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The Platform for Tax Good Governance assists the European Commission (EC) in developing initiatives to promote good governance in tax matters in third countries, to tackle aggressive tax planning and to identify and address double taxation. It brings together expert representatives from business, tax professional and civil society organisations and enables a structured dialogue and exchange of expertise which can feed into a more coordinated and effective EU approach against tax evasion and avoidance.
The EC has issued a call for members to join this platform, and interested parties have until 8 July to apply.
Published on 2 July, the report presents an overview and in-depth analysis of the design and performance of Member States’ tax systems.
The report includes a focus on the role of taxation to support a competitive EU economy and shows that tax revenues in the EU are expected to amount to slightly below 40% of GDP in the coming years. The overall tax burden (including social contributions) across EU Member States ranges from about 20% of GDP in Ireland to more than 46% of GDP in France.
The report also highlights two key structural changes that will impact the tax system in the medium term: an ageing population and digitalisation. The latter offers opportunities in terms of more enhanced tax compliance and administrations.
Changes to the tax mix and the tax burden have been minor, with some heterogenous developments across EU Member States. The overall tax burden has increased from 39.8% to 40.2% of GDP over the past decade. Eleven Member States have increased and five have decreased their overall tax burden by at least 2% of GDP. Only a few countries have made considerable changes to the tax mix in the last ten years. In contrast, around nine countries have hardly changed their tax mix or overall tax burden during the same period.
EU finance ministers met at the 21 June ECOFIN to discuss various issues, including the VAT in the digital age (ViDA) proposal. Despite high hopes, the finance ministers failed to reach an agreement due to Estonia’s continued veto over the proposal’s deemed supplier provisions, which in the country’s view would place a heavy strain on online platforms and their users. Reportedly, Estonia is not the only country with reservations about ViDA.
Among other items on the ECOFIN agenda, the ministers approved a report to be submitted to EU heads of governments on progress in tax work over the past six months. The document provides a helpful overview on the state of play on various tax files. The finance ministers also adopted conclusions on the work of the Council’s Code of Conduct Group, and received an update about work carried out in the ad hoc committee to draft terms of reference for a UN Framework Convention on International Tax Cooperation.
Hungary took over the Council’s six-month rotating Presidency on 1 July. The Hungarian Presidency has published its programme of priorities, indicating in which areas it intends to focus the Council’s work during its term.
EU competitiveness and cutting administrative burden on companies are some of the key priorities. For tax specifically, “fighting tax evasion, ensuring legal certainty for taxpayers, and supporting the international engagement of the EU” top the list.
Hungary also sees an “opportunity to enhance the competitiveness of European businesses through digitalisation, the efficient use of information, and simplification” in the area of tax – potentially referencing to the ViDA file, which remains blocked in the Council (see article above).
Moreover, Hungary’s ambassador to the EU stated at a Brussels-based public event that the Energy Taxation Directive (ETD) is another area where the Presidency will seek progress.
EU heads of governments met in Brussels on 27-28 June for the periodic European Council meeting. At this meeting, the leaders notably approved a ‘package’ of nominations for top jobs posts for the next five years. Crucially, Ursula von der Leyen was selected as the European Commission (EC) President for a second term. Antonio Costa, the former socialist Portuguese prime minister, will become the President of the Council, whilst Estonia’s former primer minister Kaja Kallas is to become the next High Representative for the EU’s Common Foreign and Security Policy. Von der Leyen’s and Kallas’ appointments still need to be ‘ratified’ by the European Parliament.
EU leaders also approved their so-called “Strategic Agenda 2024-2029”, outlining what they see as the priority areas for the EU to work on in the upcoming term. Security and defence, EU enlargement, migration, competitiveness and making a success from the green and digital transitions are among the key priorities for the leaders.
Although tax is not explicitly mentioned, it is to be expected that EU’s tax policy work in the next five years will be steered towards supporting the main strategic priorities.
Zucman presented on 25 June a report commissioned by the Brazilian Presidency of the G20 containing a blueprint for an internationally coordinated standard guaranteeing effective taxation of the very wealthy.
Individuals whose total wealth, including assets, property, shares, business ownership interests, etc., exceeds $1 billion would be required to pay a minimum amount of tax per year equal to 2% of their wealth. Like the minimum tax on multinational companies adopted in 2021, only billionaires who do not already pay the equivalent of 2% of their wealth in income tax would have to pay this tax. The proposal functions as a complement mechanism.
