The European Commission’s Internal Market Strategy 2003-2006 declares that one of the European Union’s goals is to become the world’s most competitive economy by the year 2010. The EU has always been dedicated to the notion of expanding participation in a common community. Since its inception in the 1950s, it has grown from a group of six nations to a community of 25 Member States: Austria, Belgium, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. Even today, the EU continues to negotiate with other countries for possible further expansion.
The 1 May 2004 (and fifth) enlargement of the EU, which adds 75 million citizens to the existing 378 million, presents both the EU itself and the individual member countries with an enormous opportunity and at the same time a tremendous challenge -- particularly when one considers that, with the exception of Cyprus and Malta, the new Member States are former Communist states that have barely a decade of experience as market economies. Not least, the expansion has considerable implications for multinationals doing business or investing in any of the accession countries.
The new Member States have been engaged in adopting and implementing the body of EU legislation, which comprises over 20,000 separate treaties, regulations and Directives passed by the European institutions, as well as decisions handed down by the European Court of Justice. Many areas of taxation fall within the scope of this legislation and case law, even though the new Member States still have control over direct taxation and the determination of their tax rates.
Any company wishing to enter or already operating in the European market needs to have an understanding of what the EU is and how it works, and the ability to stay on top of relevant developments in this constantly shifting environment. Deloitte has established cross-border EU International Tax Group to advise clients on the range of issues arising from enlargement and the practical and strategic aspects of conducting cross-border business in the EU. The group is comprised of experienced professionals from a number of EU countries who are versed in both EC law and the domestic laws of the individual EU Member States and can advise on corporate and individual taxation, as well as grants and subsidies.
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