The European Commission will propose a new set of binding rules by the end of January to curb corporate tax avoidance, in another move to counter unfair or illegal tax practices of multinationals, EU officials said.

Multinational corporations have long been in the sights of European Union authorities because of the way they can reduce their tax bills by basing themselves in low-tax centres or negotiating special deals with governments.

The EU executive will propose new measures on January 27, EU Commissioner Pierre Moscovici told European lawmakers.

Some of the new proposals will oblige EU countries to accept as binding a set of voluntary guidelines, known as BEPS, which aim to close gaps in existing international tax rules, an EU official said.

The official said the Commission would propose that the 28 EU states turn some of the BEPS guidelines – which were backed by leaders of the G20 group of the world’s largest economies – into binding legislation.

Interest deductions applied by multinationals are among the areas where the Commission plans to go beyond BEPS. The guidelines already recommend corporations link deductions to the economic activities of each group entity, rather than shifting debt among national branches, officials said.

Moscovici told EU lawmakers he plans to propose stricter rules on taxes applicable to controlled foreign companies and on hybrid financial products which may avoid taxation because of their complexity.

The Commission proposals will follow a crackdown on deals some multinationals have made with individual EU states, which are seen as damaging competition.

On Monday, the EU wxecutive ordered Belgium to recover €700 million from 35 large companies in taxes not paid because of a model that gave multinationals a more preferential treatment than smaller firms (see full story in The Business Observer).

In October, the Commission ruled that Starbucks Corp. and Fiat Chrysler Automobiles benefited from illegal tax deals with the Dutch and Luxembourg authorities and ordered each country to recover €20-€30 million in back taxes. Brussels is also investigating the tax arrangements of Amazon in Luxembourg and Apple in Ireland.

To avoid such deals in the future, EU finance ministers agreed in October to automatically exchange information on agreements struck with multinational companies from 2017. The package to be proposed on January 27 will also include measures to make company tax declarations more transparent and may go as far as obliging them to make their tax bills public.

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