[WATCH] Scicluna offers diplomatic comment on German tax scandal

Finance minister Edward Scicluna has insisted that issues of tax avoidance are “not an issue of morality” and that an emphasis should be placed on clamping down on loopholes by strengthening directives and cooperation between countries.

Scicluna was speaking to journalists following a ceremony where the newly appointed cabinet was sworn into office. He was asked for a reaction to reports in the international press that German banks and stockbrokers used mechanisms and loopholes to manipulate tax payments and refunds, to the benefit of foreign investors.

Research by Mannheim University professor Christoph Spengel, who shared his findings with broadcaster ARD and German newspaper Die Zeit, has shown the system to have cost the German state some €31.8 billion since 2001.

According to the report, banks and stockbrokers would buy and sell shares for foreign investors in a way which allowed them to claim tax refunds they were not entitled to, calling into question the legality of the practice.

Reacting to the reports, Scicluna explained that it was normal for companies to minimize their tax exposure by engaging experts in the field, while acknowledging that there are “lines which are sometimes crossed”, despite the fact that no illegal activities would have taken place.

“It’s not only from a legal perspective. Sometimes very aggressive tax planning or even tax evasion is not acceptable to the man in the street,” said Scicluna, who was giving comments to journalists, moments after he was sworn in as finance minister for a second term.  

“It’s not a question of morality. It’s a matter of directives and cooperation between countries to minimize this and close loopholes,” said Scicluna, who pointed to a number of initiatives on a European level.

He added however that there was no need to be “scandalised” and that the emphasis should always be on the legality of the activities in question.