Johan Langerock, policy adviser in the European Parliament, discusses his visit to Washington, D.C., the future of the OECD two-pillar tax plan, and the European Union’s green initiative.

This transcript has been edited for length and clarity.

David D. Stewart: Welcome to the podcast. I’m David Stewart, editor in chief of Tax Notes Today International. This week: on a mission.

With international coordination on tax matters rising in importance, a delegation of the recently created European Parliament tax subcommittee came to Washington, D.C., to discuss a number of issues. While here, they met with United States policymakers, and representatives of multinational organizations and companies.

During their visit, we were able to get one of the members of the delegation into the studio to talk about what the group had hoped to accomplish, what they heard from their U.S. counterparts, and other issues that are facing European lawmakers when they get back to Brussels.

Before we start this interview, I should note that we recorded this on May 26. So, any references to “this week” are referring to then. And with that, let’s go to that interview.

Joining me now is Johan Langerock, policy advisor for the Greens-European Free Alliance in the EP . Johan, welcome to the podcast.

Johan Langerock: Thanks. Happy to be here.

David D. Stewart: So, you’re in Washington with a delegation of the tax subcommittee of the EP. Could you first off tell us what the tax subcommittee is?

Johan Langerock: The tax subcommittee is quite a new committee in the EP. It started in 2020. The Parliament always had ad hoc committees to deal with tax issues. It was about time to have a permanent subcommittee dealing with tax issues, which is a subcommittee of the ECON committee, which deals with economic and financial issues.

Every committee in the EP goes on missions abroad. The tax committee chose Washington for the known context of the global tax deal, Foreign Account Tax Compliance Act-related issues, and an exchange of views with both Democrats and Republicans.

David D. Stewart: You met with Democrats and Republicans. What other groups did you meet with while you were here?

Johan Langerock: We had quite an intensive program over three days, spanning from Monday to Wednesday this week.

First day was more of an introduction to civil society, various stakeholders in Washington. We also met Google, Meta, and Amazon; society organizations like the Financial Accountability and Corporate Transparency Coalition or Transparency International, Global Financial Integrity; also the European delegation here in D.C. that briefed us on the context. It was more of an introductory day.

Then Tuesday, second day, Congress — all day on the Hill — meeting both Senate and House, and both sides, so Republicans and Democrats.

The last day, we went to the Treasury, and met with the IMF and World Bank.

David D. Stewart: When meeting with your U.S. counterparts here, what sort of topics were top of mind?

Johan Langerock: We really came with two main priorities, and then a few smaller topics that we wanted to address. Of course, the main topic was definitely the global tax deal. I think we Europeans want to hear from the Americans how they are going to get this deal through Congress. That was our main question. I don’t think we got a reply, but we can discuss that further.

Their question was obviously, “What are you going to do with digital services taxes?” As we understand that, both Democrats and Republicans hate DSTs.

Then the second issue was really FATCA and OECD common reporting standards (CRS). There’s still this inequality, unlevel playing field. We Europeans share what the U.S. wants us to share with them, but we don’t get the information that we want out of the U.S. We addressed that topic quite extensively during our meetings.

David D. Stewart: Let’s start with the OECD’s two-pillar project. I understand you met with Sen. Ron Wyden, D-Ore., on Capitol Hill. Our Capitol Hill reporter said that Wyden said that the discussion was constructive, and he told you that the U.S. wants to implement pillar 1 and pillar 2 quickly as policy.

What was your take on your meeting with him?

Johan Langerock: No, I have to say all meetings were very constructive with both sides. It’s true, one can have both an optimistic and a pessimistic view after these conversations.

The optimistic me really wants to believe that this deal will get through both in Europe and in the U.S., and that the U.S. will implement pillar 2 by reforming its global intangible low-taxed income rules. Wyden did give that confidence that this will happen and that the Democrats will work hard to get this through over the coming months.

David D. Stewart: Did you get an optimistic read from Treasury as well?

Johan Langerock: From Treasury, we also got an optimistic read, yes. Also, of course they do admit that there are difficulties on the road. Of course, I’ve just been here three days so don’t expect me to fully understand U.S. Congress and all the ins and outs. It’s just very hard to read as a European.

From what I understand, there’s a lot of optimism in that this will get through Congress. But, of course, the two pillars are very different in terms of strategy.

What I understood from pillar 2 is that it’s a matter of months. There’s also the hope that Europeans get pillar 2 through as soon as possible, which we hope there’s an approval on June 17. This will really help the U.S. to have pillar 2 voted in Congress too.

