Thursday

20th Feb 2020

EU commission eyes majority tax rules

  • The commission would identify areas where a majority decision-making would unclog the system (Photo: Ken Teegardin)

The European Commission will, next year, seek to identify tax areas where decision making could be moved to a qualified majority of member states instead of unanimity, in an effort to show voters ahead of the European elections that the EU is serious about tackling tax evasion.

In its 2019 work programme, unveiled on Tuesday (23 October), the EU executive named taxation as an area where it wanted "more efficient lawmaking", and identified topics "for a move to qualified majority voting".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

"Enhance the use of qualified majority voting and allow more efficient decision-making in key fields of taxation and social policies, so that the EU single market legislation can keep pace with economic and societal developments," the programme said of the commission's goals.

The EU executive plans to roll out a non-binding 'communication' early next year on the issue before the European elections, which means there would be no time left for this commission to propose any real legislation on the issue.

The idea was already floated by EU commission president Jean-Claude Juncker in his state of the union speech in September.

"Europeans taking to the polls in May 2019 will not care that the commission made a proposal to make internet giants pay taxes where they create their profits - they want to see it happening for real. And they are right," he told MEPs at the time.

"I also think we should be able to decide on certain tax matters by qualified majority," he added.

The commission, earlier this year, pointed the finger at Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands, where it said sweetheart deals may have enabled multinational companies to cut their tax bills aggressively.

The finance and taxation commissioner, Pierre Moscovici, said, at the time, that tax rules in those seven countries "have the potential to undermine fairness and the level playing field in our internal market, and they increase the burden on EU taxpayers".

Some multinational companies have made extensive use of Ireland and other EU countries to shift profits and avoid taxes.

With this initiative, the commission aims for faster adoption of proposals. But it also wants to avoid proposals being taken hostage by one or a few member states which might block agreement on some areas.

It could also make it easier to avoid making exceptions for member states in certain proposals before they are adopted by unanimity.

However, there is little chance there would be anything tangible at the end of the process.

The commission pointed out that the treaty allows for a change in the decision-making process through so-called "clauses-passarelles".

According to this procedure, EU leaders have to notify national parliaments, which have six months to object, and if even just one EU parliament raises the red flag, the proposal is dead.

The European Parliament is also asked to consent by majority and then EU leaders adopt the decision by unanimity.

A German centre-right MEP, and a member of the parliament's economic committee, Markus Ferber, warned in a statement that the commission should tread carefully.

"Today, some small member states such as Ireland, Luxembourg or the Netherlands can protect their dodgy tax schemes by vetoing every decision in the Council - at the expense of all other member states. When it comes to closing tax loopholes and facilitating better cooperation between tax authorities, majority decisions can be useful to prevent the worst culprits from blocking everything," he said.

"However ... Brussels must not dictate [tax] rates by majority decision as this would be entirely incompatible with the budgetary rights of national parliaments," he added.

The issue goes to the heart of competences being divided between Brussels and member states.

However, as it is up to a unanimous decision of member states to do away with unanimity, it is unlikely to happen any time soon.

EU states loosen grip on tax havens

Finance ministers removed eight entities from the tax havens blacklist, while ruling out more transparency or sanctions - prompting criticism from tax-campaigning NGOs such as Oxfam.

News in Brief

  1. EU unveils white paper on AI and data strategy
  2. Dutch court rules against Russia in €46bn Yukos case
  3. Britain to bar 'Polish plumber-type' migrants
  4. Greece seeks EU help to get back classical statues from UK
  5. HSBC to cut 35,000 jobs worldwide
  6. Regions chief appeals against cutting EU cohesion funds
  7. Verhofstadt criticises UK Brexit negotiator
  8. Turkish court acquits Gezi park activists

Vietnam sent champagne to MEPs ahead of trade vote

A trade deal with Vietnam sailed through the European Parliament's international trade committee and after its embassy sent MEPs bottles of Moet & Chandon Imperial champagne over Christmas.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Stakeholders' Highlights

  1. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  2. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  3. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  4. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  5. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  6. Nordic Council of MinistersNordic Climate Action Weeks in December

Latest News

  1. EU leaders face major clash on rule of law budget link
  2. North Macedonia warns EU on 'dirtiest ever' election
  3. Western 'endarkenment' and the voodoo politics of Europe
  4. Warning of agricultural 'digital arms race' in EU
  5. Cayman Islands put on tax-haven blacklist after Brexit
  6. Boris' Brexit bluff? - UK will resist alignment to the end
  7. US still open to Kosovo-Serbia land swap
  8. EU countries enter final phase of budget talks

Join EUobserver

Support quality EU news

Join us