Weekly Tax News – 15 April 2019

European Commission relaunches qualified majority voting in energy taxation

On Tuesday 9 April, the Commission has published a Communication on “A more efficient and democratic decision making in EU energy and climate policy” setting out a plan to move decisions on energy taxation to Qualified Majority Voting (QMV) in the Council. According to the Commission, moving to the ordinary legislative procedure in matters of environmental and energy taxation would facilitate the alignment of the tax regime to the EU's energy and climate policy objectives. The Communication suggests that proposals in the area of energy taxation could be put forward under the so-called ‘passerelle clause' – Article 192(2) – which provides for QMV decision-making for energy taxation measures that are primarily of an environmental nature. This could be justified for environmental taxation measures aiming at reducing CO2 and other polluting emissions or improving energy efficiency, key priorities of the EU's Energy Union strategy and of the Paris Agreement.

Digital taxation: Member States to speak with one voice at international level

On 6 April, the European Finance Ministers met in Bucharest for an informal meeting to discuss, amongst others, the role of taxation in supporting economic growth. In particular, Ángel Gurría (OECD Secretary-General) briefed ministers on the progress made in finding an international solution on digital taxation. Valdis Dombrovskis (European Commissioner for Financial Services) said at a press conference that the Commission has proposed debating this topic at the ECOFIN Council in May in order to coordinate the position of the Member States in preparation of the G20 meeting in June 2019. “Obviously, we have more leverage if we speak with one voice”, he said, adding that if an agreement at international level was reached in the area of digital taxation, then the Commission would adjust its plan to make sure it fits in the broader international context.

European Commission Tax policy survey 2018

The European Commission has published the “Tax Polices in the European Union Survey 2018”, a document that presents the state of play of taxation in the European Union. The survey shows that the level of total taxation differs considerably between Member States: in 2016, the tax-to-GDP ratio varied between 46,4% in Denmark and 23,3% in Ireland. Furthermore, it highlights that the top corporate income tax (CIT) rates were in constant decline in the European Union in the last two decades. The decline of CIT rates slowed down after the crisis, and has levelled off in 2018. On the other hand, the standard VAT rates have remained stable since 2013; however, on a higher level than in pre-crisis years. A specific chapter of the report is dedicated to “Tax reforms in the EU and policy options”, depicting recent reforms in the Member States, pointing out  the main initiatives proposed by the European Commission since 2015 to create a more efficient and fair tax system and listing the various reform options available to Member States looking to improve their taxation systems.