EU Commission Publish 4-Step Plan to Implement Qualified Majority Voting in Taxation Matters

On 15 January, the European Commission published a communication which sets out a 4-step plan as to how decision making on tax matters could be modified to take place by way of qualified majority voting. The Commission proposes that the European Council could utilise the passerelle clauses contained in Article 48(7) and Article 192(2) of the Treaty on European Union to produce initiatives indicating the scope of change in the decision-making procedure, and notify National Parliaments. If not opposed within 6 months, the European Council can then adopt the decision by unanimity, after obtaining the consent of European Parliament.

The Commission in its communication states that unanimity in decision making in tax matters has hampered progress on important tax initiatives, needed to strengthen the Single Market and boost EU competitiveness, and identifies the “cost” of non-action in EU Tax Policy as failure to progress the VAT definitive regime, CCCTB, financial transactions tax and digital services tax proposals. The communication proposes a 4-step process to modify the way the EU exercises its competences in taxation as follows:

Part 1 – Employ QMV for measures that have no impact on Member States’ taxing rights, bases or rates, but are critical to combat tax fraud, evasion and avoidance and in facilitating tax compliance in the Single Market.

· Aimed at measures such as administrative cooperation and mutual assistance, legislating BEPS actions and reporting obligations.

· Suggested timeframe of Commission: “decision to be taken swiftly”.

Part 2 – Employ QMV for measures of a fiscal nature designed to support other policy goals.

· Aimed at measures that support EU policy goals such as measures concerning climate change, environmental protection, public health or transport policy. 

· Suggested timeframe: “decision to be taken swiftly”.

Part 3 – Introduce QMV in areas that are largely harmonized but which must evolve and adapt to new circumstances.

· Aimed at measures relating to VAT and excise duties.

· Suggested timeframe for implementation: by 2025.

Part 4 – Introduce QMV for other initiatives in the taxation area necessary for the Single Market and for fair and competitive taxation in Europe.

· Aimed at initiatives/measures such as CCCTB, taxation of the digital economy etc.

· Suggested timeframe: by 2025.

The Commission has called for the European Council, European Parliament and all stakeholders to launch an open debate on QMV in EU tax policy, and has invited leaders to endorse its Roadmap, particularly as concerns the use of the passerelle clause for Step 1 and 2 of its Roadmap, and consider the use of the passerelle clause in Step 3 and Step 4.

Source: Tax Adviser Europe