The European Commission (EC) has taken two steps to curb tax evasion throughout the European Union.

On Wednesday 27 May, the EU signed a major accord with Switzerland to end banking secrecy for EU residents. Pierre Moscovici, the EU commissioner for tax issues, said the agreement is “another blow against tax evaders, and (represents) another leap towards fairer taxation in Europe.” The accord will come into effect in 2018.

On the same day, the EC held an orientation debate on corporate taxation. EU Commissioner for the Euro and Social Dialogue, Valdis Dombrovskis, said: “There is a need to combat tax avoidance by re-establishing the link between taxation and where the company actually does business.”

Dombrovskis said that the EC aims to establish a growth-friendly corporate tax environment across the EU. He said: “This should help support the economic recovery. We know that inefficient tax regimes can undermine economic growth.” He went on to emphasise the importance of companies who trade cross-border paying fair taxes and that this must be done through transparent processes.

During the EC's debate, deputies agreed that corporate taxation must be linked to the country where the business is transacted. The commissioner added: “This is also the principle of the international OECD work to fight base erosion and profit-shifting [BEPS]. A full consolidation of the tax base across border is the most difficult part. Member states would need to agree on how to distribute tax revenues.” The EC discussed how this could be achieved step by step. It will discuss consolidation at a second stage of talks.

The announcements made by the EC yesterday came a day after online retailer Amazon announced it will change its sales reporting to reflect sales made in the UK, Germany, Spain and Italy. The company has been heavily criticised for recording its European sales in Luxembourg, with which it had a low-tax agreement.