Then on pillar 1, we also heard from Treasury that technical negotiations are still ongoing with the other countries in the OECD inclusive framework, especially larger countries like India and also the EU. Those technical details are very crucial to then make it a bipartisan project to get it through Congress.

David D. Stewart: You mentioned that you also met with some tech companies while you were here. How did they react to the position of the EP members about how the EU member states could reintroduce DSTs if the U.S. is unable to implement pillar 1 under a multilateral convention?

Johan Langerock: At most, we’re in a standstill. There’s the agreement among the U.S., France, and the United Kingdom to freeze the DSTs and then withdraw those DSTs once the multilateral convention is ratified by all sides. Of course, this agreement will have to be extended because there’s now a delay in pillar 1. It was expected for the summer, but now we hear it’s for the end of the year.

Of course, they aren’t happy, and Big Tech hates DSTs just like Democrats and Republicans do. So, what their message to us was, “We want pillar 1 and pillar 2 and that’s what we are telling our counterparts in the Congress.” I’m not sure how much they’re advocating for pillar 1 effectively.

When I speak to the Republicans, I didn’t really hear that Big Tech were lobbying them actively to implement pillar 1 and to be supportive of it. Likely this might happen once the multilateral convention is out, the details are known, and maybe the threat of DSTs becomes a bit more outspoken again.

We actually also asked Big Tech what are their plans with voluntary public country-by-country reporting. We didn’t get a very enthusiastic answer from their side.

It’s a bit strange to hear from Google, Meta, and Amazon — big data company experts in processing data, at least that’s how they out compete everyone — that they have difficulties in gathering their own data and publishing it, which we found pretty funny from EP side. At least they promised us that they will respect the European directive, which we thought it was a normal thing to do.

They guaranteed us that they will do the required European public CbC reporting. But we hope to see a change on their front soon as also many stakeholders and investors are pushing them to change their views on voluntary public CbC reporting.

David D. Stewart: Could you tell us about what you heard from U.S. policymakers about financial account information exchange? You mentioned FATCA and CRS. Do they seem open to implementing something closer to CRS here?

Johan Langerock: Yeah, so the exchanges on FATCA were actually quite interesting.

Our first observation was talking with senators, especially also from the Republican side, was that there was no awareness of the problem, or very little awareness. There’s some awareness of the so-called Accidental American issue in Europe, but the awareness of the fact that there’s an inequality in exchange of information was not really there. Once we addressed it, there was also an understanding from the American side that clearly that wasn’t fair or normal.

I would consider it a small win for the EP as well, to maybe raise this awareness in Congress on this issue.

Then Treasury had good news for us that in the green book for the budget of 2023, there’s provisions to make FATCA more reciprocal. To make exchange of information with partner countries more reciprocal, and to already exchange information on issues that were not exchanged so far. Of course, this still needs to pass. But it’s a positive development that it is on top of their minds in Treasury, and that they have been listening to what Europeans have been asking them over the last years and months on the matter.

Hopefully we will see a more reciprocal exchange of information in the coming years, which can then decrease a bit of financial secrecy of the U.S. The U.S. was listed as the No. 1 financial secrecy haven by Tax Justice Network. We hope that can change in the future.

David D. Stewart: I assume you had some goals coming into your trip here. Did you learn what you were hoping to? How will what you found out while you were here inform the work of your committee going forward?

Johan Langerock: Very good question. I’m still processing this trip, so, I might do the processing right here.

We got to know a bit more of how both Democrats and Republicans think. We see the common denominators, like a clear disapproval of DSTs, but we also see the differences.

We see the differences in why the Republicans are at the moment hesitant on pillar 2 and how they should reform GILTI due to how tax credits will be treated in the U.S. going forward. But we remain hopeful that the GILTI rules will be reformed to be equivalent with the OECD pillar 2.

On pillar 1, what we learned is really more details are needed. The multilateral convention with all its technical details is needed to do an impact assessment and to get this through Congress.

I’m more optimistic in that sense. At first, before coming here, I thought pillar 1 is close to being dead. Now I think actually if the technical details are out, and one can clearly explain that both sides — Europeans and Americans — have done sacrifices, that this is the way to move forward and to stop unilateral measures such as the DSTs, then I think pillar 1 will get through Congress.

But that’s my very optimistic reading. I know U.S. policy is about much more than just a rational choice and many partisan issues. I’m not going to deep dive into these because it’s not my area.

David D. Stewart: Sure. Well, turning from U.S. politics to European politics, the Greens and European Free Alliance are pushing for pillar 2 to be adopted through qualified majority or enhanced cooperation. Is that legally possible?

