- EU Tax Policy Strategy
- Economic analysis of Taxation  
- Taxation and EU law 
- Information documents 
- Tax speeches 


- EU Tax Policy Strategy 

The European Commission's tax policy strategy was most recently set out in a Communication of 23 May 2001 on "Tax policy in the European Union - Priorities for the years ahead" (COM (2001) 260). See also the press release IP/01/737 and frequently asked questions MEMO/01/193).

The Commission in this Communication reiterated its belief that there is no need for an across the board harmonisation of Member States' tax systems. Provided that they respect Community rules, Member States are free to choose the tax systems that they consider most appropriate and according to their preferences. In addition, any proposal for Community action in the tax field would take full account of the principles of subsidiarity and proportionality. There should only be action at EU level where action by individual Member States could not provide an effective solution. Many tax problems might, in fact, simply require better co-ordination of national policies.

Within this framework, this Communication established as a main priority for tax policy that of addressing the concerns of individuals and businesses operating within the Internal Market by focusing on the elimination of tax obstacles to all forms of cross-border economic activity, in addition to continuing the fight against harmful tax competition.

This focus on the taxpayer was linked to the Commission's general objective of ensuring that tax policy supports wider EU policy goals, such as that established at the Lisbon European Council of March 2000 of making the Union the most competitive and dynamic knowledge-based economy in the world by 2010 and EU objectives in the environmental and energy areas. Increased tax policy co-ordination would help Member States to meet these objectives.

The Commission has since presented options for co-ordinated action to tackle tax obstacles and inefficiencies in the company tax, VAT, excise duties, and car tax areas. The Commission has also, as the Communication announced, become more pro-active in taking legal action where Member States' national tax rules or practices do not comply with the Treaty.

The Commission considers that retaining unanimity for all taxation decisions will make it difficult to achieve any of the tax co-ordination necessary for Europe and has made proposals for a move to qualified majority voting in certain tax areas.

In addition, the Commission has started to make more use of non-binding approaches such as recommendations instead of legislative proposals where appropriate, as a way of making progress in the tax field. The route of closer co-operation between sub-groups of like-minded Member States is also being explored.

The Commission has published regular analyses of the structures of tax systems in EU Member States with a view to providing information to Member States and the public on taxation trends in recent years.

The Commission is also of the view that more transparency and information exchange would help to reduce the risk of financial and corporate malpractice. Furthermore, more coherent EU policies concerning offshore financial centres should be considered as a means of encouraging these jurisdictions to move towards transparency and effective exchange of information.

The removal of tax obstacles in the area of financial services has gained importance as part of the development and implementation of the Commission's Financial Services Policy. The Clearing and Settlement Fiscal Compliance ("FISCO") expert group, for example, has been set up and held its first meeting in Brussels on 15 April 2005. It will advise on the removal of fiscal compliance barriers to the clearing and settlement of cross-border securities transactions within the EU.

Background 
 

a) EC Treaty and tax legislation adopted to date
The EC Treaty, under Article 93, specifically provides for the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, to adopt provisions for the harmonisation of Member States' rules in the area of indirect taxation (principally Value Added Tax and Excise Duties) because indirect taxes may create an immediate obstacle to the free movement of goods and the free supply of services within an Internal Market. They may also create distortions of competition. A large number of Directives and Regulations (i.e. "secondary legislation") have already been agreed in this area on the basis of that Article. The Commission's legislative strategy, particularly in respect of VAT as well as environmental and energy taxation, has been clearly established.

As far as other taxes are concerned, Article 94 provides for the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, to adopt provisions for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market. Some recommendations and legislation have been adopted in the personal tax, company tax and capital duty areas. See also passenger car taxation, Canary Islands and dock dues in French Overseas Departments.

Member States have also adopted EU-wide legislation in the field of mutual assistance and co-operation in tax matters, under Articles 93, 94 or 95 of the EC Treaty.

Community legislation on taxation has also been adopted under wider provisions of the Treaty:

·       Article 293 of the EC Treaty requires Member States to enter into negotiations with each other with a view to the abolition of double taxation within the Community. This was the basis on which Member States adopted the Arbitration Convention.
·       Article 308 of the Treaty requires the Council, acting unanimously on a proposal from the Commission and after consulting the European
Parliament, to take appropriate measures on the basis of a proposal from the Commission and after consulting the European Parliament to attain one of the objectives of the Community and the EC Treaty. The European Economic Interest Grouping, a new legal entity created in 1985 to facilitate and encourage cross-border cooperation, that was adopted under that Article involves specific tax arrangements. The legislation providing for the European Company which was also adopted under Article 308 does not contain tax elements.

