Algirdas Šemeta was the face of taxation at the European
Commission (EC) during the period in which tax ballooned from
being a footnote in financial publications to a major
international political issue.
Šemeta was also in the Global Tax 50
He was replaced by Frenchman (and fellow Global Tax 50 2014
Pierre Moscovici, who took on the new role of European
Commissioner of Economic and Financial Affairs, Taxation and
Customs, on November 1, but leaves behind
a legacy of combatting tax fraud and evasion, striving to
make the tax system fairer, breaking down barriers to the
single market and modernising the customs union.
One of the key pieces of work Šemeta chose to
undertake was to update the Savings Tax Directive, which will
be part of the legislative framework for automatic exchange of
information within the EU.
"The fundamental reason for revising the
Savings Tax Directive is to close loopholes which exist in
the current legislation," he says. "The revised directive will
be tighter, allowing for fairer and more effective taxation of
"It extends the scope of products to cover investment funds,
pensions, insurance and innovative financial instruments, as
well as capturing payments made through intermediary structures
such as trusts and foundations."
"This will help prevent tax evaders from escaping the
provisions of the legislation by channelling their money
through untaxed structures outside its current scope," he
During Šemeta's tenure, the legislation for an
electronic pan-European customs environment was finalised, and
the project – the Union Customs Code (UCC) was
launched. In May this year, the Commission took on a work plan
to have the UCC fully implemented by 2020.
Šemeta also set up a high-level expert group on
taxation of the digital economy, which presented its findings
Part of his philosophy has been to make sure that member
states feel the responsibility and ability to react to tax
abuses outside their own borders, with the assistance of the EU
– to ensure that any instances of state aid can be
"Last year the Commission sent requests to some member
states for clarifications on their tax rulings, to make sure
that companies do not receive undue, selective advantages,"
said the former Lithuanian finance minister. "We have also put
a strong onus on member states themselves to challenge what
they perceive to be unfair and to act decisively to prevent
regimes that give way to abusive tax practices."
Šemeta, under José Manuel Barroso's
premiership, helped create guidelines for member states such as
shifting taxation away from labour and onto other tax bases
such as property and the environment. He also proposed a review
of the EU Energy Taxation Directive in 2011, which made a
direct link between taxation and the CO2 and energy levels of
different types of fuels.
financial transaction tax (FTT) has been another area of
activity for Šemeta. Eleven member states are now
involved in the plans, which are going ahead under enhanced
overcome a legal challenge from the UK. The FTT has one of
the highest public approval ratings of any tax mooted by the
"This is an initiative which has the strong support of
citizens of the 11 participating member states – 75%
said they were strongly in favour of the FTT in a recent
survey," he said. "The Commission has done everything it can to
support negotiations, and will continue to do so while
respecting the rights of non-participating member states."
Another key Šemeta policy was the standardised VAT
declaration so that companies could fill in a single VAT
declaration for all of their EU transactions – an
initiative which is estimated to save €15 billion ($18.5
billion) every year.
"I am pleased with the pace of our progress in reforming the
VAT system, as it is right on schedule," he said. "Meanwhile,
we are working intensively to prepare businesses for the entry
into force of the
mini one-stop shop in 2015, which will make life much
easier for businesses selling e-services, broadcasting and
telecommunication services cross-border."