Brussels, 28/01/2000 (Agence Europe) - The tax package comes back before the Union's Finance Ministers on Monday, essentially for questions of method. After the Helsinki Summit decision to pursue work on the coordination of tax policies in the new high-level group, the Fifteen will discuss the composition of this group and how to proceed. "At this stage, the only thing we are going to do is to set up the group. It would be premature to make suppositions", commented the Portuguese Presidency on Friday.
According to the Helsinki European Council mandate, the high-level group is charged with studying how to implement the principle that "all citizens residing in a European Union Member State should pay the taxes due on all earnings on savings". Clearly, this is a question of breaking the current deadlock on taxation on the earnings of savings of Community nationals who place their money in a Member State other than their state of residence. The group will also examine how to boost efforts to combat tax fraud, in the light of the proposals made by the UK in Helsinki (see EUROPE of 11 December last, page 13). It will present its conclusions to the Economy/Finance Council, which will report to the European Council, "in June 2000 at the latest", in Porto.
Given the highly political mission of the group, the Portuguese Presidency has called on Member States to be represented at political level. The Portuguese State Secretary for fiscal affairs, Manuel Baganha, will chair the work, to be completed by end-February. Not all the names of the members are yet known. The possibility of the United Kingdom appointing a senior official rather than a politician has however been raised (Sir Nigel Wicks: Ed.). "The Commission would not be unhappy but disappointed", its spokesperson predicted on Friday.
The substantive aspects of the tax issue will nevertheless be raised on Monday, over the Ministers' lunch. The Presidency could notably see whether all Member states agree on work continuing on the basis of the dual approach recommended in the Conclusions of the EcoFin Council of 1 December 1997, ie., and exchange of information or retention at source. It could also clarify relations between the high level group and the group chaired by Ms. Dawn Primarolo, responsible for implementing the code of conduct on taxation and which should also pursue its activities.
The Fifteen will also return to the Conclusions of the Helsinki Council which, ever since they appeared have been the subject of differences of interpretation (See EUROPE of 12 December, p.5). "They are a little ambiguous as we had to keep all parties sweet", was the analysis of a diplomat. The British still refuse to include, in any way, eurobonds in the directive on taxation's field of application. "It is difficult to predict future developments. Bilateral contacts made recently with European Commissioner Bolkestein and the President of the Council Pina Moura demonstrated that the prospects of a change in the British stance are not promising", said the same source.
Possible compromises presented on the eve of the Helsinki Summit by the Commission and the Finnish Presidency on eurobonds, will form the basis for the high-level group, the goal being to demonstrate that the new directive on savings would hardly impose any additional administrative burdens for the paying agents (banks, in general). The latter would have to hand the fiscal authorities information (notably, name and address) of holders of eurobonds issued in London. "But we believe that 95% of the information requested in our compromise is already covered by the directive on money laundering", the spokesman for the European Commissioner for Tax explained. "The British do not agree with this analysis. A European Commission delegation will be in London in ten or so days to see whether the United Kingdom is implementing the directive on money laundering correctly or not", he continued.