But whether or not secondary EU legislation such as Directives and Regulations exists, Member States' tax systems and tax treaties must in any event respect the fundamental Treaty principles on the free movement of workers, services and capital and the freedom of establishment (Articles 39, 43, 49 and 56 of the EC Treaty) and the principle of non-discrimination. Moreover, in more general terms, Article 18 of the Treaty provides that every citizen of the Union has the right to move and reside freely within the territory of the Member States. The Agreement on the European Economic Area extends to individuals and enterprises of EEA States (Iceland, Liechtenstein and Norway) the principles of free movement of goods, persons, services and capital, as well as of equal conditions of competition and non-discrimination. However, secondary EU legislation does not apply in these EEA States.

b) Tax Package
The Commission at the informal meeting of Economics and Finance Ministers (ECOFIN) at Verona in April 1996 proposed a new and comprehensive 'global' view of direct taxation policy (SEC(1996) 487 ). The aim was to ensure that taxation policies were better geared towards achieving important Union objectives, such as promoting growth and employment and completing the single market, while at the same time protecting tax bases against harmful tax competition. The Commission suggested that, even if the unanimity requirement were to be maintained, more progress might still be made if greater consideration were given to the wide-ranging consequences of failure to adopt the various proposals. The Commission pointed out that repeated failure to achieve progress in tax co-ordination has substantially contributed not only to maintaining distortions in the Single Market, but also - less visibly - to generating unemployment and even to creating opportunities for tax base erosion.

This Commission strategy paper launched a period of intensive discussions among EU Member States. Following several further Commission papers - see Report on the development of tax systems 'Taxation in the European Union' (COM(1996) 546), "Towards tax co-ordination in the European union. A package to tackle harmful tax competition" (COM(1997) 495) and "A package to tackle harmful tax competition in the European Union" (COM(1997) 564) the Council agreed in December 1997 on the outline of a "Tax Package" of measures to tackle harmful tax competition in the EU.

The Package consisted of:
·       a political Code of conduct to eliminate harmful business tax regimes;
·       a legislative measure to ensure an effective minimum level of taxation of savings income ; and
·       a legislative measure to eliminate source taxes on cross-border payments of interest and royalties between associated companies.

In the same agreement in December 1997, the Commission committed itself to publishing guidelines on the application of the State Aid rules to measures relating to direct business taxation - these were adopted by the Commission on 11 November 1998. The latest Commission report on the action taken by it in the field of tax aid was published on 26 November 2003. Click here for further information on tax state aids.

EU Finance Ministers formally adopted the package at their meeting of 3 June 2003 (see press release IP/03/787). 

- Economic analysis of Taxation.

* Structures of tax systems
* Taxation papers series
* Economic studies
  
  * The Structures of the Taxation systems in the EU

This report contains statistics and economic analysis on the tax systems of the European Union (EU) Member States. It is published by the Commission's Taxation and Customs Union Directorate-General and Eurostat, the EU's statistical office. The tax systems of the 25 Member States of the EU (plus Norway ) are compared within a unified statistical framework (the ESA95 harmonised system of national and regional accounts), at different levels of aggregation and classifications of tax revenues. The framework utilised makes it possible to assess heterogeneous national taxation systems on a comparable basis.

The standard classifications of tax revenues (by major type of tax or levels of government) presented in most international tax revenue statistics are hard to interpret in economic terms. This publication stands out for supplying a classification of tax revenues according to economic functions (i.e. by labour, consumption and capital). This classification- which the 2005 edition extends to the new Member States for the first time - is based on detailed tax data and on calculations by Member States for allocating the revenue of personal income tax. It also presents statistical indicators of the average effective tax burden on labour, consumption and capital. These so called 'implicit tax rates' express the aggregate level of the tax revenues which can be allocated to these economic categories as a percentage of the total potential tax base in the economy (e.g. aggregate wages and salaries including social security contributions or total income from capital and entrepreneurial activities).

The 2005 edition for the first time extends calculation of the implicit tax rates on Consumption, Labour and Capital to the ten new Member States (although data limitations made it impossible to achieve full coverage). The publication includes country chapters that describe trends in the overall tax burden and the tax mixes and the main policy changes. Detailed cross country tables allow comparison between the individual countries and European averages. Tax revenues are presented as a percentage of GDP and as a percentage of total taxation. The report covers the period 1995-2003, which corresponds to the years for which national accounts data are now available for all EU Member States and Norway in ESA95.

·       Executive summary  
·       Full Text
·       Eurostat Press release
·       Frequently Asked Questions: see MEMO

The publication (as hardcopy or electronic pdf-file) can be obtained from EUROSTAT directly and the European Communities' Publication Office (OPOCE) and its outlets. The pdf-version is available free of charge.

   * Taxation Papers

The aim of the "Taxation papers" is twofold:
·       to facilitate the spreading of the analysis of the Commission's Taxation and Customs Union DG and 
·       to contribute to the debate on taxation in the European Union.  

This publication will consist of a series of working papers written by Commission staff or by experts working in association with them. In common with other working papers series, it will not have a fixed periodicity.

Responsibility for "Taxation papers" rests solely with the authors and, in this regard, they do not necessarily represent the position of the European Commission.