European Commission proposes to bypass Member States’ vetoes on tax evasion measures

European Commission proposes to bypass Member States’ vetoes on tax evasion measures

The European Commission has published its consultation proposals to remove EU Member States’ veto on certain tax matters by the end of 2025, so that tax proposals would only need the support of 16 countries to become EU law.

The qualified majority system will help avoid stalemates on tax legislation at European Council level, says the Commission. It points to areas where it considers that the need for unanimity has lost tax revenues for the EU, such as the EU financial transaction tax, the digital services tax, and the common consolidated corporate tax base (CCCTB).

With qualified majority voting (QMV), proposals would only need the support of 55 per cent or more of EU Member States representing at least 65 per cent of the EU’s population. A decision could, however, be vetoed by a blocking minority made up of four or more Member States, provided that together they represent more than 35 per cent of the EU population.

Under the Commission’s proposal, QMV will be introduced step by step, starting with measures against tax evasion, tax avoidance and abusive tax planning, or initiatives to harmonise reporting obligations. These measures are usually welcomed by all Member States, but are prone to being blocked for reasons unrelated to the issues at hand, said the Commission.

QMV will be extended to include decisions on major projects such as the digital economy tax, by 2025.

Tax commissioner Pierre Moscovici described the current unanimity rule as ‘politically anachronistic, legally problematic, and economically counterproductive’. Even when agreement is reached with unanimity, it tends to be at the lowest common denominator level, limiting the impact, he said. Moreover, some Member States use unanimity as a bargaining chip against other demands they may have on completely separate matters.

But Moscovici admitted the issue is a sensitive one. In fact, one Member State, Ireland, has already rejected it out of hand.

Source: Step