Poland threatens EU rule-of-law proceedings against Netherlands for “tax abuses”

Poland may seek to bring the Netherlands before the Court of Justice of the European Union (CJEU) and to initiate rule-of-law proceedings against the country over “tax abuses”, senior figures have announced.

A legal scholar in the Netherlands has responded by saying that any such case would be rejected immediately by the CJEU. It would be a “waste of Polish taxpayers’ money” and would make Poland an “object of ridicule”, he says.

The developments come after the Dutch parliament last week voted in favour of a resolution that obliges the prime minister, Mark Rutte, to submit a case against Poland at the CJEU for creating “a serious threat to the rule of law”.

At a press conference on Monday, two deputy ministers and an MEP unveiled a report entitled “Violation of the rule of law by the Netherlands: tax abuses in the EU”.

Janusz Kowalski, a deputy minister for state assets, said that the report outlines how the Netherlands has created “an aggressive tax system inconsistent with the rules of the internal market of the EU” and which allows companies to transfer profits outside the bloc.

This “entitles us to ask” whether proceedings under Article 7 of the Treaty on European Union should be launched against the Netherlands for “violating…the rule of law” with regard to “rules on non-discrimination and justice”, said Kowalski, quoted by TVP Info.

Article 7 is the EU’s so-called “nuclear option”, to be used against member states deemed to have breached the union’s fundamental values. Poland itself – as well as Hungary – is currently subject to long-running Article 7 proceedings over accusations its government has violated the rule of law.

Speaking alongside Kowalski, deputy justice minister Sebastian Kaleta said that his department would “thoroughly analyse” the report before deciding on further steps. But “we cannot be silent on…the tens of billions of euros flowing out of the EU’s internal market”, he added.

Kaleta also accused EU decision-makers of hypocrisy for “forcing through mechanisms directed against one country” while “being blind to what is happening in [another] country”.

The Polish and Hungarian governments are currently blocking the EU’s budget and coronavirus recovery funds in protest against the inclusion of a mechanism linking funds to the rule of law. They argue that this could be used “arbitrarily” against them for “political” reasons.

Both Kowalski and Kaleta are members of United Poland (Solidarna Polska), a junior partner in Poland’s national-conservative ruling coalition. Led by justice minister Zbigniew Ziobro, it is the most hardline of the three governing parties, and has been pushing for a tough stance in the conflict with Brussels.

The two deputy ministers from United Poland were, however, joined at the conference by an MEP from the Law and Justice (PiS) party, the largest member of the coalition. Dominik Tarczyński declared the need to “protect the rule of law” from Dutch tax practices and accused the EU of hypocrisy.

“The times when we [Poles] are the ones held to account, who are the whipping boys, are over,” declared Tarczyński, quoted by Wprost. While “we are starting with the Netherlands…we are looking at other member states” too, he added.

In September, the Polish and Hungarian governments announced that they were jointly setting up an institute to assess the rule of law in other member states. Their aim is to stop the EU applying “double standards towards Hungary and Poland” and “using us as a punching bag”.

In a separate press conference yesterday, the PiS speaker of parliament, Elżbieta Witek, echoed the language of her colleagues. Poland will not allow itself to be the EU’s “whipping boy”, she said, quoted by Wirtualna Polska.

She also claimed that the Netherlands allows billions of euros to be channelled to tax havens instead of the EU budget, and said that she had personally sent a letter to the Dutch ambassador on this issue.

In response to the announcements, Dimitry Kochenov, professor of European constitutional law at the University of Groningen, told Polish newspaper Dziennik Gazeta Prawna that any attempt to bring the Netherlands before the CJEU over this issue had no chance of success.

“The European Union has no general competence in the field of taxation and the CJEU will certainly reject such a case,” said Kochenov. “This is [an] absurd move…which will be treated in textbooks as a object of ridicule, not a real legal dispute,”

Kochenov noted that the recent statements are “dictated more by the need of domestic policy rather than foreign policy”. If Poland actually pursued proceedings against the Netherlands, it “will only be a waste of Polish taxpayers’ money”.

Main image credit: TVP Info (screenshot)

Daniel Tilles

Daniel Tilles is editor-in-chief of Notes from Poland. He has written on Polish affairs for a wide range of publications, including Foreign Policy, POLITICO Europe, EUobserver and Dziennik Gazeta Prawna.