Tuesday

19th Mar 2024

EU suggests majority vote on digital tax by 2025

  • Commissioner Pierre Moscovici announced the call for political dialogue in Strasbourg (Photo: European Parliament)

The EU commission proposed on Tuesday (15 January) to extend majority voting to all EU tax policies by the end of 2025 - a highly-sensitive issue, as member states guard their tax policies fiercely.

The EU executive argued that it would make the bloc able "to reach quicker, more effective and more democratic compromises on taxation matters," and more responsive to cross-border challenges such as organised crime and tax evasion.

Read and decide

Join EUobserver today

Get the EU news that really matters

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

... or subscribe as a group

The commission said that globalisation and, the growth of the digital economy have complicated taxation and revenue rights, while recent scandals, such as the Panama Papers, allowed a peek into the massive scale of international tax fraud.

"Unanimity doesn't protect the sovereignty anymore," economy commissioner Pierre Moscovici said Tuesday. He added that €50bn is not collected annually simply because of cross-border fraud.

The commission also suggested to member states extending majority voting to the controversial digital tax by 2025.

That three percent digital tax is on online revenues of large digital companies accused of paying too little tax, by funnelling their EU profits through states with low taxes, such as Luxembourg and Ireland.

The digital tax plan has been in deadlock after finance ministers failed to agree on it in December. France has since announced it would go ahead with the tax.

The commission stated that it only wants to start a political debate on the issue with member states, and was not intent on harmonising tax rates or creating new EU-level competencies.

"We want to move forward with member states, not against them," Moscovici told reporters in Strasbourg.

"We wish to convince member states that it is in their interest, and in the interest of the citizens, to gradually move to qualified majority voting," he added.

"This is not about creating new competencies, new taxes, new revenue, or harmonising tax rates, but to start a discussion on how to respond to the expectation of citizens," Moscovici argued.

Moscovici said, referring to the European elections, that according to an EU poll, 74 percent of citizens think the fight against tax evasion and tax fraud should be one of the priorities of the EU.

The commission said the unanimity requirement makes compromise very difficult, as one member state can kill the entire process, and it drives countries to agree on the lowest common denominator settlement, making tax powers toothless.

The EU executive now wants member states to agree quickly on majority decision-making, to improve cooperation in fighting tax fraud and tax evasion, and harmonise reporting obligations for businesses in the EU.

Another field where the commission sees the possibility for better coordination is where taxation supports another policy area, such as fighting climate change or improving public health.

The next leap for member states would be to agree, by the end of 2025, to modernise EU rules for VAT and excise duty, to allow majority vote on such policies as the common consolidated tax base, a single rulebook for calculating businesses' taxable profits in the EU and digital tax.

The commission plans to activate a so-called "passarelles clause" in the Lisbon Treaty to move tax issues from unanimity to majority vote. It will be up to EU leaders to active the clause with the consent of the European Parliament, with no objection from any of the national parliaments.

This way the EU could avoid the almost impossible task of renegotiating the treaty.

Rolling back national tax powers is also championed by EU commission president Jean-Claude Juncker, who served as the prime minister of Luxembourg for almost two decades, overseeing turning the small duchy into a tax haven.

He floated this idea in his state of the union speech last September.

However, EU member states are unlikely to throw themselves into discussing EU-wide tax policies ahead of the European elections in May, where populists who already accuse Brussels of a power-grab are likely to surge.

Opinion

The EU's tax haven blacklist - impressive or impotent?

One year ago, the European Union published its first ever blacklist of tax havens. It is crucial that EU governments help end the era of tax havens to ensure the billions currently hidden from public coffers.

EU commission eyes majority tax rules

The commission plans to address tax avoidance schemes in some EU states by shifting tax decisions away from unanimity to a majority system in what amounts to a long shot.

Opinion

Nordic states urge U-turn on EU digital tax plans

Finance ministers of the EU's three Nordic countries have urged partners to shelve plans to tax large corporations for their digital turnover. The digital economy should be taxed where value is created, they say.

Opinion

Why majority voting on EU taxation is a bad idea

Harmonising tax rates would probably not mean harmonising all tax systems to low rates – such as those in Ireland, for instance, but much rather an increase of taxes across the continent.

Latest News

  1. Borrell: 'Israel provoking famine', urges more aid access
  2. Europol: Israel-Gaza galvanising Jihadist recruitment in Europe
  3. EU to agree Israeli-settler blacklist, Borrell says
  4. EU ministers keen to use Russian profits for Ukraine ammo
  5. Call to change EIB defence spending rules hits scepticism
  6. Potential legal avenues to prosecute Navalny's killers
  7. EU summit, Gaza, Ukraine, reforms in focus this WEEK
  8. The present and future dystopia of political micro-targeting ads

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us