In a report published on Tuesday 4 February, researchers attached to the Foundation for European Progressive Studies (FEPS) recommend the introduction of a minimum tax on capital income in the EU.
Of the 15 European countries surveyed, most grant tax breaks to wealthy individuals, according to Lauri Finér, director of the Finnish progressive think tank the Kalevi Sorsa Foundation, and Niko Pankka, head of public affairs at the Central Organisation of Finnish Trade Unions (SAK). A growing number of countries have designed tax breaks specifically for people moving abroad. What’s more, “tax evasion on capital income has accelerated”, they explained at the conference presenting the report.
Eleven countries have introduced special tax breaks for investment income. Despite efforts to close loopholes in bilateral tax treaties, countries are not doing enough to protect their tax bases from cross-border tax evasion.
The researchers made a number of recommendations to European policy-makers: - adopt a harmonised minimum tax on capital income; - adopt the Anti Tax Avoidance Directive (ATAD) for capital income, in particular the ‘exit tax’ rule; - tax unrealised capital gains; - tax net wealth; - extend the remit of the EU Code of Conduct for Business Taxation Group to taxation of capital income.
“The burden on workers is too heavy, with billionaires paying less tax than others,” said Esther Lynch, General Secretary of the ‘European Trade Union Confederation’ (ETUC). “Social security systems are the foundation of the EU’s competitiveness. We cannot allow entrepreneurs to undermine them, we must ensure that tax rules are linked to economic and budgetary governance”, she said (see EUROPE 13556/18).
Despite a commitment by the leaders of the G20 member states to work together on the taxation of high-net-worth individuals (see EUROPE 10836/29), the election of Donald Trump in the United States could reshuffle the cards (see EUROPE 13562/8). “The situation is delicate. This discussion was impossible five years ago, and now that we have some room for manoeuvre to discuss, the geopolitical context has changed”, summarised Aurore Lalucq MEP (S&D, French).
Read the report: https://aeur.eu/f/fd8 (Original version in French by Anne Damiani)