Brussels, 13/01/2005 (Agence Europe) - The European Commission's Directorate General on Taxation has published on its website the results of a European inquiry into the cost of harmonising corporate tax and value added tax (VAT). It notes the tax obligations are costly and increase with cross-border transactions, and may also have an impact on the international transactions of a company. Seven hundred companies from fourteen Member States answered the questionnaire put out before enlargement, but no company in Luxembourg took part.
The results of the survey show that costs linked to corporate taxation and VAT are substantial, especially for small and medium-sized enterprise (SME). Such costs are even greater for a company that has a subsidiary in another Member State than for a company that only operates on the domestic market. Costs also tend to rise according to the number of subsidiaries abroad.
The lack of information is another problem raised by many firms, especially on tax regimes in force in the rest of the Union and on the identity of those in charge. Other difficulties concern the price of transfer for over 80% of companies taking part in the survey, reimbursements under the eighth VAT Directive and the activities that companies carry out in another Member State without being established there.
Many firms that responded to the questionnaire also consider that taxation has an impact on decisions relating to the international operations of companies. Such decisions concern the legal structure of companies that own a business in another Member State as well as the nature and localisation of investment made.
After the meeting between the Luxembourg Presidency and the European Commission, Jean-Claude Juncker pointed out that the Presidency will continue the debate on corporate taxation (see EUROPE of 11 January). Reflection will not only be on harmonisation of tax bases but also on introducing a minimum rate of taxation. On the other hand, Commission President José Manuel Barroso, speaking on behalf of the Commission, said that the Commission will only focus on harmonising the tax base.