While a European solution on digital taxation (see EUROPE 11986/10) was officially rejected at the March ‘Ecofin’ Council (see EUROPE 12221/6), Member States must now coordinate to try to speak with one voice in international negotiations on this subject at the OECD.
This task, on which the European Finance Ministers will be working on Friday 17 May, does not look so easy.
On Tuesday 7 May, the exchange of views on this subject at the EU Council's High Level Group on Tax Matters remained very general, according to a European source. The discussions are not at the stage of examining the concrete proposals on the table at the OECD, but only focus on working methods for coordination, she said.
Nevertheless, two camps already stand out. On the one hand, the southern and eastern Member States want a proactive approach and the EU to assert its leadership in international negotiations. On the other hand, the Nordic countries, including the strong opponents of a European digital services tax (Ireland, Denmark, Sweden and Finland), believe that it is only after an agreement has been sealed at the OECD that the European position will have to be coordinated, particularly in implementation.
In a letter sent to Finance Ministers on Monday 6 May, the European Commissioner for Taxation, Pierre Moscovici, reiterated the importance of speaking with a single voice in international negotiations. In a document annexed to the letter - of which EUROPE has had a copy - which will serve as a basis for ministerial discussions, the Commission asks the ministers for their vision of a European tax environment adapted to the 21st century for companies and the way forward in the global debate.
The Commission, for its part, believes that defining policy choices will be a necessary step. It will be necessary, she said, to establish "clear guiding principles", such as supporting the competitiveness of the EU and its Member States.
To guide these choices, the European institution also recommends that Member States carry out an assessment of the impact of the reform proposals on their individual economies, in particular the impact on revenue of the reallocation of taxing rights.
The introduction of effective minimum company taxation, as envisaged by the OECD (see EUROPE 12183/18), will also, according to the Commission, have to be designed with due regard to compatibility with EU law.
"The EU can either join the debate and shape the agreement, or be an observer […] While Member States can contribute individually to the global discussion, their individual influence my be limited – and certainly more limited than were they to speak with one voice", the Commission argues.
23 EU Member States are represented in the OECD. Only Romania, Bulgaria, Croatia, Cyprus and Malta are not. The Commission, for its part, has only an observer role. (Original version in French by Marion Fontana)