Johan Langerock: That’s a good question. We have some #TaxTwitter debates about it.

Is it possible? For me, there’s always a difference between what the “pure legal reasons” and politics. For me, this is a political choice first and foremost.


At the moment we’re in a situation in the EU where we still have unanimity on tax matters. One member state can block any tax proposal. The Poles are at moment blocking the implementation of minimum tax directive. Not because they want to link it with pillar 1.

There are many debates also out there that the Poles might be right, that it’s needed to link pillar 2 to pillar 1. Sorry, it’s just [expletive]. They’re not seeking to link one to the other. They’re just blocking it because they want the COVID-19 recovery funds, which we call the Recovery and Resilience Funds in the EU, to be dispersed to them.

But the commission doesn’t want to disperse them because they’re not respecting a court of justice ruling. They first have to give guarantees that they will respect it, reform their judicial system in order to be fully independent again, and then the money can be disbursed. Then the Poles block this minimum tax directive. So, it’s a bit of a bargain.

There’s a hope that the situation could be solved by June. But what we say as Greens is that we shouldn’t allow one member state to block the proposal that is approved by 26 other member states. There’s an instrument to which we call enhanced cooperation in the EU, which can be taken at the initiative of nine member states to move forward. In that scenario actually 26 member states could just move ahead with pillar 2, and the Poles would be left behind.

I’m pretty confident that would not raise too many issues from legal jurisprudence perspective. But I know that some listeners might disagree, and we could have an hour long debate about it.

David D. Stewart: From what I understand, the Greens support more of a generalized push toward a qualified majority voting on tax matters. What are the pros and cons of moving to that system? Are other parties joining in that effort?

Johan Langerock: First of all, it’s good to know that we’ve sent letters. Our MEPs, Ernest Urtasun and Kira Marie Peter-Hansen, have led on a letter sent by the Greens to Commissioner Paolo Gentiloni Silveri and to the French Presidency Emmanuel Jean-Michel Frédéric Macron to ask them to change strategy on the minimum tax directive.

But more in general, indeed, we are in favor of qualified majority in tax matters. It’s not only us. It’s the European citizens who have clearly voiced their support for qualified majority in tax matters. Vetoes do not work, and it allows member states to misuse a file in order to gain gains on another file.

We are fully in favor of qualified majority in tax matters in the EU.

David D. Stewart: Changing gears a little bit. Recently there was a leak of documents that showed a lot of assets hidden in the United Arab Emirates. It’s been called the Dubai papers. Is it likely that the UAE is going to find itself on the EU’s list of noncooperative jurisdictions?

Johan Langerock: It’s always very confusing, and it’s most likely the EU’s fault.

There’s a list of noncooperative jurisdictions, which is what we call the tax haven blacklist. There’s also an anti-money laundering (AML) blacklist. Both are slightly different in procedure because the tax haven blacklist is decided by the council, the member states, and the AML blacklist is decided by the commission, which then needs to be approved by the member states and by department.

What we ask is that the AML blacklist is updated to add the UAE. This is not an ambitious call from the Greens. This is just normal because the UAE are listed by the Financial Action Task Force (FATF) since March this year, and the AML blacklist in the EU follows the FATF gray list. Once a country is added on the FATF gray list to EU, the commission should update its AML blacklist.

What we believe as Greens is that we have a country that is not respecting AML standards, not respecting FATF standards. We know that the country is being also abused or at least used as a platform to circumvent sanctions imposed on Russian oligarchs. We have a lot of elements in there to list the UAE as soon as possible on the AML blacklist. We really don’t understand why the commissions aren’t moving ahead faster on this.

David D. Stewart: Following the invasion of Ukraine there has been a lot of effort to track down Russian oligarch money. How is that playing out in the EP?

Johan Langerock: We are trying to monitor as close as possible how the freezing and seizing of assets is going. We are putting some pressure on the commission as well to be as transparent as possible. There’s a Freeze and Seize Task Force, a bit of a copy-paste from the G-7 taskforce on the same matter. You have also task force in the U.S. which is called, KleptoCapture if I’m not mistaken. But we still have very little transparency of how much is being frozen and seized in member states.

There have been some leaks and we know that some member states are stronger than others. The Netherlands and Germany are performing quite weakly. Belgium has been quite strong. But we would like to have an overview per member state of what is being frozen and what is being seized.

