Brussels, 18/05/2011 (Agence Europe) - Along with discussion about the updated savings tax directive (which Italy says it not needed at this stage, see EUROPE 10380), the Economic and Monetary Council meeting of Tuesday 17 May 2011 addressed other taxation issues, like the work on financial sector taxation.
The Council took note of an interim report by the Hungarian Presidency on the taxation of financial institutions based on the debate at a high-ranking Council workgroup on taxation. The report examines two options - a financial transactions tax (FTT) or a financial nativity tax (FAT) (see EUROPE 10292) - setting out the risks and dangers inherent in each. Various Member States want the purpose of the tax to be clarified, as it could be aimed at serving as a source of revenue, a financial sector contribution to the costs entailed by the financial crisis, a way of curtailing risky financial activities or a means of heading off future financial crises. The report notes delegations' appeals to curtail the risk of relocation to financial centres outside the EU, and suggests that the impact of financial sector taxation on tax havens and tax evasion be examined further After the debate, the Council asked the Commission to submit an impact assessment of the various options before the summer break, and asked the high-ranking Council workgroup to continue its work and prepare a report, where necessary.
The Council took note of a report from the Economic and Financial Committee on the introduction by EU Member States of bank levies, examining problems bank levies have generated in the past (knock-on effects and double taxation for banks operating in more than one Member State). Ten Member States have introduced bank levels and four are in the process of doing so, and the report notes that thus far, few damaging knock-on effects have been reported. It points out that in most cases, the bank levies are flexible, with one eye on the fact that an EU levy may be introduced. Member States are starting to agree on exactly what a bank levy should cover and how it would operate, but they disagree about the purpose of such a tax (whether to use it to ensure a fairer sharing of the financial burden of the economic crisis or to alleviate the danger of collapse of the economic system) and also disagree about whether bank levy income should be fed into Member State coffers or a special fund to bail out banks in economic crises.
The Council published a conclusions document on: - the Commission's report on removing cross-border tax obstacles for European Union citizens, recommending in this connection that dialogue and better coordination needs to be introduced between Member States' tax offices to deal with double taxation and the expectations of ordinary people; and a Commission report on the work in 2009 and 2010 of the joint EU forum on the cost of sales between multinationals and their subsidiaries. (F.G./transl.fl)