In April 2016, the scandal around the Panama Papers detonated. Since then, the European Parliament has created a Commission of Inquiry to investigate what lies behind the global system of tax evasion and propose regulatory changes. One and a half years later, this commission seems to have been toned down following the last elections of the European Parliament and the outburst of a new scandal of greater amplitude, namely the Paradise Papers which brought the issue to public view. The Euro-MP of Podemos, Miguel Urbán, was a member of this commission. Highly critical of the European System, M. Urbán is sceptical about its supposed fight against tax evasion, concluding “the European institutions and regulations have been built to favor multinational companies”.

This interview was originally published by the Spanish newspaper El Salto in November 2017

El Salto: one and a half years have now passed since the Panama Papers were revealed. The European Parliament has established a Commission of Inquiry into tax evasion, which you sit on. Has anything changed?

Not yet. We need to see which recommendations will be proposed and supported by the commission following our investigation. A lot of pressure has been placed on this result. Of course, these legislative ideas for the Commission and Member states will only be recommendations. They are by no means binding. On the other hand, our inquiries are useful. They give us an insight into the magnitude of the problem we are facing. They prove that it is not a cyclical but a structural question, which is linked to the period of liquid capitalism (Bauman’s concept) which we are now in. The big coalition and the European institutions clearly wanted to use this commission as evidence they were working on the issue, somewhat like applying polish to restore a damaged surface.

The European Peoples Party wanted to put the emphasis on Panama, Bermuda and the Caiman islands, but in the Commission of Inquiry we made clear we wanted to look at Luxembourg, Malta and the UK. There are tax havens even in the heart of Europe.”

However, we have managed to broaden the discourse from that which the European People’ Party [EPP —the conservative majority of the European Parliament] wanted to focus on, namely its view that the problem of tax havens only concerns countries of the south. The European Peoples Party wanted to put the emphasis on Panama, Bermuda and the Caiman islands, but in the Commission of Inquiry we made clear we wanted to look at Luxembourg, Malta and the UK. These are the tax havens that lie at the heart of Europe, they are the real problem. There are fiscal loopholes  – I don’t like to use the term ‘haven’ because it employs a positive connotation – at the heart of Europe.

ES: What are the differences between the revelations from the Panama Papers and the Paradise Papers?

The Panama Papers showed how the ‘offshore’ world works. However, Mossack Fonseca [the offshore company from which the Panama Papers were leaked] was at the lower end of fiscal optimization [tax efficiency] when compared to the Paradise Papers. Appleby [the offshore company from which the Paradise Papers were leaked] goes much further by revealing the particularly complex universe hiding behind such fiscal engineering and highlights the factors behind enabling loopholes in regulations.

The first factor is the myth of self-regulation which the EPP has defended in Europe. The Paradise Papers have proven the system does not work, given Appleby had high self-regulation standards. This brings us to the conclusion that we need legislation introduced those elements which facilitate fiscal evasion and fraud: the fiscal planners, law firms and banks. The system relies on the banks and, of course, they can operate in total freedom, without any supervision or regulation, in tax loopholes.

HQ of Mossack Fonseca in Panama  © Valenciano

The second factor that has come to light is the role of shell corporations/letterbox companies in the form of foundations and trust funds.  Their sole mission is to conceal whoever really owns the hidden money. Within the Commission of Inquiry, set up after the Panama Papers revealed some of this, we have requested that each country keep a register of the real ownership of companies hiding behind these shells.

The third factor that needs to be stressed is that whilst the Panama Papers we only shed light  over Panama, the Appleby scandal showed us that there exists a vast and international network of fiscal loopholes used by numerous multinationals. As well as an ownership registry in each country, multinationals ought to also declare the profits made in each jurisdiction to prevent them from accumulating and diverting millions to tax loopholes, which they usually do to escape their fiscal responsibilities

“The structure of the European Union, with its free movement of capital, facilitates tax evasion”

ES: You have mentioned Malta and Luxembourg, but we noticed that Ireland and Holland also gained much attention in the Paradise Papers.

