decided about taxation, the fight against tax evasion and avoidance by individuals, I’m having trouble understanding what you’ve decided about tax optimization for companies, because I can see clearly that the hunt for individuals has begun but the hunt for companies nevertheless strikes me as being slightly more vague. So I’d like to have some more details on this aspect.

THE PRESIDENT – First of all, the first question, on shale gas: you’re aware of France’s position, which is the belief that today the technique of hydraulic fracturing can’t be accepted and that no permits can be granted in that area. However, at European level, what France is asking is for there to be regulation that can be valid Europe-wide, with a number of precautions that should be taken. We can’t prevent a country from making use of shale gas – that’s a national decision – any more than countries can ask us to give up nuclear energy. From that viewpoint, Europe trusts each country to organize the diversification of its energy sources as it sees fit. But what we’re asking is for there to be common rules to define what can or can’t be done in the area. (…)

TAX EVASION/AVOIDANCE/COMPANIES

We can’t accept – I’ve mentioned individuals but I want to talk about companies – that a number of European and non-European companies can put themselves in situations where, through behaviour that is today legal, they escape tax. So we must coordinate at European level, harmonize a number of rules and prevent the possibility of behaviour and strategies enabling those companies to escape levies.

To illustrate my remark, I’ll talk about digital companies, because there’s already a provision in the final communiqué. As you know, digital technology is a big challenge and large companies have been established, including in Europe, which don’t pay as many taxes as is desirable, while making considerable profits. So everything will be done to find ways of operating that will enable companies to pay the contribution expected of them. On other companies, more will be done to find out their situation country by country, in order to understand their actions.

AUTOMATIC INFORMATION EXCHANGE/SWISS NEGOTIATIONS

Q. – Luxembourg and Austria are making acceptance of automatic information exchange conditional on Swizerland, Monaco and others doing the same thing. My question is this: what will happen if the negotiations with Swizerland, for example, make no progress? And isn’t it a little strange for Europe to allow countries that are European Union members to carry out this kind of blackmail, and to negotiations with countries that are outside the EU?

THE PRESIDENT – No, of course it wouldn’t be acceptable and so I can’t agree to it! This isn’t stated in the communiqué, either. The communiqué – you can consult it – specifies that discussions are going to take place with the countries you’ve mentioned to ensure that, even as non-EU members they can comply with rules, particularly on automatic information exchange and minimum taxation of savings income. But it’s not the outcome of these negotiations that will determine Europe’s position on the Savings Directive – that is, on minimum capital income tax. Whatever happens, the Savings Directive will be adopted at the end of the year. So there’s been no blackmail – that’s not the word that spontaneously comes to mind: there’s simply been a determination to ensure that countries, even non-EU members, can have practices that are compatible with what we, here in Europe, are doing.

Q. – I wanted to know if we could envisage putting this automatic exchange system in place by 2015. That’s what Mr Barroso was saying yesterday. But do we have a specific date? Secondly, Germany has signalled that she’ll be following the UK’s call to put Hezbollah on the list of terrorist organizations. I wanted to know if you have followed or are going to follow Germany on that.

THE PRESIDENT – No, the latter point wasn’t discussed at the European Council, so I won’t answer it. On the former, what was decided today was to begin in June operations enabling automatic information exchange on all income, of whatever kind. A date may have been set, and it’s true that the European Commission President mentioned 2015. But why 2015 if we can do it earlier? So my impression from this discussion at the European Council was of a determination to act from June onwards to improve information exchange and make it automatic. The idea is automaticity; the United States is ready for this with Europe, moreover.

Q. – I’d like to get back to this issue of Luxembourg, because Luxembourg has always said – right up until this morning – that there has to be a level playing field, that all the states must agree to automatic information exchange in order for Luxembourg herself to agree to it. So I’d like things to be clear. Do you believe that today, following this Council, Luxembourg and Austria have definitively abandoned banking secrecy, at any rate for people who aren’t their nationals?

THE PRESIDENT – No, not today. It wouldn’t be honest on my part to claim this. But they’ve agreed for the discussion to take place with Swizerland, Monaco and other states and to have this meeting at the end of 2013 to adopt the Savings Directive.

Q. – So they’ve committed themselves to it.

THE PRESIDENT – They’ve adopted the communiqué, which has been published or will be following the European Council. Firstly discussions and then the meeting in December.

AMAZON/GOOGLE/FRANCE/TAX

Q. – Regarding the fight against companies that practise tax avoidance, isn’t France’s position somewhat schizophrenic, when we know that in order to set itself up the company Amazon has received more than €1 million in state aid, while Bercy’s tax department is demanding of Amazon €198 million in taxes? Do you regard it as natural for the state and local authorities to provide financial help to a company that doesn’t play by the rules?

