Investigating the Panama Papers: Our Conclusions

S&D on the final report of the Committee of Inquiry to investigate money laundering, tax avoidance and tax evasion (PANA)

By Jeppe Kofod, S&D MEP, Co-Rapporteur PANA & Vice-President of S&D

The Panama Papers leak deeply shocked the citizens of Europe and indeed the world. Brave investigative journalists dramatically exposed the industrial scale of global tax evasion, avoidance, money laundering and corruption.

The 11.5 million leaked documents exposed celebrities’ illicit tax schemes, revealed tens of thousands of hidden offshore companies, and even toppled the sitting government in Iceland. Dramatic though this certainly is, we will not be content with mere drama and headlines. We want real political action — and that is what we are delivering in the European Parliament.

To be frank, we in the Socialists and Democrats Group were not surprised to learn that the international super-rich are using contrived methods to avoid paying their fair share of tax. However, the sheer scale and professionalism of these practices was a shocking new revelation. Money laundering through intermediaries in the EU is clearly unacceptable.

Those responsible — and those facilitating it — must be held accountable. That is why we called for a thorough inquiry into the Panama leaks. Thankfully, the Parliament heeded our calls — and soon we will be publishing our conclusions.

Since the opening of the investigation, we have held 27 meetings and undertaken seven fact-finding missions spanning Europe and the United States. I write, one year later, as co-rapporteur for the investigative committee (PANA) as we approach the final chapter of this saga.

The PANA inquiry committee held 27 official meetings over the past year

The committee released its draft report in June, and it confirms many of the fears the S&D Group has expressed since the beginning of the investigation, after the preceeding scandals of #Offshoreleaks, #LuxLeaks and #SwissLeaks.

We have found, that, as it stands EU legislation is not sufficiently strong to address the systemic problems of tax avoidance and evasion, money laundering, and corruption.

Worse still, our draft report concluded that Member States have failed in their administrative responsibilities, particularly under the Anti-Money Laundering Directive.

Furthermore, where the Commission should have used existing legislation to ensure that Member States chase those concealing assets, the Commission has lacked both the capacity and serious sanctions to do so — leaving plenty of loopholes for tax dodgers and criminals to exploit.

Worryingly, in our investigation the committee encountered a Council of Member States that is not transparent and cooperative, in its approach to tax policy and regulation. This is a reprehensible breach of the fundamental principle of sincere cooperation, that is enshrined in the treaties of our European Union. All these conclusions underlines how serious a task we have before us, if we want to achieve tax justice in Europe. And that we do!

Nevertheless, we welcome the advances in this draft report, which will be debated until the final vote in Strasbourg this December. We are making clear that common standards are the path toward tax justice, and that we need better tools for the Union and its Member States to bring back fairness. To that end, as Socialists and Democrats we are proud that we pushed the committee’s recommendations for a Union Tax Policy Coherence and Coordination Centre (TPCCC), along with common definitions and statistics for tax avoidance and tax evasion, and an ambitious list of tax havens with strong sanctions.

It is this kind of action, supported with the penalties of cutting off access to our markets, that can produce real global change. Properly enforced regulations in a market of 500 million citizens will force others to comply with our high standards, cutting down on tax avoidance, evasion, fraud and money laundering.

The draft report clearly states that we can no longer rely only on self-regulation of intermediaries to fight money laundering, tax evasion and tax avoidance. This is an important conclusion we must draw from the Panama Papers, and we must work to ensure proper oversight of wealth managers, lawyers, accountants and all others who have been involved in designing and operating these international tax schemes.

Throughout our work, I have pushed very hard to demand protection for whistleblowers in European law, and as soon as possible. The leaks of the Panama Papers are only one recent example, of many, showing that the actions of whistleblowers protect our democracies from criminality, secrecy and corruption. Their protection is crucial in combatting global crimes like terrorism and trafficking, and as Socialists and Democrats we will repeat this demand until progress is made.

We realised during the investigation that shortcomings at the Member States and European level have a real cost. Thanks to the S&D Group, we know now that around 1 trillion euros is lost from tax avoidance and evasion to our European governments every year. That money should be in the control of our citizens, where it could, for example, more than double all spending on healthcare in our Union. That is why we, the Socialists and Democrats, continue to call for strict sanctions against companies, private individuals and jurisdictions who contribute to tax fraud.


Of many hundreds of intermediaries and entities found to be involved in aggressive tax planning or tax evasion in the Panama papers leaks, 19% of them were based in the EU. We were clear in our draft report that gaps in legislation and enforcement between Member States have created the loopholes that enables tax dodgers to pay very little — if any — tax without, in most cases, breaking the law.

This is why the S&D Group has called for Europe to look within to clamp down on tax avoidance; ‘Freeports’, ‘letterbox companies’ and tax amnesties that let large multinationals off the hook should no longer have a place in our Union.

PANA inquiry committee hearing of the European Finance minister and the president of the Eurogroup

We must shine a light on tax and secrecy havens inside the EU. The list of tax havens should also include our own member states with harmful tax measures, and we must have a procedure to properly scrutinise them when they are legislated.

I also have to say bluntly, that we were bitterly disappointed by the Council’s, and specifically the Code of Conduct Group for Business Taxation’s cooperation with our committee. Or rather, their lack of cooperation.

This lack of transparency and genuine cooperation has also underlined the need for a clear, common definition of tax havens. The Commission must continue to put pressure on the Member States to reform the Code of Conduct Group in order to increase transparency and to change the decision-taking method. The current practice of unanimous decision making on tax matters in the group makes it possible for a small number of EU Member States to delay, water down and sometimes even stop, necessary tax reform within the EU. This has to stop.

Jeppe Kofod, S&D MEP and co-rapparteur of the PANA inquiry Committee, together with S&D Coordinator Peter Simon

Our Group believes current ambitions on tax justice fall too short; and bolder action at the European level is needed. The Council must move quickly to agree on the two steps of the Common Consolidated Corporate Tax Base, so we can progress towards a minimum effective rate for corporations in the EU. We must eliminate pockets of zero or near-zero tax rates for large companies, and restore the trust of citizens. Restore fairness. Pure and simple.

Our current regulatory mismatches must be replaced with good European standards. A public register of all European businesses, with requirements for country-by-country reporting of profits, would be a good start.

New European structures such as a Financial Intelligence Unit and a Tax Policy Coherence and Coordination Centre, to uncover and stop behaviour that harms European tax interests — ideally to prevent them from ever being implemented — would finally give Europe the muscles needed to stamp down on illicit tax schemes. Be they by companies, individuals or governments. The Commission must, as Pierre Moscovici has urged many times, reach for transparency and create a new normal in the world of tax justice.

That is what we, the Socialists and Democrats in the European Parliament, have fought for. And what we will continue to fight for.

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