The European Investment Bank (EIB) must clean up its act on fiscal matters and develop a more responsible taxation policy, says a report released today by Counter Balance, a European coalition of development and environmental non-governmental organisations.

Xavier Sol, the director of Counter Balance, writes in this article on Euractiv that, while there is far greater political awareness of unfair tax practices following the series of tax scandals in recent years (Lux leaks, the Panama Papers, the Paradise Papers), the positive advancements must cover all areas of EU operations – including the EIB, which is fully public and controlled by the EU member states together with the European Commission. Sol writes: “Paradoxically, the very financial arm of the EU – the European Investment Bank – is still lagging behind on fair taxation, right when it should play a leading role on what has become a top political priority.”

One of the key recommendations is that the EIB should require country-by-country reporting for all EIB clients. Sol adds: “Being the largest multilateral lender globally, with EUR 78 billion invested in 2017, the EIB can just not afford to treat tax justice as a side issue. Since the financial crisis, the bank has played a pivotal role in economic recovery efforts at European level, for instance in implementing the Investment Plan for Europe, and yet it has financed – and still does –projects via tax havens.”

10 key actions towards fairer taxation 

Here are the 10 key recommendations from the report:

1. In 2018, the EIB should use the review of its tax havens (NCJ) policy to close existing loopholes and develop a broader responsible taxation policy;
2. Relying on the EU black list of non-cooperative jurisdictions is a needed step, but will not be sufficient;
3. The EIB needs to better tackle risks of tax avoidance;
4. Requiring public country by country reporting to EIB clients should be a minimum standard;
5. Improving due diligence on beneficial ownership;
6. Towards a stronger focus on domestic resource mobilization;
7. Using contract clauses to transpose taxation and good governance requirements;
8. Integrating tax evasion and tax avoidance in the EIB exclusion system;
9. More transparency and reporting;
10. Improved governance by developing and strengthening the EIB's in-house capacity to oversee due diligence and project monitoring activities.