Mr. Ronan Hession:

The issue of subsidiarity is still under consideration within the Department. It is a very important question that we have to pose with regard to any new European proposal. In this case it is a question of whether more can be achieved by member states acting collectively than can be achieved individually.

The second question is whether the proportionality test is passed. In other words, does it go as far as the treaties require and no further. There is a balanced judgment call there. We have to do our own analysis to see where we land and what sort of advice we give to the Minister on it. What we have seen at OECD level is that we can acknowledge that these problems require lots of countries to work together. They cannot be solved by unilateral action alone. Whether that requires a directive or a common base comes back to the proportionality point. Outside the European Union, a lot of the OECD reforms have been delivered either through changes via tax treaties or sometimes just guidelines or best practice standards. There is that question.

The broader issue of tackling tax avoidance is acknowledged in the previous directive that was agreed in June, the Anti-Tax Avoidance Directive. Member states can come together and make a meaningful difference through a directive. To a large extent that issue was dealt with in that directive. It has been carried over to this one but we do not see a huge amount of additional anti-tax avoidance content here in this published proposal beyond what was agreed previously in June. The Commission would argue that by having a common base and common rules it makes the system more transparent and more difficult to arbitrage. We would have to see whether that is the case. It is somewhat hypothetical, given we do not have a live common based example we can compare it to.