Brussels, 14/11/2011 (Agence Europe) - On 11 November, the European Commission published a report on double taxation, which EU Taxation Commissioner Algirdas Semeta described as “one of the biggest tax obstacles to the single market”, for ordinary people, businesses and non-EU bodies alike because it prevents people from doing business abroad (as people or businesses operating in more than one country pay a higher tax burden) and holds back cross-border investment. The European Commission explains areas where the problem is most acute and sets out a range of tangible measures it is planning to solve the problem at EU level.
Currently under EU law, there is nothing to oblige member states to prevent non-discriminatory double taxation. Although member states try to relieve double taxation through measures such as bilateral and multilateral double taxation agreements, these have shortcomings like too narrow scope, lack of uniformity amongst member states' provisions, red tape and taking a long time to solve disputes. Over the past year, the Commission has already started to deal with the problem through the parent company and subsidiary directive, the interest and royalties directive and the arbitration agreement for related companies, along with the draft Common Consolidated Corporate Tax Base. More is needed, but the Commission has little power over tax issues. The Commission is planning measures to boost existing directives, expanding the coverage of agreements to prevent double taxation and ensure they are implemented more coherently by the member states and improving dispute settlement by introducing a rapid settlement system for direct taxation. The next stage is to ensure effective application of the harmonised tax base, and improving the cross-border inheritance tax directive and the rules on dividends paid to portfolio investors. It is planned to publish new proposals in 2012 to deal with double non-taxation (using loopholes in member states' taxation systems to avoid paying tax). (FG/transl.fl)