In the wake of the economic shock caused by the pandemic and the expected global agreement on the taxation of international companies, the European Commission presented an action plan on May 18, with measures to be adopted by 2023. The most interesting goal but even potentially more controversial is that of providing the single market with a code of harmonized rules with which to tax companies in Europe.
“It is time to rethink taxation in Europe – the commissioner for economic affairs Paolo Gentiloni explained in a press conference -. As our economies shift to a new growth model supported by the NextGenerationEU, our tax systems must also adapt to 21st century priorities. The renewal of transatlantic relations offers the opportunity to make decisive progress towards a comprehensive tax reform ”.
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The package presented yesterday provides for Brussels to present proposals by 2023 to provide the European Union with “a single code of rules on corporate taxation, which provides a more equitable distribution of taxation rights among Member States” (the package will be known by the acronym BEFIT). The attempt follows what was done in the wake of the financial crisis of 20o8 when the European Union adopted common rules in the credit sector and in banking supervision.
The aim is to at least partially resolve the contradiction between the European single market and national tax systems. The new initiative will replace the 2016 proposal which aimed to provide member countries with a common calculation of the tax base. Although it was not a question of harmonizing the rates, the project remained stuck in the negotiations with the member countries. On the other hand, the tax issue is controversial: it requires the unanimous agreement of the Twenty-seven.
So far, Member States such as Ireland or Luxembourg have blocked any attempt to harmonize national tax systems. They have made taxation an instrument of economic competitiveness. Speaking to a group of newspapers, including Il Sole / 24 Ore, European Commission Vice President Valdis Dombrovskis explained that “the expected international agreement on corporate taxation can give new impetus to the debate in the European Union”.