We would also like to go further as Greens. We’ve been defending that we should look into confiscation of those assets, and we fully support the call made by the European Commission President Ursula Von der Leyen in Davos where she said we should confiscate to then invest in the Ukrainian recovery.

But of course, all of these things are also legally very challenging. I do understand that confiscating an asset has some legal hurdles to it which we need to solve.

The European Commission has actually also put forward a proposal to change the rules around confiscation in the EU. Let’s see how far this can help in the current situation. Rules would need to be approved and enter into force, so it’s likely those rules won’t be used in the current crisis.

David D. Stewart: One question that strikes me is that we were discussing earlier the pillar 1 and pillar 2. We talk a lot about corporate income tax. However, VAT accounts for a much higher proportion of revenue. Are we spending too much time talking about corporate tax when VAT is this much bigger pot of money?

Johan Langerock: Yeah, it’s another famous tax debate, whether we are spending too much time or not on corporate income tax. I fully agree, we should spend more time on other tax issues as well. I’m not sure if you should spend less time on corporate tax, or you should just perhaps spend more time as well on other tax matters.

VAT, money-wise, is a lot of money. In the EU, VAT fraud accounts for more than €130 billion in 2019. I think these are the latest figures. Still we’re in a situation there again, unanimity plays a role.

We wanted to move to the definitive regime in the EU, meaning that we apply a destination-based principle to business-to-business transactions. This proposal was made in 2018. It’s still blocked in council because there’s still no unanimity found on this matter.

Because this is taking so long, recently the EP had to endorse an extension of what we call a reverse charge mechanism or a quick reaction mechanism. These are mechanisms in place that member states can change from origin to destination-based principle in VAT on certain matters in case of a high risk of fraud.

This is, again, a typical example where something is blocked in council. We have to endorse an extension of an exceptional regime just because member states lack the political will to really effectively solve the matter. We regret the situation, but that’s the situation in which we’re in.

David D. Stewart: Turning to the other important issue of our time, environmental taxation. What is the tax committee doing right now on environmental tax issues?

Johan Langerock: At the moment, in the EP, we are discussing the energy taxation directive. This is a directive that is a revision of the existing directive of 2003, and it’s part of the European Green deal, which was published in July 2021. The energy taxation is very important.

What the commission wants to do is to revise the rates. The directive establishes minimum rates on energy products. What we want to do now is to change the rates from volume-based to energy content-based. We also want to allow indexation. The problem was that since 2003 the rates haven’t changed so you can imagine that the rates nowadays are not of that much value.

What we need is, 1) to update the rates to reflect energy content and not volume; 2) to also make them automatically increase over time according to the index. That’s an ongoing negotiation. It’s not an easy one because carbon pricing, carbon taxes is a very divisive topic. As Greens we’re fully supportive, and we think it’s very important. The Oil Companies International Marine Forum and others are very supportive of these matters. But there are still some political groups that are very hesitant on increasing environmental taxes.

David D. Stewart: That leads me to my last question. What’s next for the tax committee when you get back to Brussels?

Johan Langerock: There’s a lot on our plate. First there’s a legislative track, which is dealt with by our other committee, ECON committee. But it’s more or less the same people involved. There’s the Unshell directive or which we call ATAD III, which is to tackle shell companies in the EU. That’s one.

There’s also the newest debt-equity bias reduction allowance proposal to solve the debt equity bias.

We’re also working on two workstreams. Basically we’re working on an answer to the Pandora Papers. We’re working on further reforms needed in corporate income taxation.

At the moment we’re also working on a report on how new technologies will influence taxation. Actually on this it was a very interesting meeting with the IMF this week because they clearly mentioned, and I really believe in this, that new technologies will help to make our tax system more comprehensive again.

We went to a tax system where we were lowering our wealth taxes, capital gains taxes, because we always believe that they were complex to implement and enforcement was difficult. We went to a tax system more based on VAT income taxes, which led to rising inequalities. What the IMF really says is, “Let’s use those new technologies to really reinstore effective wealth taxation, capital gains taxation, property inheritances.”

This is a track for EP to work on because in November there will be a tax symposium organized by European Commission in which the European Commission wants to look at the ideal tax mix, a roadmap to 2050.

As you said in this conversation already, we’ve been focusing so much on corporate income tax, perhaps it’s time to focus on personal income tax issues and wealth and capital. As Greens we are very supportive of this, and we really aim to work more on these matters in the coming months and years in the subcommittee.

David D. Stewart: Well, it definitely sounds like you’ve got a lot on your plate. Thank you for taking the time to talk to me.

Johan Langerock: Thank you very much.


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