European Commission
EC starts discussion on QMV for tax in light of EU enlargement plans
The EC published on 30 March a communication outlining its views on how the EU should prepare for further enlargement of the Union. A significant aspect of this communication focuses on EU decision-making and governance, particularly addressing the challenge of achieving unanimity on tax proposals within the current 27 Member States, which could become an even bigger challenge with a larger EU.
The EC emphasises that EU Treaty reforms aren’t necessary to move to qualified majority voting (QMV) from unanimity on matters like tax, as existing Treaties include the so-called ‘Passerelle Clauses’ enabling such a shift to QMV in specific policy areas – though unanimity is still required for this decision.
Recognising the concerns of certain Member States about potentially losing their de facto veto powers on certain policy areas, the EC suggests that employing the Passerelle Clause could be coupled with “appropriate and proportionate safeguards to accommodate such strategic national interests”.
While the communication is legally non-binding, the EC hopes to bring new momentum and re-ignite discussions on the need for EU governance changes in an enlarging EU.
DG TAXUD publishes its 2024 work plan
Published on 8 May, EC’s DG TAXUD’s annual work plan for 2024 – or “Management Plan” – gives an overview of what to expect from the DG for this year. Here are some key highlights:
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implementing and delegated acts for the Carbon Border Adjustment Mechanism (CBAM), including for accreditation of verifiers, to be expected for Q2 and Q4 2024
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a “staff working document” – an analysis report – on the functioning of DAC (related to the public consultation) to be published in Q4 2024
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EC’s annual Tax Symposium to be organised in Q4 2024
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continued support from DG TAXUD for the Council’s work on the shell companies (UNSHELL) proposal
Council
Enrico Letta publishes report on the future of EU Single Market
Italy’s former prime minister and current President of the think tank Jacques Delors Institute, Enrico Letta, was tasked by the EU to prepare a report on how to reinforce the EU Single Market. The final report was published on 19 April, and one of its key objectives is to build up ambition for a truly integrated EU Capital Markets Union (CMU) – or the “savings and investments Union” – to unlock funding for Europe’s sustainable and digital transition.
The report makes several tax related recommendations too, for example:
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reaching a swift agreement on the pending Energy Taxation Directive to provide right incentives to renewables energy across the Single Market
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creating a new, single set of rules to determine the tax base of enterprises, with differentiated frameworks for large groups of companies and for SMEs
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stepping-up efforts to guarantee simple VAT compliance for businesses
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assessing the feasibility and establish the political viability of using article 116 of the Treaty on the Functioning of the EU (TFEU) to address potential tax related market distortions. As a reminder, article 116 allows the EC to propose tax legislation that is decided by qualified majority of Member States rather than unanimity, if that legislation’s purpose is to address specific Single Market distortions
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supporting the EC’s technical work on advancing the two-pillar solution at an international level
The report is naturally non-binding and will not force the EU institutions to take action. However, it has received significant interest from EU policy-makers, including the Heads of EU Member States’ governments, and may influence their expectations to the EC following the June EP elections.
