The European Union has acted to close a loophole, which allows multinational companies to reduce tax bills by exploiting differences in the tax laws of member states.
In difficult economic times corporate tax avoidance is a source of public fury and campaigners have used the mood to get the EU to finally do something about it.
The Greek Minister of Finance Gikas Hardouvelis and President of the Council made the following announcement: “This agreement allows for closing the hybrid loan mismatch; there are loopholes which generate important losses of revenues to our countries thus we are making a tangible step forward in the fight against tax avoidance.”
EU tax law requires unanimity among member states. Europe has been torn between the demands of some countries, which see low tax as a way of attracting foreign business.
While others fear tax changes will drive multinationals away resulting in unwanted job losses.
Earlier this month, the European Commission increased pressure on Ireland, the Netherlands and Luxembourg over their corporate tax practices, saying it would investigate deals cut with Apple, Starbucks and Fiat.