Mario Draghi unveils his report on the future of European competitiveness
Mario Draghi, former president of the European Central Bank, presented his anticipated report “The future of European competitiveness” on 9 September 2024. The nearly 400-page document outlines 170 proposals across various policy sectors to ensure that the EU remains competitive with the US and China in the future. These measures would require €750 billion to €800 billion in additional annual investments. In the field of taxation, he advocates to eliminate any taxation obstacles to cross-border investing in the EU. EU citizens should be able to invest in other Member States without complex taxation procedures, effectively resulting in double taxation. Preferably, the taxation related to capital investments should be synchronised as much as possible to reduce fragmentation in terms of incentives. Furthermore, Draghi recommends lowering and levelling the energy taxation playing field and using taxation measures strategically to reduce the cost of energy. He suggests the Commission should propose a common maximum level of surcharges including taxes, levies, and network charges across the EU. Finally, Draghi urges to extend the use of qualified majority voting (QMV) in the Council to policy areas which are subject to unanimity – as taxation. He states that all possibilities offered by the EU Treaties should be exploited to extend QMV. The so-called ‘passerelle’ clause could be leveraged to generalise voting by qualified majority in all policy areas in the Council, Draghi said.
ETAF participates in the ATAD evaluation
On 10 September 2024, ETAF participated in the European Commission's evaluation of the Anti-Tax Avoidance Directive (ATAD). In general, ETAF views the ATAD as an important tool laying down minimum standard measures for addressing the most common forms of aggressive tax planning and tax avoidance practices that directly affect the functioning of the internal market. However, the ETAF members found that the ATAD provisions have been implemented inconsistently across Member States, with some opting for excessive measures leading to further fragmentation, unnecessary bureaucracy and double taxation. Additionally, the introduction of the Minimum Tax Directive has created some duplication with the ATAD Directive resulting in additional burden for taxpayers. Therefore, ETAF recommends to adjust the information requirements in relation with the ATAD1 CFC rules for the companies in the scope of the Minimum Tax Directive as this would already lead to a considerable rationalisation of reporting obligations. ETAF calls on the European Commission to draw all the lessons from this evaluation. We are looking forward to the final results of the evaluation, expected to be published in Q3 2025, and remain available to constructively engage with the European Commission on this matter.
ECJ orders Ireland to recover €13 billion in unlawful aid from Apple
In a judgement on 10 September 2024, the European Court of Justice (ECJ) overturned a previous decision by the General Court regarding Apple’s tax arrangements with Ireland. This case, C-465/20 P Commission v. Ireland and Others, marks a victory for the European Commission in its fight against tax evasion through state aid. The ECJ's decision reinstates the Commission's 2016 ruling, which found that Ireland had granted Apple unlawful state aid through favourable tax rulings. These tax rulings allowed Apple to exclude from the tax base the profits generated by the use of intellectual property licences held by two companies of the Apple Group in Ireland. At the same time, the head offices of these companies were located outside Ireland and the management of the licences depended on decisions of the Apple Group in the United States. This led to an unlawful state aid incompatible with the internal market, because the Apple Group as a whole benefited from the tax rulings and these "selective advantage" were not available to other companies in similar situations. The judgement is seen as a major support to EU Competition Commissioner Margrethe Vestager’s campaign against aggressive tax avoidance by multinational corporations. It comes after the General Court had initially sided with Apple and Ireland in 2020, stating that the Commission had not sufficiently proven that the tax rulings constituted illegal state aid. However, the ECJ has now set aside this ruling, declaring that the aid was unlawful, emphasizing the importance of fair competition across the EU.