The three European champions in tax evasion are the UK, Luxembourg and the Netherlands. Ireland has played an active role in lowering its tax rates to favor large enterprises, but the extent of its impact is lesser than the other three. The problem is that the structure of the European Union, with its free movement of capital, facilitates tax evasion. Added to this is the problem of fiscal devaluation and dumping; at which Holland and Ireland are excellent. The Luxleaks have revealed much concerning the Netherlands, but nothing has changed.

What drives a country with a stable and developed economy like the Netherlands to carry out fiscal dumping?

The problem is that there is no fiscal unity in Europe. This leads to fiscal competition and dumping aimed at attracting companies and capital, which makes us all losers. Indeed, some sources suggest we are losing 1 000 billion Euros per Month in tax revenue in Europe. If we had such sums we could leave behind all the budget cuts imposed in recent years. Evading tax and fiscal fraud perpetuate inequality.


Miguel Urban © Álvaro Minguito

The Luxleaks revealed bilateral agreements between companies and Luxembourg —the famous “Tax Ruling”. The Paradise Papers have exposed that Nike, for instance, had an agreement with the Netherlands to avoid paying tax for ten years. Is Europe taking any actions to put an end to such agreements?

Europe is trying to demonstrate and to give the appearance that it is doing something. We have seen some trivial sanctions, such as the rule by the ‘European Commission for Competition’ against Apple. However, the problem is yet to be tackled seriously. In fact, in several cases, the supposedly remedial legislation has been in favor of businesses. I will provide two examples. The agreements put in place to avoid double taxation are ending and we know it perfectly well that they will become agreements of double non-taxation, with which the companies in question don’t pay a cent anywhere. Secondly, on the same day the Panama Papers scandal burst out, the European Parliament voted in favor of a regulation further weakening whistleblowers. When Antoine Deltour – who is the key whistleblower of Luxleaks – found out about this vote, he asked our commission to oppose this legislative change because it would rob whistleblowers of their protection. Instead of proposing laws that promote transparency and protect whistleblowers, the EU has preferred to legislate in favor of businesses. When the EU parliament tried to take a bold lead, such as in the fourth EU directive against money laundering, the EU Commission annulled it. This comes as no surprise, given EU Commission Mr. Juncker is the ex-Prime Minister of Luxembourg and was associated with allegations stemming from the Luxleaks scandal.


Jean-Claude Juncker. President of the European Commission. Associated with the Luxleaks scandal. © Factio popularis Europaea


ES: Only a few years ago (when people talked about tax havens, and especially of Switzerland) the image that came to mind was that of an African dictator hiding his diamonds or money stolen from the state. Now names such Shakira and Bono appear in these papers.

That’s what I have been saying about Panama and Europe: With the image of the African tax evader, they wanted to make us believe that this problem only concerns countries in the southern hemisphere. But now we can clearly see that the greatest tax dodgers come from Europe and the United States. The only difference now is that we know their names. It is therefore of concern to see that on many occasions the European commission expressed larger concerns regarding the naming of tax dodgers compared to losses caused by fiscal evasion.

We are returning to a feudal system, where the feudal lords don’t pay any tax. This aristocratic class and modern feudalism is called Bono, Messi, Christiano Ronaldo as well as Nike, Apple and Amazon. It’s a class that positions itself not only above the middle class but also above small and medium-sized businesses. It’s a new nobility that believes to be above the law. We cannot allow this to happen: we must confront this postmodern feudal system.

“We are returning to a feudal system, where the feudal lords don’t pay any tax. This aristocratic class and modern feudalism is called Bono, Messi, Christiano Ronaldo as well as Nike, Apple and Amazon.

ES: With the EU Commission of Inquiry and changes in the public mood following the scandals, are we approaching the an end of fiscal havens? Or are they always going to be a step ahead of us?

If only they had one step ahead of us. We have in reality fallen far behind of them.  To illustrate this, in the Panama Papers scandal, 213,000 offshore companies were revealed, but this merely represents 0.6% of the global companies. With the Appleby scandal, we managed to reach 1.5%. If we look at the numbers, we are far from knowing the full extent of what is really going on. And there are certain interest groups, who want to keep it like that. There remains much hidden, but we are only seeing what they let us see.


 Translated into English by Surya KnöBel. 


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