THE PRESIDENT – Well, they’re two different procedures! You can welcome a company that creates jobs and lend it the support which is, after all, provided for by the law or by the local authorities’ deliberations and, at the same time, go and seek ways of making the company pay tax. I’ll take another example, Google, where we’re ensuring we make Google contribute, for example, to the press – to which the company has finally agreed. There’s even been a search for a Europe-wide tax. So companies can perfectly well set themselves up in Europe, wherever they want and preferably in France, but with tax rules that must be harmonized in such a way that no company chooses to optimize its tax situation by creating activity here while paying or not paying tax elsewhere. And that’s the case with Amazon.

RENEWABLE ENERGY

Q. – A question about energy. In an article published by Le Monde yesterday, M. Gérard Mestrallet, along with a number of other European operators, asked you, the 27 [EU member states], to redefine a genuine energy policy with stable rules, and he added that renewable energy in Europe today – you discussed this; he was thinking in particular of Germany, but also other countries – is much too highly subsidized. I’d like to know if you share this observation and if, in terms of public support for renewable energy, we can also achieve a kind of harmonization.

THE PRESIDENT – I share much of what M. Mestrallet and a number of business leaders have established, namely that there’s currently an environmental and economic risk with the emergence of shale gas in the United States, and a lack of organization in the global energy market that calls for a medium- and long-term strategy at European level. And in this strategy, there must be coordination, cooperation and harmonization for renewable energy, in the sense that we must encourage the best renewable energies, not change the rules as we go along – as has sadly been the case in France in recent years –, send clear messages to investors and be aware of any deadweight effect or opportunity effect. And to that end, it’s better to have European rules and a European framework. So I’d express two principles: the European nature of support for renewable energy and the stability of this encouragement.

FRANCE/TAX EVASION MEASURES

Q. – France and your Budget Minister have opted for tougher penalties for tax dodgers precisely in cases of tax evasion. Do you think this policy of sanctions – in the interests of speed – is the most effective way to get tax evaders to come back home? Other European countries haven’t made that choice.

THE PRESIDENT – We’re refusing an amnesty. And how can we tolerate it also being applied to the most well-off, who for years have escaped tax and have thus escaped the first act of solidarity? It’s not about having tougher sanctions, it’s about telling these individuals and businesses – also applicable in this case – to declare themselves so that the existing law applies. The existing law is the tax law with corresponding penalties. It isn’t necessarily another punishment, it’s about complying. The countries which have tried to have special measures – indeed even discussions with Switzerland – generally haven’t been able to get past their parliaments, because solutions which appear unfair and ineffective can be called into question. So we prefer to say to those who might be in this situation: “come and declare yourselves. The existing law’s rules will be enforced and you’ll no longer have to worry about money you’ve put abroad.”

AUTOMATIC INFORMATION EXCHANGE

Q. – From June [there will be an] automatic information exchange between how many European Union countries?

THE PRESIDENT – This will get under way from June onwards. We don’t think it’s going to be implemented in June. (...) And I must say that it isn’t just Europe, it’s going [to apply] beyond even Europe, because all developed countries are conscious today that it’s better to collect tax revenue from those who, today, don’t pay tax rather than to put up taxes. A country such as the United States and even a European country such as the United Kingdom – who, up to now, hasn’t necessarily been overzealous when it comes to fighting tax fraud –, faced with large deficits and the need to restore accounts, believes today that fighting tax fraud isn’t an obstacle to competitiveness. On the contrary, fighting tax fraud enables them to have competition which can be fair and prevents certain countries and companies being in a situation from which they benefit, to the detriment of economic efficiency. So we now have, on the European and international fronts, a political will. And this is why I’m going back to the previous question. This is why those who thought they could escape tax today by taking refuge in tax havens must understand that impunity is over, that opacity is becoming extinct and that there’s a serious risk of being identified, and so these nationals need – in a reasonable, respectable way – to go and declare themselves in the countries where they are taxpayers. (...)

SYRIA/ARMS EMBARGO/FRENCH POSITION

Q. – I believe you and other heads of state and government also spoke about Syria. What was said on Syria? Did you, on this point, talk about a possible initiative on the arms embargo that you could unveil this evening with Mr Cameron? And secondly, more generally, what’s your position in relation to Mrs Merkel and Mr Cameron? (...)

THE PRESIDENT – Mr Cameron and I talk mainly – and it will be the case this evening – about foreign policy issues on which we have, in addition to positions, joint initiatives. You mentioned Syria. We’re of course calling for a political solution and are doing everything so that the Geneva conference, Geneva 2, can not only take place but be a success if possible. We’re putting the pressure on for this to happen.

On lifting the embargo, there’s a meeting on Monday and we’re making sure we say to the Europeans that there must be continued pressure on Bashar al-Assad’s regime and that we can’t accept there being, on one side, a regime receiving and using weapons from Russia, and on the other, an opposition which is deprived of them, even though for a long time we’ve laid down a principle of there being no question of delivering any materiel to groups without us having strict control over their use. So I’ll be talking to Mr Cameron about this later. (...)./.

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