The European Economic and Social Committee (EESC) broadly supports the Commission's legislative proposals on more efficient and fair taxation and praises their coordination at global level.
In its opinion adopted by the plenary assembly on 24 February, the EESC gives full support to the European Commission's package for fair and simple taxation. The rapporteur of the opinion, Krister Andersson, says that these proposals should be coordinated with the global discussions carried out at the OECD within the Inclusive Framework on Base Erosion and Profit Shifting.
This is key in order to achieve a global consensus, avoiding unilateral measures, he explained.
The EESC shares the view that achieving fair and efficient taxation is even more important in the aftermath of the COVID-19 crisis. In its opinion, the consultative body delivers its vision on key topics such as good tax governance in the EU, combatting tax fraud and evasion, tax reporting requirements, VAT treatment of financial services, and tax and employment rules for digital platforms.
Tax governance and competition
The EESC agrees with the Commission's approach that good tax governance is the basis for fair taxation. This requires tax transparency through the exchange of information between tax authorities, fair tax competition, the absence of harmful tax measures, more efficient tax measures and the implementation of internationally agreed rules.
Like the Commission, the Committee believes that tax competition is not an issue in itself. However, there is a concern about the existence of unfair tax competition within the EU which promotes tax avoidance. The Committee believes that an effective monetary union requires a coherent fiscal policy and consistency between the fiscal rules of its members.
Moreover, the EESC supports the Commission's initiative on reviewing the Code of Good Conduct for Business Taxation and stresses that the results and achievements of the Code of Conduct should be updated more regularly and made publicly available to civil society.
Tax fraud and evasion
Tax fraud and evasion remain a threat to public finances, especially in times of crisis. Revenue losses in the EU due to tax evasion by individuals have been estimated at EUR 46 bn, while the VAT gap is estimated at around EUR 140 bn, of which some EUR 50 bn is related to cross-border fraud. In order to fight against tax crime and evasion, a more harmonised legal framework and enhanced administrative cooperation are needed.
In its opinion adopted in September 2020, the EESC has already proposed launching a European pact to effectively combat tax fraud, evasion and avoidance and money laundering. The consultative body called on the European Commission to promote a political initiative involving national governments and the other European institutions in achieving this goal, fostering the consensus needed for this and involving civil society.
Most of the 25 actions planned by the Commission on tax simplification are related to VAT. However, the actions are described very briefly and it remains difficult, for the time being, to fully assess their specific impact on the everyday lives of European citizens and businesses. Krister Andersson added:
The adoption of a single VAT registration is very welcome. It is an important step towards the creation of a deepened single market, reducing the uncertainty and costs for cross-border operations.
The EESC is also asking the Commission to bring forward a simpler, more harmonised VAT bad debt relief mechanism. This mechanism should ensure that VAT - which businesses have not been able to collect from their customers, but have already paid to the tax authorities - can be claimed by businesses from the tax authorities in a swift and timely manner.
The EESC supports the effort to increase the transparency of digital platforms in order to prevent inconsistent declarations of income, which pose a high risk of tax evasion. Javier Doz Orrit, co-rapporteur of the Opinion, said:
In order to fight tax evasion and avoidance more effectively, a stronger convergence of Member States' tax rules is needed. In the EU, the reporting requirements and tax forms should be the same across Member States.
In July 2020, the European Commission presented a set of legislative proposals for fair and simple taxation. The package consists of three different parts: a Communication laying down measures aimed at reducing obstacles related to taxation for businesses in the single market; a legislative proposal to revise the directive on administrative cooperation through an automatic exchange of information between tax authorities; and a Communication on Tax good governance in the EU and beyond to improve tax good governance both in domestic and external jurisdictions. On 27 November 2020, the Council of the EU adopted its conclusions on fair and effective taxation.