The theme of this year's EU Tax Symposium in October 2023 was "The future of taxation in the EU". Politicians and academics discussed the taxation of corporations, assets and possible new EU own resources. It became clear that tax policy must also provide answers to the current crises and future challenges.
In October, EU Parliament and EU Commission jointly organised a tax symposium for the second time. This year's topic was "The future of taxation in the EU: challenges ahead & changes needed". The aim of the symposium was to stimulate a broad debate on the subject of taxation and to give high level speakers the opportunity to have their say. The varied programme ranged from the future of VAT to a discussion on wealth tax and decision-making on taxation – combining the national, EU and international level.
Tax Evasion Report highlights need for action
The Symposium’s recurring themes were tax avoidance and tax fraud. The latest EU Tax Observatory’s Global Tax Evasion Report 2024 highlights the need for action, not least at international level. It points out that the global minimum tax on companies introduced in 2021 has been significantly weakened. Tax loopholes have led to expected tax revenues being reduced by a factor of two. The report also shows that domestic tax evasion has increased. Billionaires only pay effective tax rates of 0 to 0.5 per cent on the income from their assets. One of the reasons being that income tax is often avoided by the frequent use of shell companies. On the other hand, the positive effect of automatic exchange of bank information, which has led to a reduction of offshore tax evasion by a factor of three over the last 10 years, has been emphasised. This would be an example of how international cooperation and data exchange can bear fruit after all.
Minimum taxation with potential for improvement
By adopting minimum corporate taxation, the EU has also made it clear that cross-border cooperation in respect of taxation is not only possible but it can also be successful. According to Mathias Cormann, Secretary-General of the OECD, although there is still a great need for improvement, the global minimum corporate tax rate represents a major step forward and will generate considerable revenue. Because in the race to the bottom in corporate taxation, cross-border cooperation is the only way to counteract this. The OECD global minimum tax comprises a two-pillar solution. Pillar 1 shall ensure that tax is fairly distributed internationally. Tax should not only be paid in the country where the company is based, but also where customers and users are located. This applies in particular to digital companies.
Pillar 2 provides for an effective minimum tax rate of 15 per cent for companies generating a turnover in excess of EUR 750 million. Economist Jayati Ghosh considers the minimum tax rate of 15 per cent too low. She points out that Pillar 1 still covers too small a proportion of corporate profits. The Chamber of Labour too criticises the low tax rate of 15 percent and takes a negative view of the preferential treatment of assets within the company, which allows corporations to deduct a certain proportion of their labour costs and real capital (e.g. land or machinery) and thus reduce the minimum tax rate to below 15 percent.
The future of tax faces international challenges
The speakers agree that more international cooperation is needed. There is a clear "Brussels effect", especially with regard to taxation. This means that EU policies go beyond Europe's borders, as other countries follow EU measures. This places greater responsibility on the European Union. Some speakers also saw a need for action in the creation of new EU own resources as part of the Multiannual Financial Framework. In the course of this debate, a European Parliament resolution proposed among other the introduction of a financial transaction tax and a digital tax. The Chamber of Labour has also been able to find something positive in this. In addition, the Chamber of Labour also calls for a separate EU corporate income tax surcharge. Evelyn Regner, Vice-President of the European Parliament, emphasises that tax policy always has an impact on gender equality. Every EU legislative proposal should be scrutinised for its effect on equality between men and women (gender mainstreaming).
EU Commission: EU Tax Symposium
EUTAX: Global Tax Evasion Report
AK EUROPA: MInimum level of taxation for large corporations becomers reality
A&W Blog: Global minimum tax – what it can do and what is not its fault (German only)
EU Comission: Minimum Corporate Taxation
AK EUROPA: Mid-term review of the EU Multiannual Financial Framework 2021-2027
EU Parlament: Multiannual financial framework